What's in an Education Business Valuation Report (and When You Need One)

What is an education business valuation report?

It is a written report that sets out the price range buyers are likely to pay for your business, how they would arrive at it, and the asking price you should go to market with.

For an owner of a childcare centre, tuition centre or enrichment school, the report answers the question every sale starts with: what is this business worth to a buyer? Edugrow's version is called an Indicative Valuation Perspective. It is an indicative, sale-focused view prepared by your M&A adviser, built on the way buyers of education businesses in Singapore actually price deals, rather than a general-purpose valuation for any reader. That focus shapes what it contains and what it should not be used for, both covered below.

What does the report cover?

Every report covers your business's current performance, its normalised earnings as two types of buyer see them, how buyers price those earnings, the indicative range that results and a recommended asking price.

Even the most compact report has six sections:

1. Purpose, basis and limits: what the report is for, what it relies on, and Edugrow's interest as your adviser.
2. Business snapshot: the centre or business, its location, capacity, programmes and lease.
3. Financial performance and current trading: the last full financial year plus the current-year run-rate. For a preschool where the K2 cohort is a large share of enrolment, the report flags the effect of those children leaving for Primary 1.
4. Normalising the earnings: owner's pay, family on the payroll, one-off and personal items, set out in both buyer lenses.
5. How buyers price it and the indicative range: the multiple grid, the band where deals like yours tend to clear, and the factors that place your business within it.
6. Recommended asking price and next steps.

The standard report runs to ten sections. It adds a projected current-year adjusted EBITDA, the buyer's view of the business, the buyer's all-in cost (including franchise fees where they apply), the change that would most lift the value, and, for a share sale, a simple bridge from the business value to the price for the shares, adjusting for cash, debt and debt-like items such as fees collected in advance.

Why does the report show two buyer lenses?

Because an owner-operator buyer and an investor buyer value the same business differently, and you need to know what each is likely to offer.

In the owner-operator lens, all of your pay is added back, because the buyer will do your job personally. In the investor lens, the same add-backs are made and then the market cost of the role you actually perform is deducted, because an investor or group buyer has to hire someone. The investor lens gives the lower figure. Seeing both side by side stops you anchoring on a number only one type of buyer would pay. Our guide to normalised EBITDA and add-backs explains the adjustments in detail.

What extra methods are used for larger or more complex businesses?

Larger and more complex cases add an income approach and an asset approach to cross-check the market approach used in every report.

• Income approach: capitalisation of maintainable earnings, using a required return built up step by step, and a five-year discounted cash flow.
• Asset approach: adjusted net assets, used as a floor test.
• Reconciliation: a weighted view across the methods, a view on discounts for lack of control and marketability where a partial stake is sold, and tables showing what could change the valuation.

For groups of several companies or sites, the report also normalises each entity separately, builds a group view, bridges from business value to equity value, reads the shareholders' agreement and franchise terms for points that affect price and deliverability (not as legal advice), and checks every figure against the source documents before release.

Which level of report fits your business?

The level depends on complexity, not on how much the business is worth: how many companies and sites, how clean the records are, and whether other shareholders will read it.

A faster turnaround is available at extra cost for most levels. The clock starts when all the documents are in, so sending everything at once is the quickest route.

What will you need to provide?

Two years of accounts, this year's monthly profit and loss, details of what the owners are paid, and the documents behind the licence, lease and enrolment.

• Audited or accountant-prepared accounts for the last two years, and this year's monthly profit and loss.
• Owners' salaries, CPF, bonuses and benefits, and any one-off or personal items in the accounts.
• The lease, and the ECDA licence or MOE registration.
• Enrolment by level, or student numbers, and a staff list by role and pay.
• The ACRA business profile.

More complex cases also need evidence for each add-back, related-party details, any forecast or budget, and, for a share sale, the balance sheet items, all broken down by company and site.

When do you need a valuation report?

Before you set an asking price or approach buyers, and ideally early enough to fix whatever is holding the value down.

Common triggers are deciding whether to sell this year or next, receiving an unsolicited offer you want to test, agreeing a price between partners before going to market, or preparing for a sale and wanting to know which add-backs buyers will accept. A report dates from its valuation date, so if trading changes materially it should be updated before you rely on it. Our guides to what a childcare centre can sell for and how tuition and enrichment centres are valued give the background.

What is a valuation report like this not?

It is a pricing tool for a sale, not a valuation for tax, court, lending or accounting purposes.

• It is not a valuation under the International Valuation Standards or any other valuation standard, and not an independent valuation, a fairness opinion, an audit or a property valuation.
• It is not for tax, stamp duty, bank financing, accounting, insurance, court, shareholder disputes, divorce or regulatory use. For those, use a credentialed independent business valuer, and a licensed property appraiser for land and buildings.
• It relies on the accounts and explanations you provide, which are not audited or verified.
• It is not a promise that the business will sell, or sell at that price, and it is not for passing to buyers or lenders, who must make their own checks.

How much does it cost, and how does the credit work?

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.

The fee is fixed and agreed before work starts, and it does not depend on the value the report reaches. The credit applies if you sign Edugrow's sell-side engagement within 6 months of the report's delivery and the sale completes within 24 months of delivery; the fee is then credited in full against the success fee, up to the amount of that fee. Your free written recommendation, sent within 2 working days of your enquiry, tells you which level fits and why. It does not include a value figure.

How Edugrow helps

Edugrow has advised on 70+ education business transactions in Singapore since 2014, and every valuation is built on how buyers in this market actually price centres. Start with a free first conversation and a written recommendation on the level that fits your business at education business valuation. If you already know you want to sell, see selling with Edugrow.