Selling a child care or private school

Only 20% of all the businesses listed for sale are actually sold. LLUNA Investments is a company that specializes in this industry. Our success rate in selling and closing the deal is very high, in fact we have sold over the years almost all of our listings.SCHOOL-FOR-SALE

The owners of a child care should get prepared and have a conversation with partners and/or spouse about selling. After being convince and make sure that they are committed, then they need to look at the facility condition and get some important documents ready.

The process of selling a child care or private school is similar to the process of selling any other business; however there some very important differences. Here are some of the important things to consider:

Prepare your team

Attorney: Sellers will need to contact a group of professionals to help preparing for the sale. Although a real estate broker will be handling most of the initial offer and contract, consultation with a real estate attorney is advisable and sometimes essential. Contract negotiations when selling a child care center or school could involve specific clauses.

CPA: Think and have a conversation about your exit strategy before you find a buyer. It is essential to have a clear view of what will be your next step the day after you close on the sale. Having all your financials in order is an essential part for valuating the school and later for the buyer. The accountant or CPA can also help planing for tax implications that may result from capital gain or a 1031 exchange. 

Broker: Hiring the right broker makes the difference between closing the deal or not closing. LLUNA Investments sold child care centers to buyers in the US, South America, Canada and Europe. We provide assistance with all aspects of the negotiation, valuation of the business and real estate, with marketing while keeping full confidentiality, qualification of the potential buyer and more.

Confidentiality

Confidentiality is not an issue when selling a businesses like a gas station. That gives you the option of advertising the sale of that business anywhere and make public. The business will not be affected. Customers will continue to go to the gas station even if the know that the business is being sold.

That is not the case when the business for sale is a child care or a private school. Confidentiality is very important. Teachers and parents will have many concerns and uncertainties, and that could have a negative impact in the business.

The best way to keep the sale confidential is to hire an experienced broker. It is very important the the broker has experience in the industry, most of the commercial brokers are not used to keep the sale confidential.

Documentation

It is important to have all the documents ready when a good buyer shows interest in the business or the seller could miss the opportunity. The minimum documentation needed will depend if the building is included in the sale. To start here is a list:

Financial documentation: 

  • Last 3 years of corporate tax returns
  • YTD financial statements.
  • Payroll summary
  • List of staff including accreditation information and salary information.
  • Information about any leased equipment.

School operations:

  • Governmental programs details. (VPK – Food program – etc.)
  • Breakdown of current enrollment.
  • Accreditation information.
  • Any additional comments, feature or quality about the business that may help to better market the center.

Location information:

  • Copy of the lease agreement (if applicable)
  • Landlord or mortgage holder information.
  • Floor plan of the facility.
  • Previous title policy (if applicable)
  • Survey (if applicable)

Valuation

Contact us for a free valuation of the center. To make sure that the school is listed at the correct price we will need some information. For more details visit the valuation section.