Buying A Business - Deli

| 2 min read

Childcare has become a necessity rather than a luxury for many working parents and single-parent families in the UK. It is also harder for such people to rely on extended family to take care of their children.

Here is what you need to know if you want to buy a nursery.

Click here to download a business sale agreement if you want to purchase a nursery school.

What it takes to run a nursery

It will be a job that, while filled with fun and games, will require high professional standards. You are going to be responsible for the physical welfare as well as the emotional welfare of the children.

Further, you will require punctuality, enthusiasm, politeness and rigour. It will also be important to be approachable and emphatic regarding any special requests of parents. Some parents get quite nervous about leaving their children.

Franchise opportunity

You can also franchise if you think buying an independent business is more responsibility you can take. A franchisor will provide rigorous training and support of complying with the regulations. Additionally, the franchisor will provide readymade templates of activities, policies and procedure so you will have to worry about a thing.

However, franchisors charge a fee that can be exorbitant and there will also be constraints on what you can do.

How to value a nursery

It will be worth your while to get an independent valuation of the business you are interested in purchasing. The owner will base their asking price on the balance sheet, property value (unless it is a leasehold), goodwill, and fixtures and fittings, amongst other things.

While valuing the business, it is important to take into consideration the location, condition, operating capacity, occupancy rates, staff competence and the standard of local competitors.

Important things to keep in mind

There are many legal requirements you will have to consider. The Office for Standards in Education, Children's Services and Skills inspect against a set of standards. You should get a copy of it to ensure the nursery you are purchasing meets the requirements.

You also need to need to look at the provisions in the area. Particularly, you want to find out how the market is for childcare. Buying a nursery will require a great deal of business planning and no small amount of time and money. So you want to keep the long term trends in mind.

If you want to make huge profits, it perhaps best to steer clear of buying a day nursery. Most nurseries only make a small profit which they have to reinvest into facilities and staff training.

Due diligence

The process of due diligence is one that provides a thorough investigation into a proposed investment transaction. It means you check the investment worthiness, and assess the full claims made by the owner. This check is usually performed by a solicitor and accountant who act on behalf of the buyer. A large portion of due diligence will involve checking financial statements and accounts.

Click here to find more about due diligence.

If you buy wisely and do a thorough research of the background and potential of the business which attracts your interest, you will get immediate access to the existing base of customers and suppliers. This will ensure that you know what you are getting into.

You need a solid contract

You, as the buyer, will have to produce the sale document. This agreement will have to cover the mechanics of the deal – what is being sold, where it is, how it is to be transferred, and so on. This is where warranties come in. Click here to download a business sale agreement if you are purchasing a nursery school.

Warranties which are legally binding promise as facts about the business, which provide information relating to the business. Click here to know about how warranties work and why they are important.

Other documents you need

The starting point for documents are those relating to the sale and purchase – of company shares, or of business assets.

Additionally, you may need assignment and novation agreements to transfer contracts the seller is a party to.

If company shares are being sold, then you will need directors service agreements, board minutes to document approvals to changes, and possibly, a new shareholders agreement and new articles of association.

We can help you find exactly what you need for your circumstances if you contact us and ask.

Please note that the information provided on this page:

  • Does not provide a complete or authoritative statement of the law;
  • Does not constitute legal advice by Net Lawman;
  • Does not create a contractual relationship;
  • Does not form part of any other advice, whether paid or free.
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