Frequently Asked Questions for a Seller
1. How is Confidentiality managed?
Confidentiality is the cornerstone to how we work. The sale of a childcare business is sensitive for owners, staff and parents. Throughout the sale process information about the business is treated in the strictest confidence. The release of this information is carefully managed to protect the interests of all parties.
All buyers must sign a confidentiality agreement providing their personal and financial details before any information is provided. Where ever possible the information is provided in a face to face meeting rather than just emailing out information.
2. What is the Market Value for my Business?
The final price you receive for the sale of your business will depend on the price a buyer is willing to pay and you are willing to accept. To establish the market value a detailed review of a number of factors is taken into account. These include but are not limited to: the profit, occupancy, size, location, lease terms and conditions, historical performance and the role of the owner.
Putting all of these factors together a recommended marketing price will be established and discussed with you. In some cases the recommended price may not meet your expectations, in these cases there may be more work to do on the business to allow you to reach that exit value.
The best price is usually achieved when the exit plan has been put in place for a period of time before coming to market. The preparation of your business coming to market is key to a successful sale, Linda Harley offers a free service to work with owners over a period of time to review and prepare their childcare business for sale so when the time is right to sell the business the price optimised and the sale process is easily transitioned to a new owner.
If selling the freehold property as a passive investment the return will range from 7-10% depending on the centre, location, size , presentation and lease terms and conditions. A registered valuation is recommended to provide a buyer confidence in the sale value.
3. What is the time frame for selling a centre?
All potential buyers are required to sign a Confidentiality Agreement before any information about the business or identity and location of the centre is provided. Once an offer is made and a contract in place , as a general guideline allow for 15 to 20 business days for due diligence and finance and then a further 30 to 60 days for the transfer of the childcare centre licence.
If finance is required the Bank will usually require a business plan and valuation of the business and/ or freehold property. They recommend leaving at least 4 weeks from initial application through to settlement so making contact with your bank early will avoid delays in settlement.
If the purchase is not a going concern and requires a new licence, allow up to 90 days for this to be issued prior to settlement.A well prepared business Information Memorandum will ensure these time frames are minimised as much as possible and buyers have all the information required for smooth transition of ownership.
4. How can I expand my portfolio of childcare centres?
As a childcare specialist Linda Harley has a large network to source new build sites or existing centres. Whether you are searching for bare land forGreenfield development or want an existing centre register for the bi- monthly newsletter and you will be kept up to date with opportunities. Better still give Linda Harley a call to discuss your specific needs, you never know what opportunity will turn up.