Across 24 profitable childcare centres Edugrow has sold, the average price was 3.86 times EBITDA (earnings before interest, tax, depreciation and amortisation). Those centres averaged 92% enrolment and a 25.8% margin. Breakeven and loss-making centres are priced differently, mainly on what it would cost a buyer to set up an equivalent centre.
Key takeaways
- Profitable childcare centres sold by Edugrow averaged 3.86x EBITDA across 24 transactions.
- Those 24 centres had 1,577 licensed places and 1,450 children enrolled, an average enrolment of 92%.
- They averaged a 25.8% profit margin, with S$24.89 million in total transaction value.
- The best prices go to centres near full capacity (80 to 90% or more) with margins of 20% or more.
- Breakeven and loss-making centres are priced on the cost of setting up a comparable centre, not on profit.
What have childcare centres actually sold for?
Across 24 profitable childcare centres we have personally transacted, the average sale price was 3.86 times EBITDA. These figures should be treated as a gauge: market sentiment changes, and every buyer assesses each centre on different factors, so your centre may fetch more or less.
| Measure (24 profitable centres) | Result |
|---|---|
| Total transaction value | S$24,893,000 |
| Total licensed capacity | 1,577 places |
| Total enrolment | 1,450 children (92% average enrolment) |
| Total profit before tax | S$5,405,000 |
| Average profit margin | 25.8% |
| Average sale multiple | 3.86x EBITDA |
We have also transacted many centres that were breakeven or losing money. They are priced in a different way, which we cover below.
What does a 3.86x EBITDA multiple mean?
EBITDA is earnings before interest, tax, depreciation and amortisation: a measure of the cash profit the centre generates from its operations. Buyers usually adjust it first, adding back costs that will not continue under new ownership and deducting the cost of replacing anything the owner does personally. The result is often called normalised EBITDA, and the price is that figure multiplied by a multiple.
The multiple reflects how confident a buyer is that the profit will continue after they take over. Our guide to normalised EBITDA and add-backs explains which adjustments buyers accept and which they reject.
What gets a childcare centre the best price?
To fetch the best possible price, a childcare centre needs to be near full capacity (80 to 90% or more is ideal) and run with strong margins (20% or more). The centres in our data averaged 92% enrolment and a 25.8% margin, which is why they commanded the multiples they did.
Lease tenure, the strength and stability of the teaching team, a clean compliance record and how independent the centre is from its owner also move the multiple. Our checklist of things that raise your centre's sale price goes through each one.
How are breakeven or loss-making centres priced?
For breakeven or unprofitable centres, buyers typically consider how much it would cost them to set up a brand new centre and add in their expected burn rate while it fills. For breakeven centres, they might even add a small premium on the expected setup cost of a similar centre, as they no longer need to spend the time and energy to build one from scratch and can take over a fully operational centre with staff in place.
If your centre is under-enrolled or losing money, our guide to the options for a loss-making centre compares selling, merging, selling the premises and closing.
When is the best time to sell?
The best time to sell is from a position of strength, not when you are facing declining enrolment and stiff competition. If your centre falls into the high-enrolment, high-margin group above, it may be worth considering a sale before enrolment or margins start to fall. It all comes down to finding the right buyer for your centre.
How do I find out what my centre is worth?
A written valuation sets out where your centre sits against these benchmarks and why, using your own accounts, enrolment and lease. Edugrow charges a success fee on the sale, with no retainer. A written valuation is a fixed fee, credited in full against the success fee if you sell with us within 6 months. The first conversation and a written recommendation are free. Start on our valuation page, or read what a valuation report contains.
Frequently asked questions
What multiple do childcare centres sell for in Singapore?
Across 24 profitable childcare centres Edugrow has sold, the average was 3.86 times EBITDA. Individual centres sell above or below that depending on enrolment, profit margin, lease tenure remaining, location, staffing stability and how much the business relies on the owner. Market sentiment also moves prices over time, so treat the average as a gauge rather than a quote.
Is a childcare centre valued on revenue or profit?
Profitable centres are valued on profit, usually EBITDA after adjusting for owner-specific costs (normalised EBITDA), multiplied by a multiple. Revenue matters as evidence of enrolment and fee levels, but two centres with the same revenue can be worth very different amounts if their margins differ.
How are loss-making childcare centres valued?
Buyers look at what it would cost them to set up a brand new centre of a similar size and add the losses they expect to fund while it fills up. A breakeven centre can command a small premium over that setup cost, because the buyer saves the time and effort of building a centre from scratch and takes over one that is already licensed, staffed and operating.
What enrolment level gets the best price?
Centres near full capacity sell best. In the data from 24 profitable centres Edugrow has sold, average enrolment was 92%, and centres at 80 to 90% or more with margins above 20% were the ones that achieved the strongest prices. If enrolment or margins are starting to fall, it is often better to sell before the decline shows up in the accounts.
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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