If you own a day nursery and are thinking about selling, EBITDA is likely to come up early in the conversation.
It is one of the most common ways buyers look at value. It helps them compare one nursery with another, even when the businesses are different sizes. But it can also be one of the most misunderstood parts of a nursery sale.
The question owners often ask is simple:
“What multiple should I expect?”
The honest answer is that there is no single correct multiple for every UK day nursery. A realistic EBITDA multiple in 2026 depends on the quality of the business, the level of profit, the strength of the management team, the lease, Ofsted history, occupancy, staffing, local demand and buyer appetite.
As a broad guide, many single-site UK day nurseries may sit somewhere around 3.0x to 6.0x adjusted EBITDA, depending on quality and risk. Stronger single-site settings can push above that. Larger groups, well-run multi-site portfolios and highly sought-after settings may attract higher multiples, especially where earnings are strong and easy to transfer.
But the multiple is only part of the story. The real question is why a buyer would pay at the lower end, the middle or the top end of the range.
What does EBITDA mean in a nursery sale?
EBITDA stands for earnings before interest, tax, depreciation and amortisation.
In plain English, it is a way of looking at the operating profit of the nursery before certain accounting and financing costs are taken into account. Buyers use it because it gives them a clearer view of the underlying earning power of the business.
For nursery owners, the key phrase is usually adjusted EBITDA.
This means the profit is reviewed and adjusted to reflect the maintainable performance of the nursery. For example, adjustments may be made for one-off costs, unusual expenses or owner costs that would not continue after a sale.
This is important because a buyer is not only interested in what the nursery made last year. They want to know what it is likely to make after completion.
That is why two nurseries with the same headline profit can attract different values. One may have clean accounts, strong occupancy and a settled team. The other may rely heavily on the owner, have high staff turnover and face lease issues. The EBITDA may look similar, but the risk is different.
Risk affects the multiple.
A realistic range in 2026
There is no official government table for nursery EBITDA multiples. Multiples are shaped by buyer appetite, funding conditions, quality of earnings and the specific risks attached to each nursery.
That said, a realistic working range for many UK day nurseries in 2026 could look like this:
Smaller or higher-risk single-site nurseries: around 3.0x to 4.0x adjusted EBITDA
This may apply where profits are modest, the owner is heavily involved, occupancy is inconsistent or there are concerns around staffing, lease terms or compliance.
Good-quality single-site nurseries: around 4.0x to 5.5x adjusted EBITDA
This may apply where the nursery has steady profit, good occupancy, a clear management structure, positive local demand and a reasonable property position.
Strong single-site nurseries or small groups: around 5.5x to 7.0x adjusted EBITDA
This may apply where the business has higher earnings, strong occupancy, a settled team, good systems and a strong reputation.
Larger groups and premium opportunities: sometimes 7.0x plus
This is more likely where there is scale, strong management, good geography, clean compliance, repeatable systems and clear buyer competition.
These ranges are not fixed rules. They are a guide. A buyer may pay more for a nursery that fits their strategy. They may pay less if the risk is higher than the seller expects.
The multiple follows the evidence.
Why 2026 is not a simple market
The nursery market in 2026 is active, but it is also more selective.
Good nurseries still attract interest. Buyers remain keen on settings with strong demand, stable teams and reliable earnings. But they are also more careful than they were during periods of cheaper finance and looser acquisition appetite.
The wider economy still matters. The Bank of England listed Bank Rate at 3.75%, with inflation at 3.3% and a target of 2% at the time of its latest published decision page. Higher borrowing costs affect how some buyers fund acquisitions and how they assess return on investment.
Inflation also affects nursery margins. The Office for National Statistics reported that CPI inflation rose to 3.3% in the 12 months to March 2026, up from 3.0% in February 2026. CPIH rose to 3.4% over the same period.
Staff costs are also a major factor. From 1 April 2026, the National Living Wage for workers aged 21 and over increased to £12.71 per hour, with other National Minimum Wage rates also rising.
For nurseries, this means buyers are paying close attention to wage pressure, fee increases, funded income and occupancy. A nursery with good EBITDA today still needs to show that its profit is sustainable.
That is why the quality of the EBITDA matters just as much as the number.
What pushes a nursery towards a higher multiple?
A higher EBITDA multiple usually comes from lower risk and stronger buyer demand.
The first driver is profit quality. Buyers like clean, repeatable earnings. They want to see that profits are not inflated by one-off savings, unusual owner decisions or underinvestment.
The second driver is occupancy. A nursery with strong occupancy, waiting lists and steady enquiries feels more secure. It suggests local demand is real and not just the result of temporary discounting.
The third driver is management. A nursery that can run well without the owner is usually more attractive. Buyers want to know who will lead the setting after completion. If the owner is also the manager, finance controller, recruiter and parent relationship lead, the business may feel harder to transfer.
The fourth driver is staffing. A settled team reduces risk. Buyers will look at staff turnover, qualifications, agency use, pay rates and whether the nursery can recruit in its local area.
The fifth driver is compliance. Ofsted history, safeguarding records, staff files, policies and day-to-day standards all matter. A strong inspection record can support confidence, but buyers will still carry out their own due diligence.
Ofsted’s early years inspection guidance applies to registered early years settings in England and the current inspection toolkit page was last updated on 2 April 2026. This keeps inspection readiness firmly on the buyer’s checklist.
The sixth driver is the property. A strong lease, suitable rent, good building condition and room for growth can all help. A short lease, difficult landlord, high rent or major repair issue can reduce appetite.
The seventh driver is local market strength. Buyers will look at demographics, competition, local fees, school-based provision and the availability of staff.
A nursery that scores well across these areas is more likely to attract a stronger multiple.
What pulls a multiple down?
A lower multiple does not always mean a bad nursery. It often means the buyer sees more risk.
One common issue is owner dependence. If the business relies too heavily on the current owner, a buyer may worry about what happens after completion.
Another issue is unclear profit. If the accounts need heavy explanation, or if there are large adjustments, a buyer may become cautious. They may still proceed, but they may not apply the multiple the seller hoped for.
Low or unstable occupancy can also reduce value. Buyers want to know whether the nursery has enough children to support its current cost base.
Staffing pressure is another major factor. High agency use, frequent staff changes or an underpaid team can all raise questions. A buyer may adjust the EBITDA down if they believe wages need to rise after completion.
Lease problems can also affect value. A nursery with strong profits but a short or uncertain lease may not achieve the same multiple as a similar setting with secure property terms.
Compliance concerns can have a serious impact. If there are safeguarding issues, poor records, unresolved complaints or weak leadership, buyers may discount heavily or walk away.
In short, anything that makes future profits feel less certain can pull the multiple down.
Why size matters
Size has a big effect on multiples.
A nursery making £80,000 of adjusted EBITDA and a nursery making £400,000 of adjusted EBITDA may both be good businesses, but they will not usually be valued in the same way.
Larger earnings often attract more buyers. They may also support a stronger management team, better systems and more predictable profits. This can reduce perceived risk.
Small nurseries can still sell well, especially if they are profitable and well-run. But smaller settings are often more sensitive to changes in occupancy, staff costs and owner involvement. Losing a few children or one key member of staff can have a bigger impact.
Groups can attract higher multiples because they offer scale. A buyer may value the ability to acquire several settings, a central team, shared systems and a stronger regional presence.
However, group value still depends on quality. A group of nurseries with weak systems, uneven performance and compliance issues will not automatically command a premium.
Scale helps when it is well managed.
Adjusted EBITDA is not always what owners expect
One of the most important parts of a nursery valuation is agreeing the adjusted EBITDA figure.
Owners sometimes look at their accounts and assume the final profit number will be used. In practice, the figure often needs careful review.
Some adjustments may improve EBITDA. These could include genuine one-off costs, unusual legal fees or certain personal costs that will not continue after completion.
Other adjustments may reduce EBITDA. For example, if the owner works full-time in the business but does not take a market salary, a buyer may include a replacement management cost. If repairs have been delayed, a buyer may factor in future spending. If staff are paid below market level, a buyer may consider whether payroll costs need to increase.
This is why valuation should not start with the multiple alone.
A 5.0x multiple on £200,000 of adjusted EBITDA gives a very different value from a 5.0x multiple on £140,000 of adjusted EBITDA.
The EBITDA figure needs to be realistic before the multiple means anything.
How funded hours affect buyer thinking
Funded childcare is central to the nursery sector, so buyers will look closely at the balance between funded income and privately paid income.
The Department for Education’s early years funding guidance for 2026 to 2027 explains that hourly funding rates vary by age and local authority, reflecting different delivery costs across age groups and areas.
This matters because two nurseries with similar occupancy may have different income profiles. One may have more privately paid hours. Another may rely more heavily on funded places. The margin can be different.
A buyer will want to know whether the nursery is able to manage funded places profitably. They will look at session structures, consumables, wraparound charges, staffing patterns and the local authority rate.
Funding can support demand, but it does not remove the need for margin control.
A well-managed nursery that understands its funded hours position can give buyers more confidence. A nursery that is full but underpriced may not be as strong as it first appears.
The role of Ofsted and inspection history
Ofsted outcomes are not the only factor in value, but they do matter.
A strong inspection history can support buyer confidence. It suggests the nursery has been operating to a good standard and may reduce perceived compliance risk.
However, buyers will not rely on the grade alone. They will look at the detail behind the setting. They will review safeguarding, staff records, training, complaints, accidents, medication logs and leadership.
A nursery with a strong grade but poor internal records may still raise concerns.
Equally, a nursery with a weaker past inspection may still sell if there is clear evidence of improvement. Buyers will look at what has changed, who is leading the setting and whether the improvements are embedded.
Inspection history should be seen as part of the wider risk picture.
Lease and property terms can change the multiple
The property position is one of the most common reasons a nursery valuation changes.
A good lease can support value. Buyers like long enough terms, clear renewal rights, manageable rent and sensible repairing obligations.
A weak lease can reduce value. This might include a short remaining term, a difficult rent review, unclear planning position or major repair liabilities.
If the nursery owns the freehold, the position may be different again. Some buyers may want to acquire both the business and property. Others may prefer to buy the business and lease the premises.
Either way, the property needs to be understood before setting price expectations.
A nursery with strong EBITDA but poor property security may not achieve the multiple the owner expects.
Buyer appetite in 2026
Buyer appetite remains strong for the right nursery.
Settings with good occupancy, clear profits and strong local reputations can still attract serious interest. Many buyers are looking for nurseries where the risk is understood and the opportunity is clear.
But buyers are also more disciplined. They are not just chasing turnover. They want maintainable profit. They want clean information. They want a business that can be transferred without disruption.
This makes preparation very important.
A seller who can present clear financials, accurate occupancy data, staff information, lease documents and compliance records will usually create more confidence.
Confidence does not guarantee a premium, but it helps protect value.
So, what multiple should you expect?
For many UK day nurseries in 2026, a realistic EBITDA multiple may sit somewhere between 3.0x and 6.0x adjusted EBITDA.
That is a broad range because nurseries vary so much.
A smaller, owner-dependent nursery with modest profit may sit towards the lower end. A strong single-site setting with clean earnings, good occupancy and a settled team may sit towards the middle or upper end. A larger group or premium opportunity may go higher if the buyer demand is there.
The key point is that the multiple is earned through evidence.
Buyers pay more when they see lower risk, stronger profits and a clearer future.
How to improve your multiple before selling
If you are preparing for a sale, there are practical steps that can help.
Start with your accounts. Make sure they are clear, accurate and easy to explain. If adjustments are needed, prepare the evidence early.
Review occupancy and enquiries. Buyers will want to see trends, not just a snapshot.
Look at your management structure. If the business depends too heavily on you, start building more responsibility into the team.
Check your staffing position. Reduce agency reliance where possible, keep training records tidy and understand your wage costs.
Review your fees and funded hours. Make sure your pricing reflects the true cost of delivery.
Organise your compliance files. Buyers will expect safeguarding, recruitment, policies, risk assessments and records to be in good order.
Review your lease. If the term is short or there are unresolved issues, deal with them before going to market where possible.
The aim is not to make the business look perfect. It is to make it easy for a buyer to understand, trust and transfer.
Final thoughts
A realistic EBITDA multiple for a UK day nursery in 2026 depends on the strength of the business behind the number.
The best nurseries do not attract better multiples by accident. They usually have strong occupancy, clean profits, stable teams, good leadership, sound compliance and sensible property terms.
A buyer will always ask the same basic question:
“How confident am I that this profit will continue after completion?”
The more confident they feel, the stronger the multiple may be.
For nursery owners, the message is clear. Do not focus only on the headline multiple. Focus on the evidence that supports it.
That is what protects value in a sale.
Thinking of selling your nursery in 2026?
At Abacus, we help nursery owners understand what their business may realistically be worth before they go to market.
A strong sale process is not just about finding a buyer. It is about preparing the right information, presenting the business properly and setting a price that reflects both the numbers and the quality of the setting.
If you are thinking about selling now or preparing for a future exit, early advice can make a real difference.
Sources
Bank of England, Interest rates and Bank Rate: our latest decision (current Bank Rate and inflation context): https://www.bankofengland.co.uk/monetary-policy/the-interest-rate-bank-rate
Office for National Statistics, Consumer price inflation, UK: March 2026 (inflation and cost pressure context): https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/march2026
GOV.UK, National Minimum Wage and National Living Wage rates (April 2026 wage rate changes): https://www.gov.uk/national-minimum-wage-rates
GOV.UK, Early years funding rates 2026 to 2027: easy explainer (funded childcare rate structure and local variation): https://www.gov.uk/government/publications/early-years-funding-2026-to-2027/early-years-funding-rates-2026-to-2027-easy-explainer
GOV.UK, Early years inspection: toolkit, operating guide and information (Ofsted inspection guidance for registered early years settings): https://www.gov.uk/government/publications/early-years-inspection-toolkit-operating-guide-and-information
