A childcare center can be valued as a business, as real estate, or as both. Understanding each method helps owners see the full picture of what they own.
Valuing the business
The operating business is typically valued on a multiple of normalized earnings (often expressed as SDE or EBITDA). The multiple reflects enrollment stability, growth, staffing, location, and the durability of cash flow.
Clean, normalized financials are essential — buyers adjust out one-time items and owner perks to find sustainable earnings.
Valuing the real estate
The real estate is valued on the income it can command — usually by applying a market cap rate to the rent (actual or market). Tenant credit, lease term, and rent coverage drive the cap rate. As a benchmark, our Year-End 2024 report tracked childcare comps averaging roughly $376 per square foot and about a $3.6 million sale price at a ~6.6% cap.
When you own both business and building, the two valuations interact, and the optimal sale structure depends on which the market values more highly for your asset.
Putting it together
The highest total value often comes from structuring the sale thoughtfully — business only, real estate only, both together, or a sale-leaseback — based on who the buyers are.
We model these scenarios so owners can see, in dollars, the best path to market.
Find out what your school is worth.
A confidential, no-pressure valuation from a broker who has owned, operated, and sold childcare centers for 30+ years.
