A long day care centre is worth what its ongoing profit can support, after rent and a fair wage for any working owner, adjusted for risk. Steady occupancy, a stable qualified team, a long affordable lease and a sound quality rating tend to support value. New centres nearby and compliance issues tend to reduce it.
What is the short answer?
Your childcare centre is worth what its ongoing profit can support, adjusted for the risk that profit will not continue. In long day care, that profit rests on three things: filled places, staff costs and rent.
A centre has high fixed costs. Staff must meet required ratios and qualifications, and rent is due whether the rooms are full or not. Small changes in occupancy, meaning the share of places filled, can make a large difference to profit.
Three things matter most:
- Occupancy and fees: how many places are filled, how steadily, and at what daily fee.
- Costs: wages, rent and running costs, measured fairly.
- Risk: the lease, the quality rating, approvals and local competition.
What pushes the value of a childcare centre up or down?
Steady demand, a stable team and a secure lease tend to push value up. Falling occupancy, high staff turnover and a short lease tend to push it down.
| Factor | Tends to support value | Tends to reduce value |
|---|---|---|
| Occupancy | High and steady across the week, with a waitlist | Low, falling, or full only on some days |
| Lease | Long term, with options, at a rent the centre can carry | Short term, high rent, or hard rent reviews ahead |
| Staff | Stable, qualified team, low turnover | Frequent turnover, heavy agency staff use |
| Owner's role | A director runs the centre day to day | The owner fills a key role for little pay |
| Quality rating | Sound rating, no open compliance issues | Low rating or ongoing compliance problems |
| Local supply | Steady demand, few new centres nearby | New centres opening in the area |
| Building | Well kept, fit for purpose | Repairs or upgrades needed soon |
Occupancy. A valuer looks at the pattern, not just the average. Full Tuesdays and empty Fridays tell a different story from steady use all week.
Staff costs. Wages are usually the biggest cost. Award rates, ratios and reliance on agency staff all shape the real margin. Fair Work sets the award terms, and your accountant can help you check them.
Lease. Many centres lease their building. A buyer can only earn profit while the lease runs, so the remaining term and the rent are central.
Which add-backs and traps matter in a childcare centre?
Add-backs are costs added back to profit because a new owner would not pay them. In childcare, the traps often sit in wages and rent.
- Owner wages. If you work as director or educator, your pay is replaced with a market wage for that role.
- Family on the payroll. Family members paid above or below the market rate are adjusted either way.
- Rent. If you own the building and charge the business little or no rent, a market rent is deducted.
- Agency staff. Heavy use of agency staff may be ongoing, not a one-off, if staffing is hard locally.
- Government funding. One-off grants or temporary support are removed from ongoing earnings. Ongoing subsidy income is checked against records.
- Repairs and equipment. Deferred repairs, playground upgrades or required works are a coming cost for a buyer.
- Fee timing. Fees paid in advance and debts owed by families are checked at the valuation date.
What documents matter for valuing a childcare centre?
Beyond two or three years of financial statements and tax returns, a valuer needs records that show demand, staffing and the centre's right to operate.
- Occupancy reports by room and by day, over at least a year.
- Your fee schedule and history of fee changes.
- Payroll reports, rosters and a staff list with qualifications.
- The lease, options and rent review terms.
- Your provider and service approvals, and your current quality rating.
- Any compliance notices and how they were resolved.
- A waitlist report, if you keep one.
- Records of Child Care Subsidy and other funding received.
What happens to approvals when a centre is sold?
A service approval does not simply pass with the keys. The Queensland Government's guide to transferring a service approval says both providers must jointly notify the regulator at least 60 days before the transfer. It also says the regulator may intervene, for example over the incoming provider's capacity or compliance history.
Rules can differ between states, so ask your lawyer how they apply to your centre. For value, the point is simple. A buyer must be able to take over and keep operating.
How can two similar centres be worth different amounts?
This example is made up. It shows how similar centres can lead to different values.
Centre A and Centre B have the same number of licensed places and similar sales. Centre A is full most days, has a long lease at a fair rent and keeps its educators for years. A director runs it.
Centre B's owner works as director for little pay. Its lease ends soon with no option. Several new centres have opened nearby, and occupancy has started to slip.
Once Centre B pays a market wage and its lease risk is counted, its real profit is lower and less certain. Centre A is likely worth more.
Which Valuo report fits my childcare centre?
Choose by who will read the report. For your own planning, the Business Value Report fits. If a buyer, lender, investor or partner will rely on it, choose the Professional Valuation Report.
Business Value Report. A streamlined assessment for your own decisions, such as planning a sale or a lease renewal. A valuer reviews it before it is issued. It is not signed and is not for buyers, lenders or other third parties. Fees start from $995 + GST.
Professional Valuation Report. A full independent valuation, with adjustments explained and a report signed by the valuer responsible. It suits a sale, a purchase, a lender or a partner arrangement. For revenue of $1 million to under $2 million, the fee is $1,995 + GST. For $2 million to under $5 million, it is $2,995 + GST.
Every fee is fixed by revenue and confirmed in writing before you pay. Businesses with revenue of $10 million or more receive a fixed fee quoted before any work starts. If you own the building, the property needs its own valuation by a property valuer.
Get your figure
- See your fee in two taps: Get your fixed fee.
- Compare both reports and every revenue band: pricing.
- The general guide: how much is my business worth.
- Funding a purchase or refinance: business valuation for a bank loan.
Questions
Is my childcare centre worth more because it has many licensed places?
Not on its own. Licensed places set the most children you can care for. Value depends on how many of those places are filled, at what fees, and what is left after wages, rent and other costs.
Does the building affect what my childcare business is worth?
The business and the property are usually valued separately. If you lease the building, the lease term and rent matter a lot. If you own it, the property needs its own valuation, and a market rent is deducted when valuing the business.
Does my quality rating change the value of my centre?
It can. A sound rating supports demand and gives a buyer comfort. A low rating or open compliance issues add risk and possible costs, which buyers and valuers allow for.
Can a buyer just take over my service approval?
Not automatically. In Queensland, for example, both providers must jointly notify the regulator before a transfer, and the regulator can intervene. A buyer also needs suitable approvals of its own, so check the details with your lawyer.
What if I work in the centre as the director or an educator?
A valuer replaces your pay with what it would cost to employ someone in that role. If you work unpaid or underpaid, the centre's real profit is lower than the accounts show.
General educational information, not advice. Examples are hypothetical and do not value a real business. The right treatment depends on the purpose, the evidence and the agreed scope.