If you are thinking about selling your childcare service, one of the most important things to understand is what affects its value. Even if two centres generate the same income, one may sell for more than the other depending on other factors.
At Mollard Advisory, we work with childcare business owners across Australia to help them understand these differences and achieve the best possible price.
Here are the eight key things that can affect the value of your childcare centre:
1. Occupancy Rates and Demand
This is one of the biggest factors. The more children enrolled at your centre, the more income you generate, and buyers want to see that.
- 80–100% occupancy is considered strong
- A waitlist shows high demand
- Low enrolment (50–60%) can lower your centre’s value
- Centres below 50% occupancy are usually breaking even or making a loss
Buyers look for steady enrolment trends and may ask about local population growth, nearby schools, and how many other centres are in the area.
Tip: Avoid over-promising future enrolment growth unless you can back it up with data.
2. Location and Community
Where your centre is located matters a great deal. Areas with:
- Lots of young families
- Growing suburbs
- Easy access (parking or public transport)
- Strong child-to-place ratios (anything over 2:1 is positive)
…tend to attract more interest and higher sale prices.
High-growth areas with limited competition are advantageous. Conversely, areas with declining birth rates or many new centres nearby may reduce demand, especially if occupancy is already low.
3. Financial Health and Stability
Buyers will closely review your financial records. They want to see:
- Consistent income over several years
- Strong profit margins (20–25% is the industry benchmark)
- Reasonable rent or lease costs (10–14% of revenue is the benchmark)
Make sure you have clear, easy-to-read records, including profit and loss statements, occupancy/utilisation reports, and details of any government funding. If profits fluctuate or expenses are unclear, buyers may offer less because of perceived risk.
4. Staffing and Management
Childcare is a people business. A well-trained, reliable team adds significant value. If your centre runs smoothly without you being there every day, that is a major advantage.
High staff turnover or difficulty retaining educators can reduce value.
Tip: Highlight your team’s strengths such as qualifications, low turnover, or training programs.
5. Licensing, Compliance, and Ratings
Childcare in Australia is highly regulated. If your centre:
- Follows all compliance rules
- Has a strong National Quality Framework (NQF) rating
- Has passed inspections
…you are in a strong position.
Buyers will examine your compliance history during due diligence. If you have had issues, be upfront and explain what was done to resolve them.
6. Lease Terms (If You Do Not Own the Property)
If your childcare operates in a leased building, your lease terms can make or break a deal. Buyers prefer:
- A long lease (e.g. 10+10+10 years, ideally 25 years total)
- Fair rent aligned with industry standards
- An easy lease transfer process
Short leases or above-market rents reduce value. Before selling, discuss options with your landlord, but always seek advice from an experienced childcare broker.
7. Reputation and Community Trust
Your reputation is a critical factor. Signs of strong reputation include:
- Positive Google reviews
- Strong word of mouth
- Long-standing community presence
- Unique programs (music, languages, nature play)
Awards or local recognition should also be highlighted. Negative feedback or complaints, however, can lower trust and value.
8. Market Trends and Government Policy
External factors also influence value, such as:
- Interest rates (affecting borrowing power)
- Government subsidies like CCS (which support enrolments)
- Government-funded centres increasing competition
The current outlook is strong, with government investment and high family demand supporting healthy valuations.
Final Thoughts
To achieve the best value for your childcare service, you should demonstrate that your centre is:
- Well-run with consistent occupancy
- Financially strong
- Staffed with a stable team
- Trusted by families
- Operating from a secure location or lease
Even if your centre has challenges, understanding these factors helps you prepare for a sale and make improvements in advance.
If you are wondering what your centre may be worth, or how to increase its value before going to market, reach out to Mollard Advisory. We help childcare owners navigate the sale process with confidence.
Frequently Asked Questions About Boosting hildcare Centre Value
1. What can we do to improve our occupancy rate?
Improving occupancy means attracting and retaining more families. Strategies include:
- Converting more tours into enrolments with a follow-up system
- Having a third party appraise playscape, cleanliness, and resources
- Running open days and local promotions
- Building relationships with nearby schools and clinics
- Offering flexible hours or session options
- Investing in your website and social media
- Asking current families for referrals
- Highlighting unique programs (nature play, languages, music)
2. Can you give me examples of locations that achieved premium multiples?
Yes. Centres in high-demand areas often sell for higher multiples, such as:
- Inner-city or fast-growing suburbs in Brisbane and Sydney
- Coastal towns with young families and few centres (Sunshine Coast, Northern Rivers)
- New housing estates with an influx of families
3. What are the best financial management systems for childcare service?
- Xero – user-friendly for small/medium centres
- MYOB – widely used with bookkeepers
- Explor / Kidsoft / OWNA – childcare-specific platform
4. How can we improve staff turnover?
- Offer fair pay and flexible hours
- Provide training and career development
- Build a supportive workplace culture
- Recognise staff contributions
- Conduct exit interviews
5. What is considered too few years left on a lease?
Most buyers want at least 25 years of tenure remaining (including renewal options). Anything under 15 years without extension options can be a red flag. Consider negotiating with your landlord or securing an agreement before going to market.
6. How can I increase my online reviews?
- Ask happy parents for Google/Facebook reviews
- Make it easy with links or QR codes
- Respond politely to all reviews
- Avoid offering incentives
7. Will buyers want to meet my staff before buying?
Generally not until a deal is close to completion. However, buyers will want to know roles, experience, qualifications, and likelihood of staff staying on.
8. Do I need to tell staff and parents I am selling?
Not immediately. Most owners wait until the deal is nearly finalised. A broker can market your centre confidentially and help plan a smooth handover when the time comes.