How to Sell a Day Nursery in the UK

If you plan to sell a nursery, the timing is better than most owners assume. Nurseries are among the few small businesses where the buyer pool includes corporate groups and private equity as well as individuals. That competition is why multiples in this sector are so much higher than in most owner-managed businesses, and why a well-run setting sells for a genuinely serious number.

The structural picture helps you.

England had 59,700 Ofsted-registered childcare providers at 31 March 2026, down 720 on the year. But that headline hides the number that matters to a seller: childminders fell by 630 while childcare on non-domestic premises, which is where day nurseries sit, rose by 410 to 27,900 settings. Places grew by 26,500 to 1.31 million.

So capacity is consolidating out of homes and into settings like yours, while total demand keeps growing, underwritten by a state entitlement that expanded again in September 2025. Groups building regional coverage need settings to buy, and there aren't unlimited good ones.

Here's the thing that surprises owners though. Your setting is probably worth more than your accounts suggest, because this sector is valued on price per registered place as well as on earnings. A nursery running at 68% occupancy has depressed profits but the same physical capacity as one at 88%, and a competent buyer prices the capacity, not just last year's EBITDA. Selling well means making that argument properly.

This guide covers what nurseries actually sell for, why Ofsted registration almost forces a share sale, how occupancy drives the number, and what to prepare. For the buyer's side of the same transaction, see our guide to buying a day nursery.

Both methods matter, and you should run both before you set expectations.

EBITDA multiple. Good-quality standalone settings typically trade at 7x to 9x EBITDA. Larger, high-occupancy settings with strong Ofsted grades and freehold premises reach into double digits when groups are bidding against each other. Settings graded Requires Improvement or Inadequate fall well below, sometimes to asset value alone, because a poor grade suppresses occupancy and carries regulatory risk that a buyer has to underwrite.

Price per registered place. The sector shorthand: broadly £7,000 to £15,000 per place across England outside London, higher in London and the South East. A 60-place nursery at £11,000 a place is a £660,000 business.

The second method is your friend if you're not full. Suppose you're registered for 52 places and running at 74% occupancy. On EBITDA you're valued on the earnings that 74% produces. On price per place you're valued on the capacity a buyer can fill. Present both, and lead with whichever tells your story honestly.

What moves you inside those ranges:

Factor	Effect
Ofsted grade	Largest single factor. Good or Outstanding attracts competitive bidding; Requires Improvement halves your buyer pool
Occupancy trend	Rising occupancy is worth more than high static occupancy
Tenure	Freehold widens the buyer pool and supports lending; leases under ten years unexpired reduce both
Manager	A strong manager staying is worth real money; an owner-manager leaving is a discount
Waiting list	Proof that earnings are sustainable rather than lucky
Funded share	Very high funded dependence adds risk to a buyer's model

Our business valuation guide covers how to normalise earnings, and our normalised EBITDA guide explains presenting adjustments a buyer's lender will accept.

This is the structural fact that shapes every nursery transaction, and it works in a seller's favour more often than not.

Ofsted registration is not transferable between legal entities. It attaches to the registered person and the premises.

Share sale. The buyer acquires the company that holds the registration. The entity is unchanged, so registration continues, the setting keeps trading, and critically it keeps its inspection grade and history. Ofsted must be notified about changes to directors and anyone connected with the registration, and will assess suitability.

Asset sale. The buyer trades through a new company and needs a brand-new Ofsted registration. First-time registration can take around six months. The setting also loses its existing grade and starts unrated, facing an early inspection under new ownership.

The practical consequence: almost all nursery deals are share sales, and buyers pay a premium for the ability to preserve a Good or Outstanding grade. That's good for you, because share sales are usually the seller-friendly structure and the one where Business Asset Disposal Relief is most likely to apply.

The trade-off is that a share sale means fuller due diligence. The buyer inherits your company's entire history, so expect scrutiny of:

1. Every Ofsted inspection report and any complaints made directly to Ofsted, which are recorded separately.
2. Safeguarding records, Designated Safeguarding Lead arrangements and training currency.
3. DBS checks for every member of staff, with dates.
4. Staff qualifications against the EYFS ratio requirements, because a setting meeting ratios only by counting an unqualified member of staff has a compliance problem the buyer would inherit.
5. Local authority funding agreements and any funding audit history.
6. Employment records, contracts and any live disciplinary or grievance matters.

Get all of that in order before you market. Our guide on what liabilities transfer explains how warranties and indemnities are used to allocate the risks you can't eliminate.

Every serious buyer will ask for the same document: month-by-month occupancy by room, for at least two years. Have it ready, because how you handle that request sets the tone for the whole negotiation.

Why room-level detail matters so much: the statutory ratios differ by age, so different rooms have completely different economics. Under-2s need one adult to three children, two-year-olds one to four, and three to four-year-olds one to eight. The pre-school room subsidises the baby room. A setting that's 90% full in pre-school and 55% in babies has a very different profit profile from one evenly loaded, even at identical total occupancy.

What good looks like. Most nurseries run 70% to 80% across the week. Profitable ones target 80% to 85% in core rooms. Because the cost base is largely fixed by ratios and premises, the last ten points of occupancy are close to pure margin. That's why occupancy improvements translate so directly into value at a 7x to 9x multiple.

How to present it well. If occupancy is rising, show the trend and the reason. If it dipped, explain what happened and what you did. Buyers forgive a dip with a documented cause and a recovery far more readily than they forgive an unexplained gap in the data.

The trap to avoid. Don't describe the nursery as "full" when the pre-school room is full and the baby room is half empty. Buyers check, and being caught overstating occupancy costs you credibility on every other number in the pack.

The opportunity to make explicit. Empty places are the buyer's upside, and you should price them into the conversation rather than hiding them. On a 52-place setting at 74%, thirteen empty places filled at a blended £280 a week gross about £190,000 of income, against ratio-driven staffing costs. Show the arithmetic. A buyer who can see the path to a better number will pay more for the capacity than for the current earnings.

One more thing to be straight about. The Coram Childcare Survey 2026 shows what parents pay for a full-time place fell 38.9% for under-2s and 38.6% for two-year-olds, as the entitlement doubled from 15 to 30 hours. The money didn't vanish, it moved to the local authority funding formula. Buyers will want your split between funded and private income, and will model what happens if the funded share keeps rising. Have that analysis ready rather than being surprised by the question.

In a nursery, the Ofsted grade rests on day-to-day leadership. So the buyer's question after occupancy is always the same: who runs this place, and are they staying?

If you employ a strong manager who intends to stay, say so early and prominently. It de-risks the whole transaction: the grade is more likely to hold, the staff are more likely to stay, and the buyer doesn't need to be a childcare specialist. That single fact widens your buyer pool to include financial buyers and small groups, and a wider pool means a better price.

If you are the manager, you have work to do. A buyer is looking at a setting whose registered leadership walks out at completion, taking the relationship with parents, staff and the local authority. Options, in order of value:

1. Recruit and embed a manager twelve to eighteen months before you sell, and let them lead through at least one inspection. Expensive, slow, and it changes the valuation basis.
2. Promote an existing deputy and support them into the role.
3. Commit to a longer handover, six to twelve months, with part of the price deferred against the grade holding.

Staff stability generally. Early years has high turnover, and agency cover is expensive and destabilising. A buyer reviewing your accounts will spot agency spend immediately and read it as a staffing problem. If you've had a bad patch, be upfront about the cause and what changed.

Retention through the sale. Tell the manager and room leaders under NDA once you have a serious buyer, not at completion. People who find out from a stranger on day one tend to leave. A retention arrangement for the manager, funded from the proceeds and payable twelve months after completion, is cheap insurance for the largest asset in the deal.

Our common seller mistakes guide covers the wider people-and-timing errors that cost sellers money.

Because nursery deals are usually share sales, the tax position is relatively clean, but the rate has moved against you.

Business Asset Disposal Relief. GOV.UK sets the rate at 10% for disposals on or before 5 April 2025, 14% between 6 April 2025 and 5 April 2026, and 18% from 6 April 2026, against a £1m lifetime limit. On a £660,000 gain that's £118,800 of tax where the old rate would have cost £66,000.

Qualifying for a share sale generally needs at least 5% of ordinary share capital and voting rights, plus an officer or employee role, held throughout the two years before disposal. If you've recently restructured shareholdings, brought in a family member, or moved shares into a holding company, check the position now rather than at completion, because the two-year clock cannot be accelerated.

If two of you own it, each shareholder has their own £1m lifetime limit, which can materially change the aggregate tax bill. Worth modelling before you agree how proceeds are split.

If you own the premises personally, an associated disposal may qualify alongside the share sale, though rent charged to the company can restrict the relief. Get specific advice, because nursery freeholds are often the largest single number in the deal.

Deferred consideration. Expect some, typically tied to the Ofsted grade holding through the next inspection and occupancy staying within a defined band. Negotiate measurable triggers. "Grade remains Good or better at the next inspection" is objective. "Buyer satisfied with quality" is not.

Timing. The nursery year runs on a September intake, so occupancy and forward bookings look strongest in the autumn term. Marketing in September or October with a strong occupancy report and a full spring forward book is a materially better position than marketing in July with the summer dip in your numbers.

Our Business Asset Disposal Relief guide covers the conditions properly.

This worked example is an illustrative composite built from typical market figures, not a record of a specific transaction.

A leasehold day nursery in a commuter town, registered for 52 places, Ofsted Good, twelve years unexpired at £48,000 a year. Owner is also the registered manager.

The trading position:

Line	Annual	Notes
Fee income, private	£389,000	52% of total
Funded hours income	£353,000	48% and rising
Turnover	£742,000
Staff costs inc. NI and pension	£474,000	63.9% of income
Rent	£48,000
Rates, energy, food, resources	£68,000
Insurance, training, software, admin	£41,000
EBITDA before manager replacement	£111,000	Owner manages, unpaid in these figures

Average occupancy across the year was 74%: pre-school 88%, toddlers 79%, babies 58%.

The buyer's adjustments. Replacing the owner-manager costs about £42,000 including on-costs, so sustainable EBITDA is roughly £69,000. At 7x that's £483,000. As a price-per-place check, £483,000 across 52 places is £9,288, comfortably inside the normal band.

What the seller did with nine months instead of accepting.

Recruited a deputy manager and promoted her to manager, with the owner stepping back to two days a week. That cost £42,000 a year but proved the setting runs without the owner, and she led the team through a monitoring visit that confirmed the Good grade.

Then attacked the baby room. The enquiry process was the problem: parents emailed and heard nothing for three days. A simple response standard, a booking link and two open mornings took the baby room from 58% to 79% over two terms. Eleven more children at a blended £280 a week added roughly £157,000 of income, against about £107,000 of ratio-driven staffing. Net contribution around £50,000.

Rebuilt position: EBITDA with a paid manager in place, roughly £119,000, occupancy 83%, and a documented rising trend rather than a flat one. That sold at 8x, so £952,000, with 20% deferred against the grade holding.

The nine months cost a manager's salary and some attention to the phone. It nearly doubled the price, because at an 8x multiple every extra £10,000 of sustainable earnings is £80,000 of value.

Matching the process to the buyer

Know your buyer types. Regional and national groups, who pay the best multiples for Good and Outstanding settings and will do thorough due diligence. Private equity platforms, active above roughly £500,000 of EBITDA. Individual operators and small partnerships, usually managers or deputies stepping up, who buy at the smaller end. And occasionally property investors where the freehold is the real prize.

The spread between those groups is wide, so reaching more than one is worth more than any negotiating tactic.

The pack. Month-by-month occupancy by room for two years, three years of accounts plus current management figures, a normalised EBITDA statement showing the manager's cost properly, the last two full Ofsted reports, staff schedule with qualifications and DBS dates, the lease or title, funding agreements, and the forward booking position for the next two terms.

Confidentiality is harder here than in most sectors. Parents leaving on rumour directly reduces the thing you're selling, and staff anxiety spreads fast in a small setting. Nothing identifying in the initial listing, NDA before the pack goes out, viewings outside operating hours or presented as a routine visit, and staff told only when the deal is close to certain.

Expect a long process. Share sales with property, funding agreements and regulatory diligence take three to nine months from heads of terms. Add the preparation and you're planning a year or more. That's not a reason to delay: it's a reason to start the preparation before you're ready to sell, because the work that raises the price is exactly the work that takes twelve months.

Don't sell into a weak grade. If you're due an inspection and think the outcome is uncertain, the honest calculation is whether to fix and wait or to sell now at a discount. Selling immediately after a downgrade is the worst of both worlds.

When you're ready to sell a nursery, you can list it on NewOwner and deal with buyers directly, see the pricing here, or read our comparison of selling direct versus using a broker. To talk through your own position first, get in touch.