So, you’ve decided to sell off your childcare business and are wondering what the whole process would look like.
Here is what you can typically expect in the entire process.
The first step is to prepare your financials and relevant documentations. These would include:
– Enrolment reports under ECDA CMS
– Approved floorplans
– All staff employment contracts
– CPF contribution for staff
– GS2 reports for subsidies
– Furniture & assets that will be left behind
– Tenancy agreements
These will be the important documentation that your potential buyers will require, in order to apply for a Transfer of License under the ECDA portal.
However, they will likely only require the high level financial summary of your centre at first.
The next step, will be to determine your expected selling price.
Usually, buyers will pay a multiple of your annual profits. And this multiple can vary, depending on many factors.
So let’s just assume your centre does approximately $240k a year in profit, and you have a target selling price of $600k.
The next step will be to market your centre to expose it to buyers.
This is the most crucial step, as you want to expose it to the right buyers in as short a time, while not letting parents and teachers know that you are selling.
The longer your centre stays on the market, the higher the chance that someone finds out about it.
The moment parents or staff realize that you are selling, you may face withdrawals from parents or even resignation from key personnel.
Once you have gotten an offer, it is time to negotiate terms and pricing. If you are doing a novation of your lease agreement, you need to get your landlord’s approval.
If your buyer wants to obtain a fresh lease, the landlord must approve of them as well.
Your buyer will then apply for a Transfer of License in ECDA portal, and you need to inform your staff and arrange for a meet the parents session with the incoming operator.
The Transfer of License will take approximately 3 months, and once it has been approved, the license will transfer to the new operator and they can then come in to operate.
Remember to clear all student deposits and novate all existing vendor contracts to the incoming operator, to ensure a smooth transition.
Typically a sale process can take anywhere from 3 months or longer, depending on the complexity of the deal and how long it takes to find a suitable buyer.
Finding a dedicated broker to act on your behalf can significantly shorten the process, instead of doing it all by yourself.
If you wish to find out how Edugrow can help you sell your childcare centre, do contact us for a non obligatory discussion.