Redwoods Dowling Kerr has negotiated 22 deals for the first quarter of 2016 – compared to 62 for the whole of last year – of which nine were for first-time buyers.
Sales include Asquith's buyout of a North London Montessori group last month.
The buyers broke down as:
- Two corporate/large groups
- Three regional operators
- Eight local operators
- And nine first-time buyers
CEO of Redwoods Dowling Kerr, Paul Miller, told Nursery World, ‘I can only speak for ourselves but year-on-year, we have seen a significant increase in sales. We’ve brokered 22 deals worth over £15m already in Q1 compared to a total of 62 throughout the whole of last year. Traditionally, Q1 is the quietest quarter and with our current pipelines, we’re expecting a record year of sales.
‘Buyer-wise, there are a number of venture capitalists and private equity firms who are looking to break into the market as they see the long-term potential of the sector. There are also numerous existing operators with a good and prospering business strategy who have performed really well. Each of these are sitting with strong balance sheets and cash, and are using that cash to expand and acquire settings which fit their business models and mirror their childcare ethos.
‘Our biggest challenge is the scarcity of stock, and this is having an impact on both the multiples in the market place and the prices being achieved – it is a good time for both buyers and sellers.’
In terms of reasons for selling, Mr Miller put this down predominantly to sellers looking to reap the benefits of their hard work and realise their investments, either to enjoy their retirement or focus on new challenges.
‘With single sites, some are more sensitive to cost pressures,’ he said. ‘Some are motivated by the 30 hours and the raft of legislation coming through like the Living Wage, pensions etc. This is not necessarily as relevant in London where wages tend to be higher but further North it is a real consideration.
‘Ofsted also remains a key driver and a challenge for many operators. We often see people evaluating their future strategy with these factors in mind.’
The firm confirmed they expect to be announcing more deals in the months ahead.
