A Bankers Perspective – securing funding for growth

Setting the Scene Nursery Sector remains highly fragmented has already seen large a number of transactions which have involved consolidation in the Sector. Most nursery businesses remained resilient in the economic downturn. Sector is generally viewed positively by both investors and lenders. Positive economic outlook

Character of the existing business – internal analysis Management Track record Blend of skills/ succession planning. Structure and systems Head office support or management on site? How is performance analysed internally? What skills are outsourced? Culture Management style How satisfied are your employees? Good childcare above profit? 3 | Barclays presentation title | 30 January 2012

Character of the existing business – external analysis Trading activity Evidence that your business is reputable and sustainable.  Financial: Management accounts, audited accounts, KPI’s.  Operational: Ofsted reports. Industry outlook/competitive positioning Historic impact of downturn. Government policy/support. Regulatory changes Existing supply in relevant areas. Fee rates/Ofsted ratings vs key competitors. Why would a parent choose your nursery? 4 | Barclays presentation title | 30 January 2012

Position the opportunity with your bank Key areas to cover: Is it an acquisition, a new development, or an extension? How does this opportunity compliment your existing settings? Track record/reputation of target? Source of introduction to the opportunity? Rationale for sale of target Projected costs/purchase price & proposed funding sources. How does the opportunity fit into your wider strategy?

Financial analysis Focus areas for your bank will include: How your financials/KPI’s benchmark against your peer group. Trend analysis over the past three years. Forecasts and assumptions underpinning these. Sensitivities. Free cash flow analysis. Ability to repay. Accounting policies Breakeven analysis. 6 | Barclays presentation title | 30 January 2012

Integration plan – share it with your Bank! Key areas to cover: How do you intend to integrate the company? Have you developed a 100 day plan? Operational assumptions? How will progress be monitored? Is any extra resource being taken on for the integration process? 7 | Barclays presentation title | 30 January 2012

Due Diligence Valuation  Has the vendor prepared a valuation that could be shared with the Bank?  Valuation addressed to the Bank will also be required. Financial  Appropriate for larger M&A transactions.  Independent review of information supplied by vendors.  Highlights key risk factors/red flags.  Sensitivities Legal  Highlight key legal risks.  Corporate structure/legal title to property.  Employment matters 8 | Barclays presentation title | 30 January 2012

Debt quantum Your Bank will typically consider the following factors: Size/profitability of your business Value of freehold assets Availability of the assets as security. Level/sustainability of cash flow Company’s ability to scale Company value 9 | |

And finally – some other tips to keep your Bank happy Offer to take your Bank manager to visit your nurseries Provide your Bank with regular and clear management accounts. Prioritise good childcare over profit Regular dialogue/communication. Be transparent 10 |