Operating businesses
How to Sell a Preschool or Private School
The short answer
Preschools, private schools and tutoring businesses typically sell for around 3 to 5 times earnings before interest, tax, depreciation and amortisation, with the property valued separately when it is owned. Enrolment is the number that matters most: a school at capacity with a waiting list and re-enrolment above 85% sits at the top of the range, while one with declining enrolment, a licensing issue or a director who is also the owner sits at the bottom. Licensing transfer usually sets the timetable for the whole sale, so it should be planned for from the start.
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How schools and childcare centres are priced
Buyers work from earnings before interest, tax, depreciation and amortisation, after normalising for the owner. That last step is critical in this sector because so many owners also serve as the director, the administrator or a teacher. If you fill a role the buyer will have to hire for, the cost of hiring comes off the earnings before the multiple is applied.
The multiple then reflects the stability of enrolment, the strength of the licence and reputation, and the quality of the leadership team. A school that runs day to day under a qualified director who intends to stay is worth considerably more than an identical school where the owner is the director.
If you own the building, it is appraised separately and added on. For many suburban preschools the property is a large share of the total, which also means the buyer pool includes people interested primarily in the real estate.
Enrolment, capacity and the waiting list
Buyers want enrolment by month for at least three years, along with licensed capacity, so they can see utilisation rather than a single headline number. A centre licensed for 120 children and enrolled at 112 is a different business from the same centre enrolled at 74, even if this month's revenue happens to look similar.
Re-enrolment and retention tell the deeper story. In a preschool, families age out naturally, so a healthy centre needs a steady intake of new younger children. In a private school, the year-on-year re-enrolment rate is the clearest signal of parent satisfaction, and buyers will ask for it by grade.
A waiting list is one of the most persuasive assets you can present, because it shows demand beyond current capacity and gives the buyer a path to growth without marketing spend. Document it properly — names, ages, requested start dates — rather than describing it in general terms.
Licensing, inspections and accreditation
Childcare and private education are licensed and inspected, and the record is the first thing a buyer's advisers will request. Expect scrutiny of your licence status and capacity, inspection reports and any citations, corrective action plans, and staff-to-child ratio compliance.
Licences generally do not transfer automatically. In most jurisdictions the buyer must apply for their own licence or a change-of-ownership approval, which can involve background checks, facility inspection and director qualifications. That process, not the financing, is usually what sets the closing date.
Accreditation and any state quality rating add value where families and funding programmes recognise them. If you hold one, confirm what happens to it on a change of ownership, because some accreditations require reapplication and buyers will want to know.
Staff, ratios and the director question
Staffing is the largest cost and the tightest constraint. Buyers will look at teacher tenure, credentials, wage rates against local competitors and how much you rely on substitutes. High turnover shows up in parent satisfaction long before it shows up in enrolment, and experienced buyers know to look for it.
The director is the pivotal role. In most jurisdictions a qualified director is a licensing requirement, so a buyer who does not have one lined up cannot open the doors. If your director is a long-tenured employee who plans to stay, that is a substantial part of what you are selling, and it is worth having a conversation with them well before you go to market.
If you are the director, plan for it. Either hire and qualify a successor in advance, or expect to stay on through the transition and see the cost of your eventual replacement deducted from earnings.
Tuition, subsidy funding and the revenue mix
Buyers examine tuition rates against local competitors, when you last raised them, and how increases were received. Schools that have not raised tuition in several years are usually under-earning, and since the price is a multiple of earnings, correcting that before a sale has an amplified effect.
Government subsidy and voucher programmes are common in childcare and shape the risk profile. Subsidised enrolment is real revenue and often very stable, but the rate is set by an agency rather than by you, and payment timing can be slower. Buyers price a subsidy-heavy centre a little more conservatively than a private-pay one.
Additional income lines are worth breaking out: registration fees, before and after care, summer programmes, meals, enrichment classes and transport. These often carry good margin and owners routinely undersell them in the story they tell buyers.
The building, the playground and deferred work
Facilities are licensed, so condition is not just cosmetic. Buyers and inspectors look at square footage per child, playground safety and fencing, bathrooms, fire and safety systems, and the general state of the building. Deferred maintenance can affect the licence itself, not merely the price.
If you lease, the lease is central. A childcare centre cannot easily relocate — families choose it partly for the location, and a new site needs its own licence — so a short remaining term with no options is a real problem for a buyer and will be reflected in what they offer.
If you own, decide before you go to market whether you intend to sell the property, lease it to the buyer, or sell to two different parties. Each choice attracts a different set of buyers and changes how the transaction is structured.
Tutoring and supplementary education businesses
Tutoring businesses are valued on the same earnings basis, generally at a similar or slightly lower multiple, and the key drivers are different. Recurring enrolment on subscription or term-length packages is worth much more than hourly ad-hoc sessions, and centre-based operations with their own premises tend to be valued above purely mobile or online models.
Franchised tutoring centres come with their own considerations: the franchisor must approve the buyer, the franchise agreement's remaining term matters, and any transfer fee or required renovation reduces net proceeds. Read the agreement before you plan the sale.
Owner dependence is often extreme in tutoring, because families frequently choose the person rather than the brand. If you personally teach the higher-level sessions, expect that to be treated as a significant risk and to be asked to stay through a transition.
Preparing the sale
Assemble three years of financials with owner add-backs identified, monthly enrolment against licensed capacity, tuition schedules and increase history, and revenue split between private pay, subsidy and ancillary programmes.
Then the compliance file: current licence, inspection reports and any corrective actions, accreditation, staff roster with credentials and tenure, ratio compliance records, and the lease or property details along with a capital list.
Finally, prepare the people. Enrolment can wobble when a sale becomes known, so plan carefully with your adviser how and when families and staff are told. A confidential process that ends with a well-managed announcement protects the value you have built.
A worked example
Take a hypothetical preschool licensed for 110 children, enrolled at 101, with $1.9M in tuition revenue and $340K of earnings after paying a market salary for the director role the owner currently fills. At 4 times that is roughly $1.36M for the operation, with the building appraised separately if owned. Add a waiting list and 90% re-enrolment and a buyer will argue toward the top of the range; show enrolment sliding for two years and they will argue the other way.
Multiple ranges reviewed September 2026. They are a guide, not a quote or a formal appraisal — see how the process works.
Common questions
Does my childcare licence transfer to the buyer?
In most places, no. The buyer applies for their own licence or a change-of-ownership approval, and that process usually determines when the sale can close.
What is the most important number to a buyer?
Enrolment against licensed capacity, tracked monthly over several years. It shows both current performance and whether the trend is going the right way.
How much does the director matter?
A great deal. A qualified director is usually a licensing requirement, so an experienced director who stays is a major asset. If you are the director, expect the cost of your replacement to be deducted from earnings.
Should I raise tuition before selling?
Usually yes, if your rates are below local market. Higher earnings are multiplied in the price, so the effect is larger than the extra revenue alone.
Is the building included in the price?
If you own it, it is normally appraised separately and added. You can also lease it to the buyer and keep it as an income property.
When should I tell staff and families?
Later rather than earlier, and in a planned way. Enrolment is sensitive to uncertainty, so most sellers keep the process confidential until the deal is close to certain.
How are tutoring businesses valued differently?
Same earnings basis, but recurring packages, centre premises and independence from the owner's personal teaching are what separate a strong price from a weak one.