If you own a day nursery, you'll know it's a business that never really stops. Parents rely on you every weekday, and every rise in the minimum wage lands on a wage bill that the ratios won't let you trim. When the time comes to sell, those are the things a buyer will look at hardest.
A buyer will have plenty to compare yours with. At 31 March 2026, Ofsted counted 739 providers of childcare on non-domestic premises in Kent on the Early Years Register, with 33,375 places between them. This guide explains how selling a nursery works in England, and how buyers work out what it's worth.
Who buys nurseries
- Larger nursery operators who want to add settings in your area.
- Investors and buyers of owner-run businesses, who usually keep a manager in place.
- Local owners with one or two nurseries who want another nearby.
- Your own manager or senior staff, often with money from a bank or an investor.
Each will look at your nursery differently. A larger operator may care most about the building and the location. A local owner may care more about whether they could run it themselves. It's worth knowing which kind of buyer you'd prefer before you start.
Share sale or asset sale, and what it means for Ofsted
How you sell decides what happens to your Ofsted registration, so it's the first thing to settle. A registration belongs to the registered person, which for a nursery run by a limited company is the company itself.
Selling the shares in your company
If the buyer buys the shares, the company is still the registered provider. Ofsted's guidance says it doesn't need to register again, as long as the company keeps its company number and carries on trading under its existing name. Changes to the people involved still have to be reported. The company must tell Ofsted within 14 days about a new nominated individual or manager and, where its main business is childcare, about new directors. Each new person needs an enhanced DBS check. A change of shareholders on its own doesn't need reporting.
Selling the business and its assets
If the buyer buys the nursery itself rather than the company, or you run it as a sole trader or partnership, the registration stays with you. The buyer can't run the nursery until it has registered with Ofsted, or had approval to add your premises to its own registration. Ofsted aims to complete early years applications within 12 weeks, but says it may take longer. It costs £220 to join the Early Years Register, and £220 a year after that for each setting.
You stay responsible until the buyer is registered. If you resign first, the nursery has to stop operating in the meantime, so the timetable has to be agreed with care. For an owner whose nursery is already a limited company, a share sale is usually the simpler route for this reason alone.
Your inspection and how buyers read it
Since 10 November 2025, Ofsted no longer gives an overall effectiveness grade. Report cards grade each area of a nursery separately, on a scale of exceptional, strong standard, expected standard, needs attention and urgent improvement, with safeguarding judged as met or not met.
Buyers will read your latest report closely, and the timing matters as much as the grades. If any area is graded needs attention, Ofsted plans to inspect again within 12 months, and within six months for urgent improvement. A buyer facing an inspection soon after completion will price that in. They'll also want to see any complaints and notifications to Ofsted, and what you did about them. Ofsted also says it's likely to refuse to add new premises to a provider's registration if that provider has a needs attention grade or worse after its first inspection, so a buyer's own record can matter too.
Occupancy and funded hours
Occupancy is where most nursery valuations start. Buyers will want it by room and by day of the week, for at least the last few years, along with your waiting list. A nursery that is full on Tuesdays and half empty on Fridays has room to grow, but only if the demand is there.
The mix of funded and paid hours matters just as much. Working parents of children from nine months old can now get 30 hours of funded childcare a week for 38 weeks of the year. All three and four year olds can get 15 hours, and some two year olds can get 15 hours too. The more funded hours your families take, the more of your income depends on the funding rate rather than your own fees.
For 2026 to 2027, the Department for Education funds Kent County Council at £11.75 an hour for under 2s, £8.67 for two year olds and £6.43 for three and four year olds, after an adjustment for the move to termly funding. Councils must pass at least 97% of their funding on to providers, partly as supplements, so the rate a nursery receives is set locally. A buyer will compare the rate you're paid with what an hour of care costs you, and look at how much of your income comes from private fees.
Ratios and the wage bill
Ratios set the minimum number of staff, so the wage bill follows the children. Under the early years foundation stage framework in force from 1 September 2026, group settings need these ratios.
| Age of children | At least one member of staff for every |
|---|---|
| Under 2 | 3 children |
| 2 years old | 5 children |
| 3 and over | 8 children, or 13 where a teacher with qualified teacher status, early years professional status or early years teacher status works directly with them |
The manager must hold an approved level 3 qualification or above, and at least half of all other staff must hold at least an approved level 2.
From 1 April 2026, the National Living Wage is £12.71 an hour for workers aged 21 and over. The rate is £10.85 for 18 to 20 year olds, and £8.00 for under 18s and apprentices. Employers pay National Insurance at 15% on earnings above £5,000 a year, and the Employment Allowance for 2026 to 2027 is £10,500. Because ratios fix how many staff you need, each rise goes almost straight to the profit, and buyers will look at how you've managed it.
They'll also look at staff turnover, your use of agency staff, who holds the level 3 qualifications, and whether your manager and deputy will stay after the sale.
The premises and the lease
If you own the building, a buyer may want to buy it, or to rent it from you. Keeping the freehold and letting it to the buyer gives you an income after the sale, and the property is usually valued separately from the nursery.
If you rent, buyers will look at how long is left on the lease, when the rent is reviewed, any break clauses, and whether the lease gives you the right to renew. Most business tenants have that right when a lease ends, unless it was given up at the start. In a sale of the business and its assets, the lease usually has to be assigned to the buyer with the landlord's consent. In a share sale, check whether the lease says anything about a change of owner.
How buyers value a nursery
Most nurseries are valued the way other owner-run businesses are, on the profit a buyer can rely on, multiplied by a figure that reflects the risk. Our guide to how to value a business explains the method, and our nursery valuation tool gives a rough range that allows for things like occupancy and your inspection.
For a nursery, the biggest adjustment is often the owner. If you're also the manager, a buyer will need to pay someone to do your job, and that salary comes off the profit. Occupancy trends, the gap between registered places and children on roll, your inspection, staff stability and the length of the lease all push the figure up or down.
Telling staff and parents
In a share sale, the company stays the employer and nothing changes in law for your team. In a sale of the business and its assets, staff usually transfer to the buyer on their existing terms under the TUPE regulations, and both sides have duties to inform and, in some cases, consult them.
Parents need to hear from you too. Make sure the sale agreement deals with deposits and fees paid in advance, and with funding already claimed for the current term. Agree with the buyer when you'll tell staff and parents, and who'll be in the room. Staff in particular should hear it from you, before they hear it anywhere else.
Getting ready to sell
The work that adds most to the price is done before a buyer sees anything. Tidy accounts that separate funded income from fees, an up to date staff file, your Ofsted history and a clear picture of the lease will all be asked for in due diligence. If you'd like to keep a share and step back gradually, our guide to selling part of your business covers how that works. Our nursery readiness check takes about five minutes and shows where you stand.