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Potential Deal Breakers

Many deals do not happen even after there is an agreement as to the price, so it is important to anticipate potential deal breakers and prevent them from occurring. Examples include: Continue reading

How to Select a Business Broker?

The right business broker can be very valuable to a childcare center owner in many ways. When selecting a Business Broker, childcare center owners should consider if the broker has the experience, services, and the right philosophy to meet their needs. Some questions to ask, and why they are important: Continue reading

When is the Best Time to Sell your Childcare Business?

I have heard off-the-cuff opinions such as:

  • Only when you get the highest Price.
  • I will not sell unless I get all cash.
  • Do not sell unless you know what you want to do next.
  • Everything is for sale… for the right price.
  • If it is a good business that makes money, then don’t sell.

The above answers just address the price and terms…but there is much more in a childcare business owner’s decision to sell. Continue reading

A bird in the hand is worth two in the bush

If you decide to not sell your childcare center now and instead decide to exit your business later…

Remember that A bird in the hand is worth two in the bush. So, … in other words, a buyer will value any changes that you make that better your business instead of giving the potential buyers the “opportunity to better the business”.

Increase Prices. The opportunity for a buyer to increase prices to the level charged by other competitors is not worth as much as if you successfully increase prices. The reason day care centers charge less then competitors is because with an increase, there is a real risk that the decrease in enrollment

Reduce Labor. Once the children in a room gets to the level for one teacher to leave, have that teacher leave. Do not have them on the clock for another 30 minutes. This can cut labor expenses.

Space Allocation. Once successful childcare operator I know evaluated the capacity of each room and the space allocation of each. He determined that each Georgia PreK program contributed about $20,000 each year to cover overhead expenses. He was to able to inexpensively reconfigure his space to fit one more Georgia PK into his facility without effecting the effective capacity of the other rooms.

Playground. If putting down wood chips costs $1,000 per year, and can increase enrollment by one child, it is worth it.

Improve the Center’s Initial Impression. Some of the items that create a negative first impression by a buyer are: the ceiling and walls are covered by old tape used to put up children art, paint rooms, and center has a lingering diaper smell. This could involve inexpensive things.

Financial record is poor conditions. Clean financial statements. You may have expensed your “vacations” and your meals because your CPA told you that you could if you did a certain minimal amount of business

Increase the ability of a buyer to get a loan to buy your business. The last two years of Income tax returns are the most important to a bank To provide the most loan, banks will want to see at least two years of good

All of these action items are done with successful childcare centers where the Owner is very involved in the business.

Child Care * Real Estate * North Fulton Atlanta

Asking: $1,990,000
Gross: $535,962
Cash Flow: $190,000
FF&E: $124,000 (included in the asking price)
Real Estate: $1,900,000 (included in the asking price)

Business Summary:
This is an excellent opportunity to take over a first class education based day care center in a desirable North Metro Atlanta location. It is a beautiful facility on a perfect, wooded piece of property. There is a lot of room to grow and a new full time active owner could double the cash flow of this business. If you’re interested in growing a day care center, you will not find a better opportunity.
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Daycare/Preschool * North Metro Atlanta * Excellent Franchise

This is an excellent nearly new Daycare Facility in a great North Metro Atlanta location. Everything about this center says “quality”. * The facility is immaculate, the reputation is terrific, the staff is supportive, the playgrounds and equipment are top quality and the classroom programs are geared toward early childhood education. * The center is licensed for 233 children with steady enrollment of around 200. The school handles all age groups from infants to after school. It has 2 Georgia Pre-K programs and 1 Private Pre-K program. * This center is a desirable and well known Franchise operation. * The school is well organized, profitable and has good financial records.

Asking: $399,000
Included in the Asking Price:
Furniture, Fixtures & Equipment: $110,000
Gross: $1,162,075
Cash Flow: $155,112
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This well-established day care is licensed for 200 children. The current enrollment includes 181 children with 126 children enrolled for the full day, 36 in the after school program, and 19 GA Pre-K program children who stay after 3:00 p.m. The center is located on 2.15 acres and includes three buildings with playgrounds and a swimming pool. The center is near four elementary schools. The purchase price includes both the business and real estate.
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This well-established EDUCATION CENTERED day care is licensed for 189 children. The current enrollment is 120 children which includes 60 children with the Georgia Pre-K program and 36 children in the after school program. The center is located on wooded 2.89 acres and includes an attractive 13,600 sq. feet building with well-maintained private playgrounds and a manicured lawn. The center is near three elementary schools and has two vans for transporting children. The purchase price includes both the business and real estate.
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Sales: $500,000
Adjusted Profits: $100,000
Price: $1,100,000
Terms: The new owner will acquire the center debt free and clear of all liabilities.
FF&E: $100,000
Real Estate: $1,700,000

Two years ago this Center was appraised for +$1.7 million. Tax problems are forcing the sale for less then the Appraised Value of the Real Estate. This is an opportunity to take over a very nice school in a very nice location at a very low price. The current owners have not done a good job of managing the business and there are many opportunities to reduce costs, increase tuition and grow the enrollment.
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