Owning an early childcare education (ECE) service can be a rewarding business opportunity. But when it comes time to sell or purchase a service, the process can be complex and challenging. An ECE service change of ownership isn’t just about transferring a business. It’s about ensuring continuity of care, preserving the service’s culture and maintaining strong relationships with children, families and staff. Let’s explore the key steps and considerations involved in a successful ECE service change of ownership, including how software can help with a smooth transition.
The current ECE landscape
The ECE sector plays a critical role in children’s development, with Te Whāriki, the national early childhood curriculum, placing a strong emphasis on holistic learning and child wellbeing. The sector is diverse, with over 4,500 early learning services across the country, ranging from small community-run centres to large multi-service providers. Recent trends, such as increased demand for flexible childcare options, government funding changes and a focus on high-quality early education, are driving changes in ownership as operators seek to expand, retire or consolidate their businesses.
ECE service change of ownership—legal and regulatory considerations
An ECE service change of ownership involves navigating various legal and regulatory requirements. New owners must ensure they meet the Ministry of Education’s licensing criteria, which include
- Maintaining staff ratios and qualification levels as set out in the Education (Early Childhood Services) Regulations 2008.
- Complying with health and safety obligations to create a safe learning environment.
- Undergoing regular assessments by the Education Review Office (ERO) to maintain service quality.
- Understanding obligations related to Pay Parity and wage requirements, which impact staffing costs and retention.
Additionally, transferring an ECE licence can be a lengthy process, often requiring significant documentation, inspections and background checks. Prospective owners should also consider the impact of the Vulnerable Children Act and ensure all staff have appropriate police vetting and child protection training.
Financial and operational due diligence
Before completing your change of ownership, conducting thorough financial and operational due diligence is crucial. This includes
- Reviewing financial statements, cash flow projections and tax records.
- Understanding occupancy rates, waiting lists and community demand.
- Assessing the physical state of the premises, including lease agreements and potential property maintenance costs.
- Evaluating staff turnover rates, wage structures and employee contracts.
Conducting a detailed financial review helps ensure the business is financially viable and free from hidden liabilities. This stage also provides an opportunity to assess the service’s growth potential and identify areas for operational improvement.
Communicating with families and staff
While the legal and financial aspects of the change of ownership are vital, other crucial things must be addressed. Clear, thoughtful communication is essential during an ownership change. Families and staff are the heart of any ECE service, and maintaining their trust is crucial for a smooth transition. Here are some key strategies.
- Early and transparent communication—Announce the change of ownership as early as possible, providing clear and consistent information about the process and timeline. Use multiple communication channels, including newsletters, in-person meetings and digital platforms, like Discover by Xplor, to ensure the message reaches everyone.
- Addressing concerns—Understand that change can be unsettling for families and staff. Be prepared to address common concerns, such as staff retention, continuity of care and the service’s long-term vision.
- Highlighting the benefits—Frame the change positively, focusing on new opportunities for growth, potential improvements in resources and ongoing commitment to quality education.
- Personal touches—Host welcome events for the new owners, such as morning teas or open houses, to build personal connections and reinforce the sense of community.
- Regular updates—Keep communication open throughout the transition, providing updates as milestones are reached and encouraging feedback to address emerging issues.
Integrating technology for a smoother transition during an ECE service change of ownership
Technology can play a significant role in streamlining the transition process. Using a student management system (SMS), like Discover by Xplor, can help in several ways.
- Data management—Ensure a seamless transfer of digital records, including child enrolments, attendance histories and billing information.
- Staff and parent portals—Platforms like Discover by Xplor help you communicate clearly with families and staff, ensuring important updates are easily accessible.
- Financial oversight—Xplor Pay by Debit Success also helps you simplify financial management with integrated invoicing, payment reminders and real-time reporting.
- Compliance and licensing—Keep track of staff qualifications, safety checks and licensing requirements to maintain compliance during the ownership change.
- Building a digital community—Leverage digital tools to build relationships, share updates and foster a strong sense of connection during the transition period.
Discover by Xplor can help with your ECE service change of ownership—but you need to let us know early
Whether your service is currently using Discover by Xplor or you will be using it after the change of ownership, we’re here to help. There are three scenarios for a change of ownership, and we can help with all of them.
- The current owner is using Discover by Xplor, and the new owner wishes to continue using Discover by Xplor.
- The current owner is not using Discover by Xplor, but the new owner wishes to start using Discover by Xplor once they complete the change of ownership.
- The current owner is using Discover by Xplor, but the new owner wishes to use another SMS.
Discover by Xplor has processes in place to assist with all three scenarios—but these processes take time.
How much advance notice is needed to ensure I can start using Discover by Xplor once the change of ownership is complete?
Typically, we require at least two weeks’ notice to copy or “migrate” data to a new Discover by Xplor system. But the more notice you give, the more likely Discover by Xplor will be able to accommodate your data migration and onboarding to align with your timeline. Migrating to or from a different SMS will also take at least two weeks, but again, more notice is better.
A change of ownership is busy and stressful enough without worrying if your SMS will be ready and your staff will be comfortable using it. The earlier you notify Discover by Xplor, the more time we’ll have to assist with your change of ownership, the calmer the migration will be and the better we’ll be able to set you up for success.
If you’re considering an ECE service change of ownership or want to learn more about how Discover by Xplor can help you simplify and streamline the running of your ECE service, please get in touch. We’d love to chat.
Dean Comeau
Marketing Team Lead
