To the Point: Nursery Chains

A number of private nursery operators have asked me whether the spate of mergers and acquisitions in our sector is a good or bad development. It is an interesting question.

Busy Bees, one of the country's oldest and most prestigious commercial nursery chains, was sold to an Australian company for around £72m. Barely six months later, Asquith Court was sold to private equity firms for £92m. Now Busy Bees has swallowed up Nord Anglia's day nursery division, making it the largest chain in the UK by far.

Is this a good thing? My personal view is that such changes are, at this stage, certainly for the best. The sector needs proper representation with both media and government, and consolidations go some way to producing meaningful parties to provide that representation.

The usual problem with a large multi-sited business, as compared with the single trader, is in buying power, and consequently the ability to cut selling prices at the expense of smaller operators. The classic example would be contrasting Tesco with the corner shop.

However, whether the newly consolidated nursery companies grow to control 200 or even 500 nurseries around the country, they are highly unlikely to be able to benefit from such size at the expense of local operators. After all, no matter how many nurseries you have, around 60 per cent of fees will go in providing approved staff. Other major expenditures such as rates and other services are unaffected by size issues.

But we should not close our eyes to possible conflicts. While the number of individual nurseries any company acquires is unlikely to have a detrimental effect on the single provider, a consolidation of the 'voucher business' could very well produce unacceptable results.

My financial director often draws to my attention the time we have to wait between providing nursery care and actually receiving clear, unencumbered cash from voucher companies. This cash-flow problem causes great difficulty to smaller chains and lone providers, who could be at further risk if the voucher market consolidated to such a degree that reduced competitive market forces failed to prevent more delays in settling their accounts.

My own view is that we should not worry. The financial sector is quite well controlled where potential monopolies are concerned, and any attempt to benefit in such a manner would, I am sure, be swiftly curtailed.

Finally, a big thank you to all who responded to my request for details of the Nursery Education Grant in your area. There is still time to add to this research sending an e-mail to alan.bentley@childcare.uk.com.

Alan Bentley is chairman of the Childcare Corporation.