With nursery groups continuing to buy up existing settings, Nursery World looks at the different approaches they take when acquiring an already operational business and how they make it part of their group.
Before acquisition
The owner of Tops Day Nurseries, Cheryl Hadland, says she only buys nurseries with potential – a setting that can be expanded if there is demand, for example, or a failed nursery.
‘I like taking on failed nurseries or nurseries that are going to close as I think we can make a difference’, she explains. ‘I have taken on “requires improvement” settings. We run a training academy and can bring in our tried-and-tested policies and procedures. It would take six months to turn the nursery around though, so we can’t do too many at once. With these settings, you often just buy the building and not the business as the business isn’t worth anything.’
Ms Hadland, who operates 31 nurseries, had always said that she would never buy a packaway setting but then decided to take over a pair of bankrupt nurseries. However, she would be unlikely to buy an Outstanding setting, a small nursery (25 places or less), a setting with just a roof garden, or a nursery that is restricted by local authority rules on when children can play outside, which she says would be raised during due diligence.
‘You have to look at about ten nurseries before you find one you want to buy,’ explains Ms Hadland.
The chief executive of Kids Planet nursery group, Clare Roberts, says she often has a gut feeling about a setting from the particulars before viewing it.
‘We are presented with a lot of opportunities, but for us to consider a nursery it has to be in a location that makes sense to where we are currently operating,’ she explains. ‘We only need to view a setting once before making a decision to buy it.’
Toddletown’s owners, however, view a nursery several times before making an offer. ‘We make several visits to a prospective nursery at varying times of the day to get a feel for it,’ explains co-owner Eamonn O’Connor who, at the time of writing, was due to open the group’s fourth setting.
‘We do an audit and look at the commercials, the books and the fees paid. We also have a “secret shopper” who will visit the competition.’
After acquisition
One of the first tasks following acquisition is for the new owners to notify staff, which Mr O’Connor says can potentially make the buyers the ‘bad guys’ from day one.
‘A lot of owners don’t share with their staff what is going on, so most of their employees find out that we are buying the nursery in which they work on the day of completion.
‘Many owners don’t want to tell their staff for fear of them leaving the setting before a deal is reached, which could jeopardise things, as most of the time you are buying a business and a property.’
This very scenario made a nursery more appealing to Ms Hadland. She explains, ‘With one setting we are buying [correct at the time of writing], the nursery owner told the staff that he was selling up, then two sales fell through, and the quality of the setting subsequently fell. Now it’s only the building, not the business that is for sale.’
Ms Hadland says that the first thing she does after an acquisition is to meet staff, who will obviously be feeling very unsettled. ‘When employees aren’t aware of the sale, we apologise first off to staff and parents and tell them there will be as few changes as possible. It’s all about reassuring them,’ she explains.
Meanwhile, Kids Planet, a group of 46 settings, says staff that they inherit are told from the outset that it will be a ‘whirlwind’, but it means they won’t be left in limbo and they are made to feel part of the Kids Planet team.
‘One to two weeks ahead of a deal completing, we encourage the existing owner to tell senior management they are selling. They can then meet me and our childcare quality manager,’ says Ms Roberts. ‘The idea is that the senior team can sell it to the rest of the staff.
‘We try to help vendors and hand-hold during the process, but you can’t always control things. It’s helpful that one of our area managers was acquired through an acquisition so she is a great ambassador.’
Kids Planet says it has a clear process of integrating nurseries. ‘Within the first three months of acquisition, we ensure things are done the Kids Planet way. Otherwise, there is a real lack of control, particularly if a setting has different policies and procedures’, she explains.
Just Childcare, which operates 60 settings, also puts in place its policies and procedures very quickly once it has acquired a setting, as this is expected of it by Ofsted.
For Bright Horizons, the second largest nursery group in the country, senior staff are sent to an acquisition as soon as possible. The group says that this is to understand what is important to families and staff, from outdoor activities to continuing apprenticeship programmes, and how the nursery group will continue to provide and enhance them.
Staff training
For Ms Hadland, finding out what training and qualifications the staff members hold is done as part of the TUPE (Transfer of Undertakings Protection of Employment) agreement.
‘We see what training inherited staff have undertaken, if they have been DBS checked, whether they have done first-aid and when. Then we talk with each member of staff individually and discuss what training they would like to do.
‘We use this to work out what gaps there are in training and qualifications. For instance, a nursery might not have a SENCO, perhaps they left recently, or the previous owner held that role. This would mean either retraining someone or recruiting,’ she says.
‘When we take on a nursery, we want to keep as many existing staff as possible for continuity of care. We could change staff down the line; for instance, if they didn’t agree with our sustainable, respectful ethos.’
For Kids Planet, with an acquisition they induct staff like any new employee. Ms Roberts says that if staff don’t have the qualifications they expect, they would train them straight away. The nursery group runs its own training academy.
Rebranding
Kids Planet rebrands all the nurseries it acquires to make them feel part of the group.
‘Eight years ago we didn’t rebrand as quickly as we do now. When we acquired the Jeffrey Nurseries we took a long time to rebrand, as I found it hard to get rid of the giraffe mascot,’ says Ms Roberts. ‘Now we see our brand as a unique selling point as it is stronger than many others.’
La Maison Bleue, a French operator which runs the Old Station Day Nursery group of 11 settings, takes a slightly different approach.
The group has a common set of policies and procedures, but head of mergers and acquisitions, Fatima Essoufi, says it doesn’t mean every nursery should follow them down to the line as they believe in giving settings autonomy.
Any nurseries acquired by La Maison Bleue outside of France are not rebranded, as the group feels its brand is not well-known enough abroad.
Similarly, Just Childcare opts not to rebrand any existing settings it acquires, as does Toddletown.
‘We like to retain a nursery’s own identity, so don’t change the name or rebrand any existing settings we buy,’ explains Just Childcare’s co-owner David Johnson. ‘If we buy a small group, then we give each setting its own name. We don’t want to be a big chain. We are a family of nurseries.’
Mr Johnson says that nursery managers are trusted to make decisions about the day-to-day running of their setting. For example, they can decide if they want a baby room and a separate toddler room or if they want to do the curiosity approach.
‘We empower managers to decide what is right,’ he explains. ‘We don’t have a restrictive model. We want to be seen as a family of individuals.’
Refurbishment
After taking over a nursery, groups may decide to carry out a refurbishment, but this can create difficulties if a setting is full.
La Maison Bleue, which refurbished some of the Old Station Day Nurseries, says its decisions depend on the scale of refurbishment and whether it would require closing the nursery or not. Small-scale changes can be made outside operating hours.
Just Childcare nurseries, however, have stayed open in 98 per cent of cases when work is being carried out.
‘Most of our nurseries just need a refresh,’ says Mr Johnson. ‘However, on the odd occasion we have agreed with parents and Ofsted for children to relocate to our other nearby settings for six to eight weeks for us to carry out a full refurbishment, effectively ripping everything out and starting again.’
Toddletown had to close its most recent acquisition for refurbishment to carry out major works, including a mezzanine to increase capacity. Mr O’Connor says that when they took over the setting they only had a handful of children attending.
For Tops Day Nurseries, closing a setting for refurbishment is not an option. The group has a health and safety manager who audits a nursery after completion to see what needs to be tackled first.
‘If we have to replace flooring, we would do a room at a time – generally when we acquire a setting, it isn’t at capacity. Otherwise, we would do the work overnight or at the weekend.
‘The same as replacing windows, which we would only change if needed. We have a debate about what is most important and allocate a budget,’ says Ms Hadland.
Other changes Ms Hadland implements is the removal of single-use plastic and, if a setting, isn’t currently doing it, introducing free-flow play.
She says this comes before children’s resourcing. ‘An existing setting will likely have sufficient resources and tables and chairs. Even if the table and chairs are plastic and in primary colours, which is quite old-fashioned and not to our style, then we could live with them and gradually replace them with wooden versions.
‘We never throw away any furniture or resources, we try and rehome any resources we replace,’ she explains.
Nursery point of view – Kids Planet Wallasey
Kids Planet Wallasey was a standalone nursery until it was bought by Kids Planet in August 2018.
Manager Jane Molyneux (pictured), who has worked at the nursery for 19 years, says becoming part of the group has been a positive experience.
‘The previous owner was very involved in the day-to-day running of the setting and I worked with him closely,’ she explains. ‘He told me he was selling up when he was showing Clare [Roberts] around the nursery. It was a bit of a shock.
‘Initially I felt anxious about the change, but I can honestly say it has been a positive experience. Staff were initially also very worried about being part of a nursery group, but I reassured them it would be a good move. They were worried that we would lose our individuality and thought Kids Planet would change a lot of things, including ceasing having music and French teachers come in, but that hasn’t been the case.’
In fact, she says, the nursery has benefited from being part of a group. ‘Under Kids Planet ownership, we have gained a good support network and HR and marketing departments.
‘The group has also invested considerably in the setting, which is based in a former bank and has been added to over the years. As it is an older building, it needed some work. We’ve had new flooring put in, CCTV has been installed throughout and new resources have been bought.’
Another positive of being owned by a group, says the manager, is that there are more opportunities for staff to progress. ‘We have a lot of long-term staff so as a standalone setting the opportunities for promotion were limited. Now with Kids Planet, there is more room for progression and they have their own training academy, which means staff are not only doing Level 2 or 3 qualifications but also assessor qualifications and degree courses.’