Selling a day nursery: asset sale with Ofsted registration, TUPE and a lease assignment

At a glance

We acted for the owner of an established day nursery in Leicester on the sale of the business to a new operator. The deal was structured as an asset sale, with the majority of the seven-figure price paid on completion and the balance deferred. Because the seller also held an interest in the property the nursery trades from, the lease was assigned under a separate property transaction. We coordinated the corporate, property and employment work so that everything completed on the same day.

The client and the objective

After many years running the nursery, the owner wanted to sell and move into a different industry. The objectives were a clean exit at a full price, a structure that protected the deferred part of the consideration, and a smooth transfer of the children, staff and Ofsted registration so that the nursery's reputation, and the goodwill the buyer was paying for, survived the change of ownership.

The deal

• Asset sale of the nursery business, goodwill, equipment and records by the trading company.
• The majority of the price paid on completion, with a deferred balance secured by contractual protections for the seller.
• Separate assignment of the lease of the premises, handled by a property solicitor on our side alongside the asset purchase agreement.
• Transfer of the nursery staff to the buyer under TUPE, with an employment solicitor advising on the information and consultation process.
• Buyer represented by its own solicitors; the buyer's due diligence was extensive and took several months.

Key legal issues and how we solved them

Parent contracts that could not be assigned

The nursery's income comes from its contracts with parents, and those contracts did not allow assignment to a new operator. On an asset sale that is a real problem: the buyer is paying for a customer base it cannot simply take over. We built a mechanism into the asset purchase agreement under which the buyer took the economic benefit of the contracts from completion, with an obligation on the buyer to use best endeavours to have each contract novated or re-signed, and clear rules on what happened to fees in the meantime. That gave the buyer the certainty it needed to pay the price and protected the seller from being asked to keep performing contracts after it had sold the business.

Ofsted registration

A nursery cannot operate without an Ofsted registration, and registration is personal to the provider rather than attached to the building. The timetable was built around the buyer's new registration, with completion conditional on it being in place, so that there was no gap in which the nursery could not lawfully open.

TUPE

All staff transferred to the buyer on their existing terms under TUPE. We ran the information and consultation process with an employment solicitor, gave the buyer the employee information it was entitled to in the required form, and allocated liability for pre- and post-transfer employment matters in the asset purchase agreement.

The property

Because the seller had an interest in the building, the lease assignment had to be negotiated and completed in step with the business sale. We ran the two transactions in parallel and made each conditional on the other, so that neither the business nor the premises could change hands without the other.

A long due diligence

The buyer's due diligence was unusually lengthy. On the seller side, our role was to keep the responses organised and consistent, so that the disclosure letter at completion was accurate and the seller's warranty exposure was limited to what had been properly disclosed.

Outcome

The sale completed in June 2026. The nursery transferred to its new operator with its staff, children and registration in place, the seller received the majority of the price on the day and has moved on to a new venture.

What this deal shows

• When customer contracts cannot be assigned, the agreement needs a mechanism, not a hope.
• Regulated businesses such as nurseries, care providers and schools must be sold around the regulator's timetable, not the parties'.
• Where the seller also owns the premises, the property and business deals have to be tied together.