Nursery Business Valuations: What Is Your Day Nursery Worth in 2025?

Nursery Business Valuations in 2025

If you are considering selling your day nursery, understanding the valuation process is an essential first step. Whether you run a single setting or a group of nurseries, the same core principles apply when buyers assess value.

This guide outlines how nursery businesses are valued and explains how owners can prepare to achieve the best possible outcome.

How Are Nursery Businesses Valued?

Day nurseries are typically valued using an earnings multiple applied to EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation). Buyers focus on the underlying EBITDA, which reflects the sustainable profit the acquirer will inherit.

For example, an EBITDA of £500,000 with a multiple of 6x results in a valuation of £3 million.

Most transactions are structured on a cash-free, debt-free basis, and involve a working capital adjustment to ensure the business remains operational after completion.

What Is Underlying EBITDA?

The reported EBITDA figure in your accounts often does not reflect the true earnings that buyers will use. Buyers will assess what they call the “underlying EBITDA,” which includes adjustments to reflect the ongoing profitability of the business.

Common adjustments include:

• Director or shareholder salaries removed if not expected to continue

• Non-business-related expenses such as private vehicles or club memberships excluded

• One-off costs such as professional fees related to refinancing removed

• Pro-forma adjustments to reflect new capacity, such as recently opened rooms or extended hours

• Synergy savings expected post-completion

Establishing a credible, well-evidenced EBITDA will have a material impact on your valuation.

What Affects the Multiple?

EBITDA multiples for nursery businesses in 2025 typically range from 3x to 7x, depending on the nature, scale, and quality of the business. Several key factors influence the multiple applied:

Quality (Ofsted Ratings)

Ofsted ratings are a primary indicator of quality. Nurseries rated “Good” or “Outstanding” tend to achieve higher multiples, while “Requires Improvement” can significantly reduce buyer appetite.

Fee Levels

Higher fee levels generally lead to stronger margins and increased buyer interest. Fees are often linked to the local demographic, the style of care provided, and the setting’s investment in facilities.

Occupancy and Demand

Consistent high occupancy and waiting lists indicate strong demand. Buyers value nurseries with proven ability to fill places and maintain steady enrolment.

Location

Affluent and accessible locations are highly sought after. Proximity to schools, residential areas, and transport links can significantly influence both fee levels and buyer appetite.

Property and Tenure

Freehold nurseries typically attract higher valuations than leasehold equivalents. Well-maintained and recently refurbished properties are viewed more favourably. Buyers will reduce price expectations where investment in catch-up maintenance is required.

Scale

Larger businesses tend to attract higher multiples due to economies of scale and greater buyer interest. This applies to both the number of registered places and the number of settings operated.

Valuation Multiples in 2025

Profile	Example Characteristics	EBITDA Multiple (2025)
Small, single-site nursery	<50 places, North East location, rated Good	2x–3x
Regional group	3 nurseries, 150 places total, all rated Good	4x–5x
Large group	5+ nurseries, South East location, all rated Good or Outstanding	6x–7x

These examples assume a leasehold model. Freehold ownership may command a premium.

What Does Cash-Free, Debt-Free Mean?

Most nursery business sales are completed on a cash-free, debt-free basis. This means the seller retains any cash in the business and repays any outstanding debts before completion.

A working capital adjustment is also applied. This ensures there is a sufficient level of cash in the business at the point of sale to support day-to-day operations.

Buyers typically compare current working capital against historical averages to calculate this adjustment.

Considering a Sale?

Understanding how nursery businesses are valued is the first step toward preparing for a successful exit. Sellers who present a clear, defensible EBITDA figure and address key value drivers early in the process tend to achieve stronger outcomes.

Eclipse Corporate Finance specialises in advising nursery owners on sales, whether of single settings or larger groups. Our approach is personal, confidential, and focused entirely on helping founders achieve clarity and value.

If you would like to understand your nursery business valuation or explore your options for sale, we are here to help.

Further details on how we can support you in selling your business can be found by following the link below.

Day Nursery Sales