Market View: Optimism in the wider market

M&A activity in the nursery space has continued over the past few weeks, including Old Station Nursery acquiring Little Green Rascals in York, Kids Planet acquiring Do Re Mi in Durham and Children's Choice Nurseries in Newcastle, and Busy Bees acquiring Alderley Day Nursery Montessori in Cheshire. These transactions all illustrate some continuing level of focus outside London and the Home Counties, and the acquisition of Little Green Rascals in particular is an example of selective regional diversification with a focus on high quality and premium.

Beyond traditional nursery roll-ups, we are observing two things. The first is private school groups (for-profit and not-for-profit alike) continuing to focus on their nurseries strategy, both as standalone profit centres and as feeders to their existing primary provision. Nurseries represent one form of diversification as the independent schools sector faces possible VAT on school fees and changes to the benefits of charitable status if a new government is elected. The second is in services to the early years space. KidsKonnect, the largest provider of childcare software in the Netherlands, has acquired Blossom in the UK, and Hope has partnered with the NDNA to provide discounts to members. There is a well-trodden path of M&A activity and proposition development in the ‘services to schools’ space, and we expect this to grow in the early years space – in part just focused on the nursery sector and in part through existing offerings to schools extending into the childcare space.