Over the next 3 years we fully intend to acquire 25-40 Day Care Nurseries to create a Group worth over £85m-£120m
We will also purchase around 20 properties with a combined value of circa £10-20m
We require capital to acquire the businesses, add value, improve service levels and standards as well as buying the property the business occupies.
1. An investment by way of a secured loan where we pay you a 15% return per annum, paid to you every month. This loan is secured on the assets of the Group.
2. An investment by way of a secured loan where we pay you a 10% return per annum, paid to you every month, plus a 100% uplift on your investment on the sale of the Group. This loan is secured on the assets of the Group.
3. An investment where you acquire shares at £20,000 per 1%. On a sale, an investment of £20,000 should be worth £100,000.
We Aim to Acquire Established Day Care Nurseries that we can Grow
We aim to acquire Day Care Nurseries with a track record of delivering excellence for over 5 years, with over £500k in turnover, where they have an OFSTED rating of Good or better in areas of high density of people between 25-40. Our target business strategy is aimed to improve the chance of growth is high and failure is very low.
The Day Care sector is hugely fragmented with circa 25,000 businesses and the vast majority are owned by their founders with many of these due to retire within the next 5 years. The vast majority of Nurseries, whilst cherished by the owners and are typically well run, have plenty of scope to improve and grow.
This sector is reasonably secure because:
We acquire businesses with existing management teams that is more likely to ensure they continue to run smoothly and to serve their loyal customers well.
Whilst the previous owners are likely to have been dedicated to their business, as the fresh new owner we are able to invest in the nursery to aspire to:
Our ownership is often going to be like a breath of fresh air into the business.
We are dedicated to supporting the management and leadership team and staff of the Nursery and we hope that the leadership teams will love working with us to enhance the children’s enjoyment whilst they are attend our nurseries.
We only acquire highly profitable businesses with untapped potential for further growth and improvement.
We only acquire businesses where the turnover is over £500,000 and who have rock solid management in situ. We bring along a huge amount of support for the management team and staff to enhance their ability to improve the experience of the children and their families.
Most of the nurseries we will acquire are likely to experience an increase in profits over a third or more within 6 months.
The Nursery sector as a whole is growing because our population is growing that may increase demand and probably ensure long term profitability.
Why we need Investment Capital
The existing business owners need to be paid for their business and we pay them using Deferred Consideration. This means that we pay them over 2-3 years with around 20% paid upfront.
We still need to pay them around £20k- £60k up front and we typically need to invest in improving the Nursery. Thats why we need investors like you to fund the purchase and improvements.
Your investment simply allows us to acquire more, more quickly. Using our own funds it could take 10 years to reach 36 and with your investment the time should be less than 3 years.
Most Nurseries also come with properties that they trade from and these vary from as little as £300k to £3m.
We are typically required to fund at least 25% to enable one of our banks to fund the rest.
Most businesses also need a little TLC and these improvements typically cost circa £10k to £100k per business.
On average we need to invest from £150k to £300k per business we acquire. Over the first year this is likely equate to a CAPEX of £1.5m with £750k coming from investors like you.
What’s the Return for Us?
A business with an EBITDA of £150,000 will cost circa £150,000 to £200,000 to acquire plus typically £50k-£75k of further investment.
After 3 years the EBITDA per Day Care Centre could increase to circa £300,000 and as part of the Group this business will possibly be worth circa £2.4m. Let’s not forget the potential profits over the three years, potentially adding to the value of the Group.
Our return for £250k invested should return us circa £2.4m valuation within 3 years or less.
Over the next 36 months we aim to acquire 25-40 Day Care Nursery Businesses that should give us a return of circa £85m-£120m for the Group. And you can potentially profit from this.
What’s the Proposed Return for You?
You have three choices.
Keep in mind that many of these businesses have a value equal to or greater than what we paid for it.
The Nursery Group will also hold all the properties where the combined value of these should be more than the loan values. This should mean that if the business where to fold, your investment should be secured on the value of the commercial property.
There is often safety in numbers as well. We will acquire 25-40 Day Care Nurseries over 36 months. There are around 25,000 day Care Nurseries in the UK and 25-40 represents ~0.1% of the market.
Over 50% of the Nurseries are owned by people over the age of 55 and over 20% by those over 60. Many of these will wish to sell their businesses over the next few years. Day Care nurseries are currently very resilient because they are largely funded by the Government, we keep having babies and most adults need to work to survive.
Please also read our Capital at Risk statements
How do we keep your funds safe?
Until we use your funds to invest in a Nursery we leave the funds with our Accountants; Red Pepper Accountants. Here is a copy of their website www.redpepper.accountants
Please also see our Risk statement at the bottom of every page and also ensure that you have read, understood and signed our Declarations
Ready to find out more? Please click the ‘ Apply to Invest‘ button below to fill in our initial fact find and Declarations. Our team will be in touch shortly to discuss the next steps.
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