A private equity-backed childcare provider is close to completing an acquisition that will almost double its UK footprint, EducationInvestor Global can reveal.
This publication has learnt that Family First, the August Equity-owned childcare platform, is nearing a takeover of Footsteps Nurseries, a group of 10 settings across England’s West Midlands rated ‘outstanding’ by Ofsted.
The deal, expected to complete within weeks, will lift Family First’s total number of sites to 27 and mark the group’s first steps outside London and the Southeast of England, where August Equity has predominantly focused since it acquired Little Garden, its first childcare asset, in June 2019.
It will mark Family First’s single largest acquisition to date.
Filings with Companies House show that Footsteps Nurseries booked profit of £1.4 million in the year ended 31 March 2020 – before the Covid-19 pandemic struck – up from £830,305 a year prior.
While the company’s enterprise value is unclear, an advisor with experience in deal-making in the UK childcare sector said that “in the current market, there is a premium price to be paid for such a decent group. My best guess is a multiple of around 10-times” earnings before interest, tax, depreciation and amortisation (EBITDA), a figure for which is not reported in Footsteps Nurseries’ statutory accounts.
Family First’s acquisition of Footsteps Nurseries will take August Equity a step closer to its goal of building a platform comprising more than 100 settings in the UK’s highly fragmented childcare market.
The transaction will extend a spate of consolidation in the sector triggered by two significant deals executed in recent weeks – buyout firm Oakley Capital’s takeover of ICP Education and Just Childcare’s sale to private equity-backed Dutch operator Partou.
Family First is chaired by Andy Morris, the former chief executive of Asquith Day Nurseries & Pre-Schools, which he helped grow to around 90 settings before it was acquired by Bright Horizons, the UK’s second-largest childcare provider, in 2016. Morris’s nephew and son, James and Edward, in 2019 founded Three Little Birds Nurseries, whose buy-and-build strategy they co-lead as joint-chief executives.
Last month, August Equity installed Ollie Humphreys as Family First’s new chief executive. Humphreys was previously managing director of restaurant chain Frankie & Benny’s and earlier in his career was a divisional director at bookmaker William Hill.
August Equity is a mid-market buyout firm that focuses on the education, healthcare, business services and technology sectors. It also owns a stake in Orbis Education & Care, and from 2013 to 2018 controlled Minerva Education, a group of London private schools, which it sold to Dukes Education.
Date published: 10 June 2021