How to buy a daycare business.
Buying a childcare center means buying three things at once: a business, a licence, and often a building. This guide covers what they actually cost, how they're financed, and the numbers that decide whether a center is worth buying — from a brokerage that only sells childcare.
The short answer
A single-site childcare center typically sells for 2.5 to 4.5 times seller's discretionary earnings. If the real estate is included, it is priced separately at a cap rate — a 7.11% national median, and 7.5% to 8% for independent operators. Most single-center acquisitions in the United States are financed with an SBA 7(a) loan.
Three numbers decide whether a center is worth its price: occupancy against licensed capacity — 80% or better on a full-time-equivalent basis; gross rent at or under 18% of revenue; and whether the owner is also the director. Everything else in diligence is confirmation.
A business, a licence, and sometimes a building.
Centers sell three ways, and which one you're buying changes the price, the financing, and the risk. The operating business only; the real estate only, with the existing operator staying on as a tenant; or both together.
Buying both is the simplest structure and what most owner-operators want. It also finances best, because including the real estate generally allows a longer amortization than a business-only loan — which materially lowers monthly debt service on the same purchase price.
Buying the business only means you will lease from the seller, or from whoever buys the building. Scrutinize that rent. A lease written above market transfers value out of the business you're buying and into the landlord you're buying it from, and you carry that cost every month for the term.
Buying the real estate only is a net-lease investment, not an operating purchase. You are underwriting the tenant's credit and the lease, not the enrollment. Our guide to reading childcare tenant credit covers that assessment.
What centers actually cost.
The same multiple a seller uses to price their center is the one you use to test it. These ranges come from 592 recorded childcare transactions and our own closings.
| Scale | Typical multiple | Basis |
|---|---|---|
| Micro programUnder 25 licensed seats | 2.0 – 2.75× | SDE |
| Single centerThe standard case | 2.5 – 4.5× | SDE |
| Small group2 – 4 centers | 3.0 – 5.0× | EBITDA-equivalent |
| Platform5+ centers | 4.5 – 6.5× | EBITDA-equivalent |
| Real estate, if includedIndependents typically 7.5% – 8% | 7.11% median cap | NOI ÷ cap rate |
One check before accepting any SDE figure you're handed: childcare SDE typically runs 12% to 22% of revenue. Materially above that and either personal expenses are still in the books, or the owner occupies the building without charging themselves rent. Materially below and the add-backs are incomplete. Either way the number needs work before you multiply it. Our valuation guide walks through the full method.
What separates a good center from an expensive one.
Occupancy: 80% is a strong center
A single center running at or above 80% of licensed capacity on a full-time-equivalent basis is performing well. Public operators average lower — KinderCare reported 67.8% same-center occupancy for fiscal 2025 — but that reflects a portfolio built over decades, not what a well-run independent center should achieve. Ask whether a seller's figure is roster or FTE: a roster counts part-timers once, FTE weights them by attendance, and earnings follow attendance.
Rent: 18% of revenue is the ceiling
Gross rent up to about 18% of revenue is a workable load for a center leasing at today's rates. Public-operator figures run far lower — KinderCare's sits near 10.5% — but that reflects leases signed across 30 years of ownership, and is not a fair yardstick for a center you are buying today. Above 18% and the rent is eating the return you are paying for.
Director: how many people leave?
If the owner is also the director, at closing you lose both. A tenured director who stays through transition is the difference between buying a business and buying yourself a job — and it's the single largest swing in the multiple.
Rent coverage is the test experienced buyers run first.
Before the cap rate, before the lease term: can the center comfortably afford its rent out of the earnings it generates? A center that barely covers rent today has no margin for a soft enrollment season, a wage increase, or an upward renewal.
This matters doubly when you buy the business and lease from the seller, because the rent in that new lease is negotiable today and fixed for the next decade. Our full treatment is in rent coverage ratios.
What to verify before your deposit goes hard.
- Licence & complianceLicensed capacity, open citations, inspection history, and — critically — how the licence transfers in that state. Rules vary widely and this is usually the longest pole in a closing.
- FinancialsThree years of P&Ls and tax returns. Reconcile stated revenue against bank deposits and against the enrollment roster. Normalize the add-backs yourself rather than accepting the seller's.
- Enrollment & tuitionCurrent roster with full-time-equivalent enrollment, month-by-month adds and drops, waitlist if any, and where tuition sits against the local market.
- Staff & ratiosWages, tenure, credentials, and state-mandated ratios. Staff turnover is the most common reason a center cannot fill the capacity its licence allows.
- Lease or propertyRemaining term, renewal options, escalations, and who pays what. If buying the building, add condition, roof, systems, and whether the site converts to another use.
- Subsidy mixWhat share of revenue comes from state or federal programs versus private pay. High subsidy concentration changes the risk profile and how a lender views it.
Our full childcare acquisition due-diligence checklist expands each category, and 7 key factors when buying an operating preschool covers what separates a sound acquisition from an expensive one.
Who else is bidding, and with what money.
Most single-center acquisitions in the United States are financed with an SBA 7(a) loan. The structural point that matters: including the real estate in the purchase generally allows a longer amortization than a business-only loan, which lowers monthly debt service on the same price. Programme terms change, so confirm current ones with your lender — our SBA financing guide covers the childcare-specific considerations.
The buyer pool is deeper than most assume, and you compete with different archetypes depending on size. Owner-operators dominate single centers. Regional operators buy nearby centers to share administration. Private equity and national platforms compete for groups of five or more. Net-lease investors buy the building, not the business. Who's buying childcare centers in 2026 breaks down what each archetype pays.
One thing worth knowing about sourcing: most quality centers never list publicly. Owners avoid public listings precisely because they destabilize enrollment and staff. Deals move through specialists and their networks instead.
Looking to buy a center?
See what's active, or tell us the market and size you're after — a good deal of what we move never reaches a public listing.
Frequently asked
How much does it cost to buy a daycare business?
A single-site childcare business typically sells for 2.5 to 4.5 times seller's discretionary earnings. Micro programs under 25 licensed seats price lower, around 2.0 to 2.75 times. Groups of two to four centers run 3.0 to 5.0 times and platforms of five or more 4.5 to 6.5 times, on an EBITDA-equivalent basis. If the real estate is included, it is priced separately at a cap rate, with a national median of 7.11% and independents typically at 7.5% to 8%.
Is buying an existing daycare better than starting one?
An existing center comes with a licence, a staff, an enrolled roster, and provable cash flow — which is also why lenders will finance it. A startup carries licensing delay, a build-out, and a ramp to enrollment with no revenue during it. Buying costs more upfront and carries less risk of never opening.
Can I buy just the business without the building?
Yes. Many childcare businesses are sold with the seller retaining the building and leasing it back to the buyer on a long-term lease. Check that the rent in that new lease is at market: a lease written above market transfers value from the business you are buying to the landlord you are buying it from.
How long does licence transfer take?
It varies widely by state and it is the step most often underestimated in a childcare closing. Some states allow a relatively direct transfer to a qualified operator; others effectively require a fresh application, with inspection and approval before you can operate. Confirm your state's process before your deposit goes hard, not after.
What occupancy should a center be running at?
Around 80% of licensed capacity on a full-time-equivalent basis is the mark of a strong center, and above 85% commands a premium. Public operators average lower — KinderCare reported 67.8% for fiscal 2025 — but those portfolios were assembled over decades and include legacy underperformers; they are not the yardstick for a single well-run center. Always check whether a figure is roster or FTE, and verify it against attendance records.
KinderCare occupancy and rent figures are from its published quarterly reports, and are cited as portfolio context rather than as performance benchmarks: its centers have been held over roughly 30 years, so its legacy rents and blended occupancy are not a fair comparison for a center transacting today. The 80% occupancy and 18%-of-revenue gross rent standards reflect Little Scholars Real Estate transaction experience. Multiple ranges reflect Little Scholars Real Estate transaction experience across 70+ closings in 18+ states; cap rate and price-per-SF medians are from a database of 592 sold childcare transactions across 41 states, compiled from public records via Crexi and updated June 2026. The 7.5%–8% range for independent operators reflects transaction experience rather than a computed median. This is general information, not legal, tax, or investment advice. Brand names are used for identification only; Little Scholars Real Estate is not affiliated with, endorsed by, or sponsored by any brand listed.