Buying a Day Nursery

Two dependable engines

Nursery income comes from government-funded hours and private fees, both contracted in advance by the term. That makes cash flow unusually visible — a lender can see next term's revenue in this term's registers.

Occupancy is everything

Ask for the occupancy registers, the funding statements and — most telling of all — the waiting list. A full nursery with names waiting commands a premium; empty places tell their own story. Twelve months of both income streams should reconcile to the bank statements.

• —Occupancy by room and age group, not just in total
• —Funded-hours statements against invoiced fees
• —Fee increase history and local competitor pricing

People and registration

The inspection grade, staff ratios and the stability of the key-person team carry the goodwill. Registration itself does not transfer — you re-register as the new provider — but lenders know the timetable and fund through it routinely. Plan the completion sequence around it.

Structuring the finance

Most purchases are goodwill-led: an unsecured term loan over five to seven years sized on maintainable profit, with deposits ranging from 5% to 30%. Settings that own their premises — increasingly common in converted houses — open up commercial mortgage terms that ease the monthly burden considerably.

Demand for quality childcare across much of the UK consistently outstrips supply, making well-rated nurseries resilient and financeable acquisitions. Asking prices for established nurseries typically range from £150,000 to £500,000 depending on capacity, Ofsted rating, and location. Specialist lenders assess Ofsted ratings, occupancy levels, and the mix of funded and private income when structuring the funding.

If you are ready to look at funding for a specific purchase, read more about Day Nurseries acquisition finance and loans, including how lenders assess these deals and the areas we cover.