Frequently Asked Questions – Childcare Valuations

Have a Question? Read our frequently asked questions below. Still didn’t find the right answer? Give us a call at 770-410-7582 or an email to JayWhitney@ChildcareBrokers.com

  • What is the “Calculation of Value Estimate of the Market Price and Terms”? This “ball park” valuation can be used when a precise valuation is not required. This product is based just on the information provided to us on the “Confidential Business Value Form” and a discussion we have with the client. The “Calculation of Value” report is a one page business valuation report that contains a financial analysis, the estimate of the business’s value, and an explanation of why the center was valued as such.
  • What is the Professional Estimate of the Market Price and Terms? This is a more precise valuation that can be used when negotiating a sale/acquisition of a childcare center. This product is based on all the information provided to us by the client and a discussion we have with the client. The “Professional Estimate” report is a two to three page business valuation report that contains a financial analysis, the estimate of the business’s value, and an explanation of why the center was valued as such.
    • Information to be provided by client for a Professional Estimate of the Market Price and Terms:
  • Why should a childcare center owners thinking of marketing her business use a local broker to market the center, and use Childcare Brokers to prepare the valuation?
    • Most childcare center buyers are local to the center, so there should be a local broker. However, most local brokers will not have an expertise on how to value a childcare business what potential buyers value in a center.
    • The advantage of a local broker selling a childcare center using Childcare Brokers:
      • Objective, 3rd party specialist in the childcare business.
      • The local broker maintains the relationship with the seller, and with the local buyers.
      • Saves both you and the broker time, and helps both make money. If the childcare center is priced too high, both you and the broker will waste time time dealing with buyers that will likely not buy. If the center is priced too low, you will not get a fair price, and the broker will have a lower commission.
  • Do you provide a “certified” valuation?
    • No, the “Calculation” and the “Professional Estimate” are not certified, and we we do not adhere to the strict set of guidelines that the IRS and courts require when “certified”. The estimates of value we provide are based on many years of experience in childcare center sales & acquisitions. It is based market data from current sources and your center’s financial data. It’s part-science, part-art. We understand the business aspects of the childcare industry, and we take the time to understand the childcare center you want us to value.
    • Since the reports are not certified, these reports should not be used when going to court (as in partnership disputes or divorce), or for the IRS for tax implications. A business appraisal meeting the standard requirements for legal disputes will typically cost a minimum of $5,000.
      • If there is a potential for the parties in a partnership dispute or divorce to negotiate an amicable solution, the Professional Estimate can be used as the basis for the negotiations.
  • How can I use the “Calculation” and the “Professional Estimate” valuations?
    • Are you selling your childcare center? The “Professional Estimate” can assist an owner to establish an initial asking price, and acceptable price, for the sale of a childcare center business.
    • Are you buying a childcare center? A “Professional Estimate” can help you make a fair offer.
    • Are you estate planning or updating a buy-sell agreement with a business partner? A “Professional Estimate” can help you understand the value of your center in order to put common sense, realistic plans in place for the future. If you are the sole owner of the childcare center, the “Calculation” may be sufficient.
    • Are you a childcare center owner heading to retirement, but not yet ready for retirement? A “Calculation” will help you understand what your center is worth for retirement planning and in order to weigh all your options (i.e. when to sell, hold and grow the center, etc).
    • Are you considering an internal transition to the next generation or to your current director? A “Professional Estimate” helps all parties understand the value of the center in today’s market in order to pave the way for a smooth and fair transition.
    • Are you simply doing some strategic planning for your center’s future? Depending on the level of precision needed in your plans, either the “Calculation” or the “Professional Estimate” will provide realistic information so you can make well-informed business decisions for your future.
  • How long does it take?
    • Once you send us the information, we will set up a conversation within a day or two. Within a day or two from our conversation, we will provide the valuation to the client. In total, it will take less than a week, which is much quicker than most other firms.
  • How much does it cost?
    • For a single location childcare center, a “Calculation” costs $499, and a “Professional Estimate” costs $1,499. These are much more cost-effective than most other firms.
    • For a multiple location childcare center chain, and multiple/bulk purchases (if for example, a buyer wants a valuation on many potential acquisitions): Contact us for more information about our bulk discounts, or cost of a childcare business with multiple locations.
  • What about confidentiality?
    • All information that you provide is completely confidential and will only be used by Childcare Broker to value the childcare center.
  • Do you value the childcare center business only?
    • Many times, both the center’s real estate and the business are sold together. Since most childcare centers are in special use facilities (and are expensive to convert to other uses), the center’s adjusted Seller’s Discretionary Earnings (SDE) has to be able to support both the price paid for both the real estate and the business. Our valuations will give a confirmation that the real estate value is reasonable based on the profitability of the childcare center business. But it is not a real estate appraisal, which an appraisal firm local to the center should do.
  • I own a childcare center and am not thinking of selling now. Why should I get a valuation? Without a valuation, there can be harm:
    • If the owner doesn’t increase the value of her business before a sale because she did not know how buyers value a childcare center.
    • If the owner doesn’t have insurance to protect the company’s value against the unexpected.
    • If the owner doesn’t implement a wealth preservation plan prior to a business sale, or the owner’s unexpected death or disability.
    • Even though you are thinking of selling, if you don’t accept an unexpected lucrative offer (or if you accept an unexpected low offer) because you did not know the value of the business.

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