Purchasing a children's day nursery

[DanX5]

I have a friend thinking of purchasing a children's day nursery that they currently manage. Shortly due to get the accounts and financial records so that I can have a look to see how much it actually makes after taking account of current owners costs - supposedly pretty profitable but will look at with my usual cynical view that it may have been window dressed for sale.

Anyone on PH in this industry with experience of purchasing a children's day nursery?

I have no experience at work of dealing with the sale or purchase of a children's day nursery and just wondered if there was currently any industry norm for valuation? I am thinking it may be similar to looking at care homes for the elderly which I have dealt with (where value can be placed both on premises and then the business, largely related to the number of places they have for residents and historic recurring occupancy rates). I am thinking that if nursery has licence for say 50 children, has been full for last 5 years with a current waiting list due to it's reputation, then there may be a price per head multiple that could be used as a comparison to what I think it may be worth when looking purely on a regular valuation based on return on investment.

Any thoughts or links to some industry specific guidance appreciated. Have tried googleing without too much success........

[Rollcage]

The accounts may well be reconstituted accounts - showing wage figures for running without a manager (ie assuming the new owner will run it), rather than the true cost.

If it is profitable under management, then why sell?

Might not just starting a competitor from scratch be another option for your friend?

[Bullett]

As a customer just looking for this type of service reputation is everything.
I would thank that that has a considerable value in such a market.

Legislation is draconian, check if there are changes coming the current business may not be able to support, ofsted reports for the place etc.

What age groups? I know that there is a minimum ratio of 1 staff to 3 babies.

[Windsorphil]

I have a friend who owns two nurseries and they are saying that the new early years funding rules that give children flexible access to nursery places may have a negative effect on business... but I'm sure they'll know if they are already managing the business.