selling your nursery
In last month's newsletter we looked at issues a buyer should
consider when purchasing a nursery. This month we are
considering the deal from the angle of the seller. The simpler you
can make the process, the lower your legal and accounting fees.
- Your buyer will make investigations and ask
you questions about your setting and you will have to provide
information and copies of a wide range of documents. This is known
as ‘due diligence’ and is partly financial and partly legal.
- You will make the due diligence process
easier (and therefore less costly) if you have your paperwork in
order. You should be able to produce the documents relating to your
ownership or lease of the settings' property (or at least know
where you can obtain them and how long it is likely to take to do
so), contracts with parents, insurance policies and details of any
claims, and a pipeline of starters and leavers.
- Have all staff signed employment terms? (Have
you issued them?) You have a legal obligation to provide statements
of employment, but it also creates certainty. A buyer will want to
know about terms of employment and a lack of written terms makes
that very much more difficult.
- Have you had any complaints or been the
subject of any complaints to OFSTED? If so, make sure you know the
up to date position and can make a realistic assessment of the
outcome.
- Consider who, within your organisation, you
are going to tell about the proposed sale. Your staff may find the
news that you intend to sell very unsettling and may leave before
the process has really got underway. On the other hand you may well
need the co-operation of your senior management to produce the
information which the buyer requires.
- Be careful about confidentiality. Get a
properly drafted confidentiality agreement signed by any potential
buyer. A note of caution - such documents are not easy to enforce,
so prevention is better than cure. Be very careful about releasing
business sensitive information early on in the process.
- You should have carried out a Type 2 survey
under the Control of Asbestos Regulations of all premises for which
your settings operate. Failure to do so is a criminal offence and
can cause a buyer all sorts of difficulties. Not least, their
funder may not be prepared to lend money against a property where
the survey and any necessary management plan have not been
completed. So the lack of a survey and appropriate follow up action
may sink your deal.
- Be prepared for the whole process to be
disruptive. You have to be able to go on ‘doing the day job’ whilst
negotiating and responding to requests for information.
points to note
- The main message is 'plan ahead'.
- Get your paperwork in order and locate documents.
- Who has to agree to the sale – your landlord and your bank are
the most obvious, but there may be others.
- Be ready for people in suits to be in your setting while the
due diligence is carried out. Consider how you are going to explain
their presence
- You may also be interested to know that our employment team has
published its 2011 handy fact card showing
the new statutory rates and compensation limits which came into
effect on 1 February.
