A confidentiality agreement and/or exclusivity agreement with the seller? Exclusivity agreements mean that the seller can only negotiate with one buyer for an agreed period. Confidentiality agreements ensure that the potential sale of the business cannot be disclosed to anyone, including parents, suppliers and staff.
Are you able to meet the necessary compliance requirements? Remember that it is a criminal offence to open and operate a nursery without being registered with Ofsted so the registration process must be in place from the day of completion. Please click here for more information.
Will food be served to the children cooked on site? If so, the nursery provider must register with local authority and arrange for a hygiene inspection from the Food Standards Agency.
How will you structure the purchase? You could buy the assets of an existing provider, start a new undertaking with a new company or purchase a company operating a nursery already in existence. Consider that if a company is to be purchased, a shareholders’ agreement may be necessary. Historic liabilities should also be taken into account when buying a company. We recommend full commercial and regulatory due diligence, including confirmation of the identity of the registered entity running the nursery to confirm they are the named seller.
How will you finance the business from the beginning? We can advise on all aspects of financing from bank finance and third party investors to funding a new business from your own resources.
How will you hold the property? Whether leasehold or freehold, there are a number of issues to be addressed in this field.
If the purchaser intends to acquire a freehold property, they should take into account whether they will be using their own funds or the help of mortgage finance to pay the purchase price.
If the property is to be acquired on a leasehold basis, it is recommended that the tenant take out a new lease of the property with the landlord at the time of acquisition to ensure all their essential requirements are included in the lease. Taking an assignment of an existing lease would likely mean having to compromise on the terms such as the length of the lease.
Some specialist provisions required will be necessary for the operation of the property as a children’s day nursery such as requiring all visitors only to enter the site accompanied by a member of staff.
More general requirements would be clear divisions of responsibility between the landlord and tenant for repair and maintenance of the buildings and surrounding grounds (perhaps used as the children’s outdoor space), adequate tenant only break clauses to meet the buyer’s long term business plans and satisfactory insurance provisions to ensure the property will be covered adequately.
If you have any questions at all about the above, please do not hesitate to contact Kathryn Johns of Gordons Partnership on 01483 451900 or by email at kathryn@gordonsols.co.uk.
Have you considered the employment contracts? This will enable you to make early decisions with regard to the staffing required to take the business forward under your new ownership.
Have you taken into account the contracts with parents for services supplied? In reviewing the notice periods required to remove a child from the setting, together with the ability to amend fees as required, assessments can be made as to the profitability of the business.
Disclaimer
This article has been published for reference purposes only. The advice given is of a general nature and is not intended to offer legal advice and should not be relied on as such. Legal advice tailored to your specific circumstances should always be obtained.
© Gordons Partnership is the trading name of Gordons Partnership 2020 Limited a company registered in England & Wales (Company Number 12464371).
Registered office is at First Floor, 1 Chancery Lane, London WC2A 1LF. VAT No: GB 629 857 388 - Site by WBJ Designs
© Gordons Partnership is the trading name of Gordons Partnership 2020 Limited a company registered in England & Wales (Company Number 12464371).
Registered office is at First Floor, 1 Chancery Lane, London WC2A 1LF. VAT No: GB 629 857 388 - Site by WBJ Designs