Pulling together

Large nursery chains seeking to grow their businesses often opt to purchase or merge with other childcare groups and in doing so have to overcome some major managerial problems.

Issues to resolve are how to establish common values, philosophies and policies between the component parts of the new company, how to integrate the staff teams and whether to re-brand.

In many business sectors, huge corporations swallow up the smaller fry, strip the assets and dump them, but this is not the history of the mergers and acquisitions of childcare providers. This is possibly because there are relatively few tangible assets but is also due to the nature of the sector, where the major players in recent acquisitions say the motivation has been to add value to their organisations and to improve and develop their services.

Susan Hay, who chairs Bright Horizons Family Solutions Europe, part of the US-based childcare group, says, 'All the mergers we have done have been about investment and growth and not about cost-cutting. Obviously the investment has to make sense. We are not just interested in growth for growth's sake. What we are interested in is merging with companies that add value to what we do.'

This summer BHFS Europe bought two chains - Kinderquest, which was the ninth largest nursery chain in the country and specialised in providing workplace childcare centres, and the small Scottish chain, Red Apple Private Nursery Schools. Ms Hay adds, 'It is about the acquisition of skills and experience and coverage in some way as distinct from the acquisition of more nurseries, more staff or more children.'

Asquith Court, by far the biggest childcare and education group, set the trend for expansion through acquisition when it bought one of Britain's largest nursery chains, the Gatehouse group, a subsidiary of Whitbread's David Lloyd Leisure Group in 1999.

Jean Cross, Asquith Court's operations director, says in tackling the issue of establishing common policies and values, 'We set up a working party to identify differences and similarities in policies and to set out the best practices from each. Having done that we launched our new policies and set up training for staff where necessary.

'Establishing common values is an ongoing process but I believe we would have to work hard at this even with the existing group. We manage our nurseries via a team of area and senior managers. They meet regularly as a group to discuss new initiatives and to share problems. From these meetings shared values emerge and it is their task to establish these at their nurseries.'

Ms Hay demonstrated to the new staff that they already shared common values and philosophies by running an exercise involving the different company mission statements. 'I took the different mission statements and although we used different words they meant the same thing and so I was able to use the comparison for them to see.'

According to Sarah Carr, former chair of Kindercare Childcare Centres, which was bought by Busy Bees in July, 'The secret of success is you have to be sure you are merging with a company that has a similar philosophy.'

Jean Cross says blending different corporate cultures takes time. 'We try to involve everyone. Our area manager group has a mix of new and established staff. We make sure we respect the traditions and values of the acquired group. In the early stages we made some significant changes to our existing business to reflect practices within the new group. For example, we changed staff titles from "head" and "head of care" to "manager" and "deputy" in line with Gatehouse and we changed from our local to their central accounting systems.'

Leading private education provider Nord Anglia bought the Milton Keynes-based Bright Horizons nursery chain last year, rebranding the settings as part of incorporating them into its Princess Christian Nurseries group.

Jacqueline Moss, managing director of Princess Christian Nurseries, says, 'Ascertaining that the cultures are not worlds apart before the merger takes place obviously makes the task easier but it requires good communication, training and time. The key is not trying to move too quickly. We set a goal of one year for the merger to be fully complete so gradual changes are introduced and incorporated which are not as hard to cope with or as threatening.'

John Woodward, director of Busy Bees, explains how the Busy Bees' approach to an acquisition is planned but flexible. The development team runs a financial and quality audit on a potential candidate for purchase; the integration team brings it on board and prepares it to be handed over to the operations team.

'Our integration plan is systemised to make sure we do it right, but that does not mean we do the same things each time.' For example, on the issue of branding, when Busy Bees bought the Copperbeech chain, based in St Albans, it was re-branded as Busy Bees but the Kindercare settings have kept their name. 'We felt Kindercare was a good strong brand so we have kept it.'

Carole Edmond, executive director of Teddies, the chain which was bought by BUPA Childcare, adds that it launched a review to look at re-branding. 'We spoke to staff and customers. The staff felt they had been a part of the decision-making process. There was a lot of staff support for retaining the Teddies' name.'

The Teddies nurseries are encouraged to enjoy local autonomy but with the knowledge that they are part of a bigger picture and have the back up of BUPA in terms of administration and training resources.

Mr Woodward adds that the key to a successful integration is good communication. 'You need to be absolutely up-front and honest. The people with the greatest concern will be the staff and you need to inform them. If you are going to make a change tell them. If you are not going to make a change tell them that too.'

All the Kindercare staff were given an information pack about Busy Bees, while the Busy Bees staff were given information about the acquisition and the company's future plans.

Parents too have to be kept informed. Ms Carr explains that staff and parents need stability when a merger occurs. 'Parents who use a facility of ours do so because they want to use that particular facility and what they are interested in is that the standards there are maintained and that the staff continue to work there providing a high standard of care. They are not interested in the bigger picture.

'You have to remember that and not rush in and change everything for change's sake, which is not a good idea. This all only happened in July so we are very much in the early stages. I think we have been fairly successful because we haven't tried to make too many changes too soon.'

An acquisition is an opportunity to share best practice so all parts of a company can benefit. Ms Hay says Kinderquest's greater experience in after-school provision is being shared with the rest of the chain, while Nurseryworks' back-up childcare scheme is being rolled out to Kinderquest.