Before buying a childcare centre, check six areas: the ECDA licence (class, capacity, tenure remaining and compliance history), enrolment and attendance records, subsidy claims and fee collection, teacher qualifications and ratios, the premises and lease, and the accounts and tax. For a transfer, ECDA requires at least 7 months left on a 12-month licence (Code of Practice s3.3.4).
Key takeaways
- A transfer of licence can only be applied for if the seller holds at least a 12-month licence with at least 7 months remaining (ECDA Code of Practice s3.3.4).
- Enrolment, including trial enrolment, must not exceed licensed capacity without the Chief Licensing Officer's approval (s2.2.8).
- Subsidy claims must be audited annually by a certified auditor, with the audited statement submitted within 3 months of financial year end (s8.9.1, s8.9.2).
- Every programme staff member needs the qualification for the level they teach and the Chief Licensing Officer's approval (s4.1.1).
- Advance programme fees are capped at 3 months for Class A and B licences and 1 term for Class C (s9.2.8, s9.2.9).
How should you use this due diligence checklist?
Use it to ask for documents, not reassurance: each item below names the evidence to request and, where one applies, the ECDA rule it tests.
Due diligence normally starts after the seller accepts your Letter of Intent. Send the list in one go and check answers against original records. Section references are to ECDA's Early Childhood Development Centres Code of Practice (5th edition, updated October 2026) unless stated. Licence and premises checks matter most for a transfer of licence; liability checks matter most in a share purchase, because you inherit the company's history. If you are new to the process, read how to buy a childcare centre in Singapore first.
What licence and ECDA compliance items should you check?
Check the class of licence, its tenure and expiry, licensed capacity and the centre's compliance history, because these decide whether and how the licence can move to you.
| Check | What to ask for, and the rule behind it |
|---|---|
| 1. Class of licence | Copy of the current licence: Class A, B or C, or an allowed combination (CoP s2.1). |
| 2. Licence tenure and expiry | Tenure granted (6, 12, 24 or 36 months) and the expiry date (s2.4.7). |
| 3. Tenure remaining for a transfer | At least a 12-month licence with at least 7 months remaining when the transfer application is submitted (s3.3.4). |
| 4. Licensed capacity | Capacity stated on the licence. Enrolment, including trial enrolment, must not exceed it without CLO approval (s2.2.8, s2.2.9). |
| 5. Renewal history | Past tenures. Two consecutive 6-month licences must be followed by at least a 12-month licence, or the licence may not be renewed (s2.4.9). |
| 6. Licensing visit reports | Recent reports and proof that non-compliance was fixed on time (s2.4.10, s2.4.11). |
| 7. Other ECDA approvals | Approvals for extra capacity, extended bays or changed operating hours (s2.2.9, s3.4, s3.8). |
| 8. Pending notices | Any notice already given to ECDA or parents about relocation, cessation or change of class (s3.1, s2.5, s3.2). |
| 9. Key Appointment Holders | ECDA's record of KAHs compared with ACRA's list of directors (s3.5.3). |
| 10. Incident reports | Incidents reported to ECDA and their follow-up (s10). |
| 11. Standard operating procedures | The SOPs ECDA requires (Annex C) and the parent handbook, kept up to date (s2.4.4). |
| 12. Partner Operator status | Whether the centre is in ECDA's Partner Operator scheme, which carries fee caps, and how a change of operator affects it (ask ECDA). |
Tenure sets how soon you face your first renewal, and a transfer cannot be applied for with less than 7 months remaining. See our guide to the ECDA transfer of licence.
How do you verify enrolment and records?
Match the enrolment the seller quotes to attendance records, ECDA's system and next year's registrations, because enrolment drives almost all of the revenue.
| Check | What to ask for, and the rule behind it |
|---|---|
| 13. Enrolment by level | Current enrolment for each level (infant care, playgroup to K2) against licensed capacity. |
| 14. Attendance records | Twelve months of daily attendance. Attendance must be taken daily with no back-dating (s8.4.2). |
| 15. ECDA system match | Enrolment in ECDA's Centre Management System matching the centre's own list. |
| 16. Withdrawals | Twelve to 24 months of withdrawals with signed withdrawal forms and reasons (s8.5.1). |
| 17. Next year's pipeline | Registrations and waitlist for next year, and deposits received. |
| 18. Graduating cohort | How many K2 children leave this year compared with incoming registrations. |
| 19. Child records | Particulars, medical conditions, emergency contacts and immunisation for each child (s9.1.1). |
| 20. Record retention | Children's records kept for 3 years after withdrawal or graduation (s9.1.3). |
| 21. Children with developmental needs | Enrolment within 15% of capacity (excluding infant capacity) unless the CLO has specified otherwise (s2.2.10). |
| 22. Complaints and feedback | Parent complaints log and how complaints were resolved. |
What should you check in subsidy and fee records?
Check that subsidy claims are accurate and audited and fees follow ECDA's rules, because ECDA can recover wrongly paid subsidies from the licensee.
| Check | What to ask for, and the rule behind it |
|---|---|
| 23. Schemes in use | Use of Child Care Basic and Additional Subsidies, KiFAS (MOE and Anchor Operator kindergartens), CCFA, the Start-Up Grant and CDA (s8.1.1). |
| 24. Monthly subsidy reports | Government subsidy (GSII) reports and confirmation of discrepancies by the 7th of the following month (s8.7.1). |
| 25. Annual subsidy audit | Audited subsidy statements from a certified auditor, submitted within 3 months of financial year end (s8.9.1, s8.9.2). |
| 26. Overpayment recoveries | Any ECDA notices to refund subsidies, and whether they were paid (s8.8). |
| 27. Withheld subsidies | Whether ECDA is withholding subsidies, and why (s8.7.3). |
| 28. Receipts and invoices | Samples showing gross fee, subsidies, discounts and nett fee for each child (s8.2.2). |
| 29. Fees net of subsidy | Fees collected from parents net of subsidies, or refunds where gross fees were collected (s9.2.10). |
| 30. Advance fees | Advance programme fees within 3 months for Class A and B, or 1 term for Class C (s9.2.8, s9.2.9). |
| 31. Fee history | Three years of fee schedules and the last fee-increase notice, due by 1 September of the preceding year (s9.2.1). |
| 32. Incidental charges | Charges are optional, on the permitted list and notified by 31 January (s9.2.2 to s9.2.4). |
| 33. Deposits held | Deposit amount for each child and the refund terms. |
| 34. Fee arrears | Ageing of unpaid fees and any write-offs. |
Subsidy history stays with the company in a share purchase. In an asset purchase it stays with the seller, but ECDA withholds one month's subsidy for centres pending transfer until the audited statement is received (s8.9.3), so the SPA should say who bears that.
What staff and certification checks matter?
Confirm every teacher is qualified and approved for the level they teach and that ratios are met; gaps here become your compliance problem.
| Check | What to ask for, and the rule behind it |
|---|---|
| 35. Staff list | Name, role, level deployed, start date, salary and contract for every staff member. |
| 36. Qualifications and approval | Each programme staff member holds the qualification for the level deployed and has CLO approval (s4.1.1, Table 2). |
| 37. Principal | ADECL or an approved alternative, CLO approval, and full-time employment with no regular teaching load (s4.2). |
| 38. Ratios | Rosters against enrolment, showing staff-to-child ratios are met (s4.3). |
| 39. Child First Aid | CFA certification for the Principal or Key Personnel and enough staff present (s4.4). |
| 40. Declarations and medicals | Self-declaration on offences and warnings and pre-employment medical clearance for all staff (s4.1.1, s4.1.2). |
| 41. Staff records | Appointment letters, work passes, certificates and declarations on file (s9.1.4). |
| 42. Key-person risk | Whether the Principal and senior teachers intend to stay, and their notice periods. |
| 43. Payroll and CPF | Payroll reconciled to the staff list, CPF up to date, leave and bonuses owed. |
| 44. Turnover | Staff who left in the past 12 months and why. |
Our guide to staff transfer in an education business sale covers how employment moves across in each deal structure.
What should you check about the premises and lease?
Check that the lease outlasts your payback period and that every planning, fire safety and building approval is valid for the incoming operator.
| Check | What to ask for, and the rule behind it |
|---|---|
| 45. Tenancy agreement | Tenant entity is the licensee; rent, term, renewal options and rent review terms. |
| 46. Lease term against licence term | Lease expiry against licence expiry and your payback period. ECDA's setting-up guide says a tenancy should be at least two to three years. |
| 47. Assignment and change of control | Whether the lease allows assignment, a new tenant or a change in shareholders, and on what conditions. |
| 48. HDB tenancy | For HDB premises, HDB's approval of the tenancy change; it must be in the intended licensee's name before ECDA approves a transfer (s3.3.2). |
| 49. URA permission | Whether a Grant of Written Permission is needed, temporary or permanent, and its expiry. Temporary permission must be renewed 3 months before expiry (s3.3.3). |
| 50. Approved use | Approved use as a centre from HDB, SLA or URA, or a change of trade letter for privately owned HDB property (ECDA setting-up guide). |
| 51. Fire safety | SCDF Fire Safety Certificate or Temporary Fire Permit and a QP-certified floor plan approved for an early childhood centre (setting-up guide). |
| 52. Building approval | BCA Temporary Occupation Permit or Certificate of Statutory Completion (setting-up guide). |
| 53. Outdoor play space | Safe access to outdoor play space of the size required for the class of licence (s2.2.6, s2.2.7). |
| 54. Reinstatement | Obligations to restore the premises at the end of the lease, and the condition of the fit-out. |
For HDB centres, read our guide to HDB premises in a childcare takeover.
What financial and tax checks should you do?
Rebuild the profit from source records and identify every liability that will still exist on completion day.
| Check | What to ask for, and the rule behind it |
|---|---|
| 55. Financial statements | Three years of financial statements and year-to-date management accounts. |
| 56. Revenue check | Monthly revenue reconciled to enrolment, fee schedules and bank statements. |
| 57. Subsidy income | Subsidy income reconciled to ECDA payments. |
| 58. Normalised profit | Owner salary, related-party rent and one-off costs identified and adjusted. |
| 59. Prepaid fees and deposits | The liability for fees paid in advance and deposits held, to be settled at completion. |
| 60. Corporate tax | Tax returns, IRAS Notices of Assessment and any tax outstanding. |
| 61. GST | Whether the company is GST-registered and, if so, its returns. Fees on subsidy forms must include GST where applicable (s8.2.6). |
| 62. Debt and charges | Bank loans, director loans, guarantees and charges registered against the company. |
| 63. Supplier contracts | Enrichment, catering, transport, IT and cleaning, with notice terms. |
| 64. Insurance | Current policies, cover and claims history. |
| 65. Disputes | Any claims, disputes or threatened legal action involving parents, staff, landlord or suppliers. |
What should you do with what you find?
Each finding should lead to one of four responses: adjust the price, add a warranty or indemnity, make it a condition of completion, or walk away.
- Price: re-base the offer if verified enrolment or profit is lower than presented.
- Warranty or indemnity: for risks that may or may not crystallise, such as a subsidy recovery relating to the seller's period.
- Condition: for things that must happen before you pay, such as landlord consent, HDB's tenancy in your name or a renewed URA permission.
- Walk away: if the licence cannot move in time, the lease is too short, or records cannot be verified.
How Edugrow helps
On the centres Edugrow sells, buyers sign an NDA before receiving information, and Edugrow works with the seller to answer due diligence requests in an orderly way. Edugrow has advised on more than 70 education business transactions since 2014, and can draft a neutral Sale and Purchase Agreement that reflects what due diligence found. Browse current centres on the buying page, or register your criteria to hear about off-market opportunities.
Frequently asked questions
How long does due diligence on a childcare centre take?
It depends on how organised the seller's records are and how many advisers you involve. A seller with clean records, a data room and an adviser coordinating requests is quicker to work through than one assembling documents for the first time. Agree a timetable in the LOI and tie the exclusivity period to it, so neither side is left waiting.
Can I talk to the centre's teachers and parents during due diligence?
Only with the seller's agreement, and usually late in the process. Most sellers keep the sale confidential until terms are agreed, because news of a sale can unsettle staff and parents. Meetings with the Principal or key teachers are often arranged near signing, and parents are formally told under ECDA's notice rules, at least 3 months ahead for a transfer of licence.
What is the biggest risk in buying a childcare centre's shares rather than its assets?
You inherit the company's history, including any subsidy overpayments ECDA may later recover, tax liabilities, staff claims and supplier disputes. That is why the financial, subsidy and liability checks matter more in a share purchase, and why the SPA should include warranties and indemnities from the seller covering the period before completion.
Do I need an accountant or lawyer for childcare due diligence?
For most deals it is worth having an accountant review the financial statements, tax position and revenue reconciliation, and a lawyer review the lease, the SPA and any liabilities. This checklist tells you what to ask for. Professionals help you judge what the answers mean for price, warranties and conditions.
Which documents should a seller provide before I make an offer?
Before an LOI, expect a summary: licence class and capacity, current enrolment, fees, staffing, lease terms and recent financial statements. Detailed records, such as attendance, subsidy reports, staff files and tax filings, usually come after the LOI is accepted, when you have exclusivity and the seller knows you are serious.
Sources
- ECDA Early Childhood Development Centres Code of Practice (5th ed, updated 19 Oct 2026), s2.1, s2.2 and s2.4 (licence class, capacity, tenure)
- ECDA Early Childhood Development Centres Code of Practice (5th ed, updated 19 Oct 2026), s3.3 Transfer of Licence
- ECDA Early Childhood Development Centres Code of Practice (5th ed, updated 19 Oct 2026), s3.5 Change of Key Appointment Holders
- ECDA Early Childhood Development Centres Code of Practice (5th ed, updated 19 Oct 2026), s4.1 to s4.4 (staff qualifications, Principal, ratios, Child First Aid)
- ECDA Early Childhood Development Centres Code of Practice (5th ed, updated 19 Oct 2026), s8.1 to s8.10 (subsidy administration and audit)
- ECDA Early Childhood Development Centres Code of Practice (5th ed, updated 19 Oct 2026), s9.1 and s9.2 (record keeping, fees and charges)
- ECDA Guide to Setting Up an Early Childhood Development Centre, s3.4.1 Statutory Approvals
- ECDA Partner Operator Scheme (POP)
This guide is general information about buying and selling education businesses in Singapore, not legal, tax or financial advice. Rules change, so confirm the current position with the relevant agency or a professional adviser before acting.
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