Selling your childcare business

Selling a childcare center is a complex task that requires advance consideration; it is crucial to get all in order before you offer your daycare or school for sale.Before you start to offer the business for sale, you must know the process, get your business ready and understand the length of time it will take from the day you start offering to the closing and beyond. Yes, I said beyond. For a childcare business, it will take you a few months after closing before you can even close the business bank account. I will explain later in this article.More than 50 percent of the businesses listed for sale NEVER SELL, some of them will never get a serious offer — the odds of a successful sale will depend on circumstances like the reason for the sale, timing, accurate valuation and, the finances of the company. Following the tips below will dramatically improve your chances of success.

Get financials and other documentation ready.

It is crucial to have all the documents ready beforehand, or you could miss an excellent opportunity with a qualified Buyer. The minimum documentation needed will depend if the Real Estate is part of the sale.

Financial documentation:

    • Last three years of corporate tax returns.
    • YTD financial statements. (P&L and Balance Sheet).
    • Last three years of monthly bank statements.

Order a Childcare Business Valuation

Pricing the school right is essential for your bottom line, and also crucial to make sure that the offering price your school is not outside of the real market value. Setting a price that is too high will only favor other sellers. — Getting a childcare valuation done by a 3rd party is crucial. The good news is that we do it for FREE.

To arrive at the value, you will need to have all the Financial Documents previously mention and, the following:

    • Payroll summary.
    • List of all staff accreditation.
    • Floor plan of the facility.
    • A copy of the current lease agreement and any addendums.

If your center includes the Real Estate, the following additional documents will be necessary:

    • Landlord or mortgage holder information.
    • Previous title insurance policy.
    • Survey.

Before selling a childcare business — find a team of professionals

Business Attorney

Sellers will need to contact a group of professionals to help to prepare 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. The sales contract of a childcare center or school could involve specific clauses.

A Good CPA

Have an exit strategy prepared before you sell your business is crucial — a clear view of what will be your next step before you close on the sale. Talk to your CPA regarding Capital Gain and Depreciation Recapture taxes. There are ways to deferred for years or indefinitely, some or all of those taxes. At Lluna Investments, we can work together with your CPA and provide you with a plan for a Structure Sale that could deferred Capital Gain taxes while helping you sell at the best possible price.

Qualified Intermediary for 1031 Exchange (if applicable)

1031 Exchange is another way that you could differ taxes if applicable. It requires planning with your QI and your broker from Lluna Investments to identify and close on another Real Estate property within 180 days of closing.

Childcare Broker

Hiring the right broker makes the difference between closing the deal or not closing. There are many essential aspects to consider when hiring a broker to sell your school, for example:

Confidentiality

Selling a childcare center is different from most other small businesses. It requires special care handling the confidentiality of the sale.  The parents are the first to worry if the school is for sale; they have a school and teacher their kids love and do not want changes. Teachers start to look for other childcare centers to apply before a new owner walks in and changes things around that they won’t like. The result is always a significant drop in enrollment, and the price of the school becomes much harder to defend.

Childcare Business Experience

Lluna Investments sold childcare centers to buyers in the US, South America, Canada, and Europe. We assist 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.

—– The process will take from several months to years.First, all the partners of the business should sign a Partners Resolution to Sell. Second, they need to look at the facility condition and get some essential documents ready. The process for Selling a childcare center is similar to other businesses; however, there are some crucial differences, like notifying DCF before closing.School Valuation Service.Contact us for a FREE valuation of your center. To assure the school is listed at the correct price we will need some information. For more details, visit the valuation section.It is crucial to have all the documents ready beforehand, or the Seller could miss an excellent opportunity with a qualified Buyer. The minimum documentation needed will depend if the Real Estate is part of the sale. To start here is a list: Follow this link, if you are looking to buy or invest in  Residential Real Estate? Click here

This Post Has 2 Comments

  1. Evelyn Monteagudo

    Interested in selling my preschool located in Cape Coral, FL

    1. artcien

      Evelyn, please contact us at 954-529-9491

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