4 Ways to Grow a Multi-Site Business While Protecting Core Values with Clare Roberts

0:01This episode is brought to you by Dealroom, the only M &A platform for buyer led M &A. If you're running multiple deals a year and still relying on legacy VDRs and generic project management tools, you're not just wasting time, you're overspending. Teams using Dealroom see a 40 % reduction in execution costs. Thanks to built-in diligence workflows, easy permissioning, and automated task tracking, it replaces multiple tools, your VDR, your PM software, and even a bunch of spreadsheets with a single source of truth for the entire deal lifecycle. You'll also save hours on contract review with AI that pulls key terms and risks automatically, helping you move faster and more confidently.

0:45M &A is hard enough. Dealroom gives you the structure, automation, and visibility to do it right without blowing your budget. Check it out at dealroom.net or tap the link in the episode description. Here's to the deal. I'm Kisan Patel and you're listening to M &A Science, where we talk with deal professionals and learn valuable lessons from their experience. This podcast focuses on stories, strategies, and what actually happened during M &A deals.

1:25Hello, M &A scientists. Welcome to the M &A Science Podcast. This podcast is part of a mission to rethink how M &A is done. The old school satellite approach, it's dead. Fire-led M &A is all about strategy, alignment, and efficiency. And let's be real, it's not about just closing the deal, it's about making it successful. We uncover what truly works in M &A by learning directly for the best. For episodes, resources, and tools to elevate your M &A game, visit mascience.com. Follow us on LinkedIn. I'm your host, Kisan Patel, founder and CEO of Dealroom and chief scientist at M &A Science. Joining me today is Claire Roberts, OBE, founder and CEO of Kids Planet, a rapidly growing childcare company with 225 nurseries across the UK.

2:14Claire started the business in 2008 and has since scaled it through strategic M &A and greenfield development. She's also a brand ambassador for Girls Out Loud, advocating for the empowerment of young women. Today, we're going to talk about balancing organic growth with M &A, managing relationships with sellers, and building a scalable business while preserving core values. Claire, thank you for taking the time from running a big business and doing deals to have a conversation with me. Not at all. Thanks very much for having me. Can we kick off with a little bit about your background? I originally am an IT graduate, but I did my degree prior to the internet really launching properly.

2:55So my degree was becoming outdated as I was studying it with technology moving forward. I ended up in various sales careers, first of all, in recruitment for a number of years. And then I was in the pharmaceutical industry for about seven years prior to becoming pregnant with my oldest daughter, who's now 17. I took voluntary redundancy, as you do when she was five weeks old as a baby, and decided that I was going to try something really new and different. And I needed to find a nursery and hadn't been able to when I was pregnant. And I decided that I was going to basically buy a nursery and operate my own nursery to fulfill my own childcare needs, but hopefully to help other people who were having the same struggles as me on the journey of trying to find childcare and balance work as well.

3:45But it's a good place to stop because I want to like get the full story. I got to ask, what's the OBE by your name for? It stands for Order of the British Empire and I was awarded it for services to education in 2022. So I was awarded it by the Queen in her last honours list. And then I was actually given it by the King at Windsor Castle and I took my three daughters to come and watch me receive that. That's awesome. I got to ask, you know, because we're Americans. Yeah, yeah. It's part of the award system that's in place in the UK. And it's one of those things that you never really think about until someone tells you that you've been nominated and you're being awarded one.

4:26And then you're like, oh, that's quite special. But no, I was thrilled. It was a real privilege and an amazing experience. Awesome. That's really impressive. Let's do some storytelling. Okay. I want to build a story on this. It's really unique and interesting. You were pregnant. You couldn't struggle finding the right nursery. Yeah. Somehow you said, hey, why don't I just buy the nursery? Yeah. So I live in a village which is in between Manchester and Liverpool, sort of right in the middle. I was pregnant and like many people was thinking, how am I going to carry on doing the job, which I've loved for many years, and make sure that my child's being well looked after and that it works for me and her dad.

5:08I looked all around and part of the problem that I came to was that where I lived, nothing was particularly flexible and it was all geared at dropping off at the earliest at 8am. Now I was on the road every day before half seven. So already I was starting to think this sounds like a nightmare. I came to the conclusion that lots of people, and I saw this through friends who'd had children, People really struggle to try and find that way to go back to do a job, but also to make sure that their most treasured possession, which is their child, is well looked after in the right environment that's of a high quality standard.

5:46I got to the point where I had Izzy she was five weeks old and my company went through a restructure and I basically on a Friday spent the weekend talking to my husband at the time saying I'm going to take voluntary redundancy and absolutely that was not something that had ever been on my agenda at all but I think I just realized that I was facing an impossible task of not having child care that was going to work for me and I was going to go back to work and really struggle. But the problem was, like many people, we'd bought a house relying on two people's incomes. So it wasn't as simple as sit at home and look after the baby and don't do anything.

6:26I had to go to work. And I was a bit like, well, actually, do you know what? If I'm struggling to find this, other people must be as well. So why don't I look and see whether I can find a nursery and buy that. And basically, that's where it all started from. What was lucky, I don't really know whether it was deliberate. It certainly wasn't deliberate in my mind at the time. I ended up with my dad buying two nurseries in the very beginning. He may say now, if he's asked, that he deliberately wanted us to buy two nurseries. I don't know. I've not actually asked him. I should do really. But that was a really important factor because really quickly, we were a group.

7:07Sometimes with business, if it's particularly multi-site businesses, you get so absorbed in the day-to-day of things in one setting that you can't get out. If that makes sense in terms of seeing it from the growth element. So I suppose I know no different than having been very quickly a multi-site business. Well, two sites to start with. You started with the two sites, so it already gave you that thinking like, hey, we basically have a platform. Yeah. And obviously that taught me from day one that integration was key and having two separate nurseries doing totally separate policies and processes, etc.

7:46You have to have a common ground for that to make it work. So I suppose I learned that just naturally as I started. And for me, that's really been part core basics and the values as we've grown and progressed and moved forward. How did you put the money together? Private at that point? Yeah. So initially, it was through private investment. So my dad and I founded the company together. He had some money. He was prepared to invest that money into the business. And that's how we started. Could I have gone to a bank? Possibly. But I think once I decided to do it, it was quite a quick decision and we needed to go and move forward with it.

8:27When I look back, It was a bit of a whirlwind, really. Literally within six weeks of starting, a health clinic came up for sale in the village that I lived in. And I was like, this is a no brainer. This is my answer to a nursery in the village, which is what started all of this in the first place. Within six weeks, we'd already decided we were going to the third setting. setting. And obviously that was a building conversion, which then brought me into the development side and the creation side of doing a greenfield site. Was that the first, I guess it was a timeframe. So we started in September 2008.

9:04By the end of October 2008, we'd agreed to buy a clinic in the village where I lived that come up for sale. Third one. Yeah, third one. By September 2009, we'd got a builder, we'd developed that building into a nursery and we'd actually got a fourth one. So within 12 months, we had four. Wow. so really so at some point as well probably should add in i had at some point in life a five-year-old a two-year-old and a baby so in the first sort of five years of kids planet i had three children i always joke and say that growth was able to escalate once i'd stopped having children so we probably grew on average uh i about two nurseries a year for the first five years that That was genuinely just being real.

9:52I think when you're an entrepreneur and you're a female and you're having children, there are natural distractions that halt your ability to scale. And that was probably mine. Then I saw Kids Planet being my fourth child managed to escalate further once I stopped having babies. When did you get to the point when you started working with institutional or private equity investors? We got to the point in 2016 where we had 15 nurseries at that point. The blend was probably about 50-50 of nurseries that we'd acquired or buildings we'd converted or buildings we'd built from scratch. And we had other properties that we owned that we were either going to develop and build from scratch again or convert.

10:42We decided to bring an investor in, really, because by that point, we'd got bank funding But in order to escalate the growth faster, we needed to bring in a partner who would invest more cash into the business and stop that looking like a three to five year plan and actually rapidly scale it up. BGF, which stands for Business Growth Fund, they're a minority investor internationally now, but they started in the UK. They invested a minority stake in the business when we had 16 nurseries and grew from there really. Is that the only private equity that you've worked with? BGF invested in August 2016.

11:20They're still partially invested, as in they rolled in when we did our next round of raising finance. It's Fremen International, who are our main investor now. They invested in November 21. At that point, we had 82 nurseries. So we'd grown over that five-year period significantly. Obviously, as well, remember that during that period of time, COVID happened as well, which threw a few bumps in the road for us. We probably had a period during COVID where there was about 18, just maybe just under 18 months where we didn't do any acquisitions or grow. Oh, wow. Even with that, you're still doing good with over time today.

12:05But you know, in some ways, when I sort of look back, obviously no one would wish a global pandemic on anyone's business. it's not ideal but actually that pause was fundamental for us because we'd got to a scale just before COVID of having 52 nurseries it enabled us to sort of look at what we'd done and really reflect on the structure and the infrastructure and put in place what would be definitely more stable foundations for escalating and making that growth more rapid and that definitely helped us. It wasn't obviously deliberate, but sometimes things that happen give you that time to sort of pause and reflect and become stronger.

12:47Yeah, that's a good point. That's a good point. Take advantage of the downtime. The P firms working with them, are you got any key lessons in terms of working with the right partner? It's really important that you do your homework during any process. You have to see P as a partner because I think that's key. It is a partnership. you're all invested in the same company. And if you don't see it like that, it's like any relationship, you've got to work on it and make sure that you're all supporting each other in the right way. BGF were a minority investor, and they tended to back the entrepreneur and allow them to sort of run with what their sort of growth strategy or plan was.

13:29When Fremden came and invested, they were really looking at scaling at the next level. and I would say that they were a lot more involved in terms of helping us think and reflect on the structure and the strategy as we move forward. It's really important that you recognise the value of what a PE investor is going to bring to you because obviously someone in your business, if they're going to be involved, you need to make sure you're utilising and getting the best out of their skills and expertise as well. For a CEO and a founder, you have to recognise the value that they're adding and see it as that partnership because if you don't it's quite difficult if people come into your business and have opinions and ideas of direction and things you got a good point so it's beyond the money everybody's got money and that's something i've been looking at too is like how well can they support your growth yeah see when mna is going to be instrumental yeah how do you think that actually panned out i feel like you get the pitch a lot but then does the road when they actually work with you for us it did really work out we've gone from today 82 nurseries to 225 at the moment which obviously that's pretty rapid growth in over three years for us it was helping us look at things from a technology and data point of view really differently when you scale knowing the detail in your business and sharing that data and being able to make sure you can unpick what's going on across multiple sites and locations but actually using it in a really sensible way to inform decisions is key.

15:06And you can't know what you knew about 10 settings when you've got 225. It's been fundamental to us, that investment in the platforms and the technology that we use across the business. And also in terms of the key personnel. Like obviously when I founded the business, I was doing loads of different roles at various points. And I think it's really important as you scale that you bring in the right expertise to come in and support you because you're a CEO. You're not supposed to be a superhero being able to have all the knowledge for everything as you grow. Really good point. Let's talk about deals.

15:45I'm curious when you find an opportunity, what are you looking for? How do you know this is going to be a good fit culturally or does anything go? What's the criteria that you know this is going to fit your platform? So for us, we've grown in quite a controlled way geographically. So one of the things that's key is having the right support structure to that growth. So I know when things were stretched for me in terms of the direct reports to me, and it's been really important as we've scaled up that platforms in place. So a lot of it has been around location and making sure that we've not just randomly picked places that are hours away from each other because people don't support businesses in the right way when it's too far away to be able to have that direct contact.

16:35We look for either single setting acquisitions or small group acquisitions where people have good quality asset. For us, really, with a nursery, ideally, it would be a nursery that's over 50 places just because of terms of the scale. if it's much smaller it doesn't really make sense and it's making sure that we can support them and add value in bringing them as part of the kids part family but also that they're already on the way with our journey and they've got the same to a certain degree they don't have to have the perfect culture or perfect value alignment but they need to share the fundamentals of wanting to deliver a high quality child care having good people a decent management team and then we support them and integrate them and i refer to our nurses as a family and that might sound really cheesy but for me that's how i see it it's really important that people feel that they're part of something special and they get that magic and they get what our values are and they don't feel that we've they've joined a sort of cold corporate because ultimately we're providing a service to people's most treasured possession.

17:47We shouldn't ever take that for granted. You need to have the right people. People are key in our business. We employ nearly six and a half thousand people. So people are fundamentally the key to delivering our brand and what our offering is. Okay. Culture is a big element. Let me even back it up a little bit of the whole process. I feel like you look at the data, you have some general criteria on demographics and location and stuff. So genuinely, we don't really have to go out looking for these acquisitions. There's enough acquisitions that we can grow through people who are coming to market, through people who approach us directly.

18:29I think this is quite important in an M &A business. There's loads of things that CEOs can do to promote their brand and make them known in their sector that actually later on, if they're looking to grow, can add real long-term value. We get about a third of our acquisitions as direct approaches to us. People who are looking to sell that come to us and want us to be the buyer or acquirer. Just because you have a good reputation? What you see is what you get. I think it's really important that in any business you have someone who's the sort of figurehead in that business and that they talk and articulate what's important.

19:07And for me, I'm really honest and I've done lots of talking in our sector. and that's important because people don't go into child care because they don't care about it people really care about what they're doing so it's really important obviously money is a fact of course it is but it's really important as well that they get the right person take on their legacy and that's really sort of key you invest your love your time and your efforts over the years into your business and you yes you want to do well at the end of it and do whatever you want to do next. But you also want that legacy to continue and to be left with a safe pair of hands.

19:46And obviously, my job and our team's job is to make sure that they recognize that we are that chosen person or people to look after their business. Yeah. So it sounds like now you got a big reputation. What about backing up to maybe in the earlier days when you didn't have that? What was the approach? I did all our M &A visits and everything. My dad's an accountant. My dad would look at the numbers and make sure that they seem to stack up. I would do the visit. I would talk to the owners. I would meet team. And I did that till we had 82 nurseries. Teach me. What's the approach? It's about being personal.

20:29It's about talking about what... What does that look like? Is it a phone call? Is it an email? No, no. I used to spend my evenings and weekends traveling throughout the country, visiting nurseries when they were closed and meeting owners. You can look at Ofsted reports, which are our regulator. You can look at numbers. But really, the only way to go and tell if you want to do something is to go and look around them. And that's what I'd do. I'd meet the owners. I'd ask them questions. You'd show up unannounced. You'd have made appointments and done that. And you'd have made an arrangement. What does that look like, though?

21:01So what's the message to get them interested to want to visit with you? So these visits that I'd have been doing would have been people who'd already gone through a broker and wanted to sell their businesses. So they'd already decided that they were going to sell. So the message is exactly what I'm talking about. It's about talking about our values, our culture, how our colleagues are the most important resource that we have, how we invest, what our support structure is, what the opportunity is for people in terms of career progression. and they're all the things that I'd talk about and make sure that they felt comfortable with.

21:36It's really important as well as a founder that they hear that message and it doesn't become diluted. But I think there was a lot of homework that we do before we get to the point of doing a visit, where almost by that point, unless there was something really fundamentally wrong during the visit or someone told you something, it was something you were really interested in and wanted to do. The other thing that we've always had a reputation of as a company, which I think is really important, is if we say we're going to do something, we deliver on it. Unless there's some real sort of unexpected things that come out during due diligence, the offer we make, we stand by and we're not in it to chip people or to undercut things at the last minute.

22:20We're in it to give them a fair valuation for their business and to do it in the timeframe that we agree on. That's really important because people don't want everyone knowing what they're doing as well and don't want failed processes and all kinds of things, which you see quite often in our sector and in many other sectors. A lot of the businesses you mentioned, you'd find them through a business broker. Was that how it started? And then did you do a number of deals just forcing them yourself? A lot have been through business brokers. some have been through tenders where different institutions have reached out to us directly and have asked us to go through a tender process and then we've been awarded either a single site or a group some have been property that's been for sale that have gone to view and then we've worked with a developer who's developed on our behalf and then we've opened nurses from scratch it's been a real blended approach of greenfield development and acquisitions probably more in the last three years people then that know people who we've acquired nurseries from have contacted us directly because it's been on referral and recommendation i get quite a lot of people reaching out to me on linkedin who have heard about us recognize our reputation and think we'd be an easier option to sell to their colleagues as they look to exit.

23:46Well, you got a lot of different areas that you source these deals. What does the terms ultimately look like when you do have this private owner and you're selling? Is it here's a check and you're off to the races? Or are you creating different structures, earnouts, roll over equity, things like that have a template they use? We don't really have earnouts or things like that. It tends to be two ways. Either someone looks to exit totally and we would acquire the nursery and the freehold property. Or, as is quite common more so these days, people might want to sell the business but retain the property and give you the property as a leasehold.

24:29We're sort of open to what someone wants to do in terms of exit with that. But ideally, we always used to have everything as freehold, but it's not always possible to do that. So we're quite flexible in the model. And that's also what enables us to grow at pace because it's not just a one-size-fits-all approach. That's just sounding so easy right now. Like, what's the hard part of doing these deals and working with the sellers? Part is once it's yours and integrating and making sure that... When the deal is easy, it's after... Now, doing the deal isn't easy, but it is if you come to an agreement and people are doing what they say in order to make that process complete.

25:10Once you've completed, the hard part is the integration. And because lots of our nurseries have been single site acquisitions, it's the number of integrations and that process. and making sure that it's personalized, making sure that people get it, making sure it's not just something I say that isn't then delivered by my team beneath me. Let's talk about buyer-led. And this is something I've noticed a big advocate around is that first time you do a deal, it can be very seller-led. Yeah. Let them drive the process. But then as you get your reps in, the process evolves and changes and it ultimately becomes buyer-led.

25:48Love to hear from your view of doing this a number of times. That's true. And how do you see it evolve? It's slightly true. Depends if you end up working with the same lawyers and things like that. You start to know what your points are that you want in a deal to complete. We have set things that we would have as part of our heads of terms. There's lots of nurseries that have been for sale across our sector and probably what our expectations are a fair one. Sometimes for some sellers, they think they might have to hang around for much longer than they actually do post-completion. You need them around for a few weeks in case there's anything that you need to ask them.

26:27But the reality is sometimes it's quite difficult. If a seller hangs around for too long, it is quite awkward because obviously you do need to make sure that you're integrating things properly and make sure that team that's joined you feel that they're part of your culture and your company. And it changes from every deal to the next. It depends how experienced the seller is as well at deals and things like that. You know, that's what I thought the crux of being more buyer led is ultimately being able to better plan integration and execute integration. Yeah. Versus when seller driven, you don't do as much planning or have an opportunity to just fast track timeline to close a deal.

27:11So the reality is the fastest acquisition we've ever done was probably in about eight weeks. The reality is it normally takes three months. Our due diligence process for even single site acquisitions is quite thorough. But the thing that we do that's really important, because particularly for a single site seller, is it's quite a daunting process to go through a sales process, probably with an organization that's the size of ours. So we support them and we try and cut through some of the legal chat to make it as simplified a process as possible. not everyone's as prepared as they decide to sell about what they might need in order to complete that sale so we help them and tell them how we want things to look and be presented and actually that helps us in terms of once it becomes our acquisition we've got a platform to start from of some of the stuff that otherwise historically we might have been creating post-completion wow so you're giving them an idea of how they can prep the company to integrate better And probably a lot of those things are there.

28:18They might just not have the hands on them as easily or as quickly as possible, which for us, that's quite important as we scale. Do you have like an example of something like that? Like of what you would have a company do to... Even like looking at recruitment files, making sure things are organized in the right way. If someone started a business 30 years ago, recruitment would have been different 30 years ago. Whereas obviously for us, when we acquire it, whether they took someone on in 1985 and didn't need references then, that's not that helpful to us as we come in and acquire sort of 40 years later.

28:56So you almost get the seller to do some of that work. That means we don't have to, so that we'd get them to make sure there were references on all the colleagues in every single folder, even if they have to go and get them from somewhere or have to provide statements of employment themselves. Because the world's changed a lot. So you find that when you go through due diligence, it could be really different. We've got people who've worked in nurseries that we've acquired for 40 years. And you joke and they bring out their CVs and they might be handwritten because you didn't even have a typewriter as they applied for jobs and things.

29:30That's some of the sort of more fundamental parts, really. That's really interesting. The other thing is, obviously, for single settings, we have a nursery software platform that we use, which is our registers, our future occupancy, our bookings, everything's on it. Loads of people who have single settings wouldn't have a system like that. It might be done on Word. By getting everything in an organized way prior to completion, it means we've got the visibility really quickly of how we want it to look within our platform. It's things like that that you should try to think. What's your problem after completion on a Friday?