Childcare and Education a Standout Performer in Business Markets

According to Christie and Co’s 2022 Business Outlook Report, the childcare business market is performing well. After a period of Covid-driven stagnation, business transactions are up 21% from 2020, with demand for high quality settings particularly high. It is very much a seller’s market, with offers considerably outstripping demand, increasing 38% from 2020 and 45% from 2019. This means that sale prices are rising too, with asset sales achieving on average 102% of the asking price.

One reason for the increased demand is that childcare businesses are still seen as a good investment by lenders. Covid-19 thrust the sector into the limelight like never before and the government’s decision not to repeat the closures of the first lockdown in the winter of 2020-21 may have offered further reassurance that childcare businesses still attract government support. However, buyers are getting more savvy when reviewing the businesses they purchase, looking for strong management teams and existing success. This means that some sales are taking longer than they used to, particularly where more rigorous financial due diligence is required. Notably however, buyers are apparently less concerned than usual with previous years’ earnings – 2020 having been so wildly outside the norm – and are more interested in 2021’s operations, occupancy and earnings.

In the nursery sector in particular, Christie and Co are predicting further consolidation of the market, potentially creating a two tier system as larger nursery groups solidify their place in the landscape. On the whole, the nursery market is expected to remain buoyant, with few clouds on the horizon, though regulatory pressures from inspections are identified as a factor that could lead to settings closing. The report is however more cautious about the wider education market, noting that businesses such as tutors and independent schools whose occupancy has not improved in 2021 will face sustainability challenges.

The Christie and Co Business Outlook 2022 report is available here: https://www.christie.com/news-resources/business-outlook/2022/