How Much Is My Childcare Business Worth?
As an early education owner, knowing the value of your school is mission-critical.
Without a solid handle on the worth of the organization you’ve so lovingly built, you’re missing critical information that can help you make sound decisions about reinvesting in your business, planning for growth, or maximizing your value when you’re ready to find a successor.
Calculate Your Value
In the early education industry, the starting point for business valuations is a calculation that multiplies the business’ EBITDA by a “multiple.” An estimated business value is derived from this formula.
EBITDA x Multiple =
Est. Childcare Business Value
Keep in mind, valuations are an art and not a science! Many factors have the potential to influence a valuation, including an understanding of potential buyer operations and growth objectives.
Get a Free, Confidential Valuation
Valuations that involve real estate ownership or larger ECE schools can get complicated quickly. If you own your school’s real estate or a multi-site company and are interested in receiving a custom valuation, please reach out and one of our advisors will be in touch!
For 20+ years, HINGE Advisors has set the gold standard for early education business valuations that are trusted by industry leaders, buyers, and investors.
EBITDA
To determine the value of your early education business, first calculate your school’s annual earnings. Keep in mind that historical profits and expenses are not always accurate indicators of future earnings and expenses.
To estimate projected annual future earnings, commonly referred to as Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA), begin with your annual net income. Start with the most recent 12 months of adjusted earnings. Adjustments are then made which could include removing owner personal expenses, adjusting rent and/or property taxes, projecting ramp up of new schools, etc.
$100,000
$5,000
$20,000
$10,000
$365,000
$XXX,XXX
$500,000
Net Income
Plus Interest
Plus Taxes (Income)
Plus Depreciation
Plus Owner Expenses
Plus/Minus Other Adjustments
EBITDA
Wondering what your early education real estate is worth? Request a Free Valuation!
Multiple
A multiple represents the number of years it will take a buyer to recoup their investment in the business. This number varies based on factors such as market, leadership, quality of real estate, private pay versus subsidy tuition, and growth opportunities. Multiples follow the level of EBITDA. For example, if your EBITDA is $500,000, your multiple may be 6x or 7x. That means your school would be worth between $3,000,000 and $3,500,000.
EBITDA of $500,000 x Multiple of 6 = $3,000,000
EBITDA of $500,000 x Multiple of 7 = $3,500,000
Getting the Most Accurate Value
If you’re serious about exploring growth or selling opportunities, the best way to get the most accurate valuation of your business is to work with a seasoned, industry-specific partner like HINGE Early Education Advisors. Our team of ECE financial analysts carefully analyze various data points, including Profit & Loss statements, tuition rates, and a variety of expenses, as well as industry trends and local market conditions. Using this analysis, we create competitive, robust valuations that owners can use to make strategic decisions about the future of their organizations.
If you own your center’s real estate or a school with multiple locations and are interested in receiving a confidential, no-obligation valuation of your early education business, get in touch!
Request a Confidential Valuation
We specialize in selling early education and swim school businesses and related real estate for owners with cashflows starting at $100k. Our expertise ranges from single locations to large multi-site organizations looking to exit or partner with an investor. To see if you qualify for a free valuation (even if you’re not ready to sell), please fill out the form below and one of our advisors will be in touch.