The document discusses how to determine the appropriate purchase price for a childcare business based on its annual profit. Childcare centre businesses typically sell for 3 to 5 times their annual profit, depending on location, business strength, lease terms, and other factors. The annual profit amount used in the calculation is the EBITDA (earnings before interest, taxes, depreciation, and amortization), which can be obtained from the business's profit and loss statement. Expenses that are non-recurring or personal in nature should be "added back" to the EBITDA figure to determine the profit for sale purposes. A potential buyer should consider what profit they may be able to achieve under their own management by improving staffing,

1. HOW MUCH
TO PAY?
CHILDCARE SALES AUSTRALIA
#SMM

2. LIKE ANY BUSINESS, A
CHILDCARE BUSINESS IS ALL
ABOUT THE AMOUNT OF PROFIT
YOU CAN REASONABLY EXPECT
TO MAKE FROM THE BUSINESS.
BUSINESSES TRADE ON A
DECLARED PRICE TO EARNINGS
FACTOR WHICH CAN ALSO BE
DESCRIBED AS A RETURN ON
INVESTMENT (ROI).

3. Example: A leasehold centre for $200,000 annual profit selling
of a multiple of 3 would sell for $600,000
C H I L D C A R E C E N T R E B U S I N E S S E S C U R R E N T L Y
S E L L G E N E R A L L Y I N T H E R A N G E O F 3 T O 5
T I M E S A N N U A L P R O F I T ( 3 3 % T O 2 0 % R E T U R N
O N Y O U R P U R C H A S E P R I C E ) D E P E N D I N G O N
T H E L O C A T I O N , S T R E N G T H O F T H E
B U S I N E S S , L E A S E T E R M S A N D O T H E R
F A C T O R S . A C H I L D C A R E C E N T R E I N A
R E G I O N A L A R E A S H O U L D S E L L O N A L O W E R
M U L T I P L E E G M U L T I P L E O F 3 O R R O I 3 3 %
T H A N O N E I N A C A P I T A L C I T Y W I T H A
M U L T I P L E O F 5 O R R O I 2 0 % .

4. The profit per annum is expressed on an
PEBITDA (proprietors’ earnings before tax,
depreciation and amortization. In layman’s
terms this is the money which comes out the
bottom before you allow for any depreciation,
tax or interest payments.
The first financial document a potential buyer
should look at is the PROFIT AND LOSS
statement for the previous financial year and if
possible the year to date.

5. T H I S I S T H E D O C U M E N T W H E R E Y O U R B O O K K E E P E R
O R A C C O U N T A N T R E C O R D S A L L T H E I N C O M E , A L L T H E
E X P E N S E S A N D T H E R E S U L T A N T P R O F I T F O R T H E
P E R I O D . T Y P I C A L L Y A C H I L D C A R E C E N T R E L I K E A N Y
S M A L L B U S I N E S S H A S I T S A C C O U N T S S T R U C T U R E D T O
M A X I M I S E T A X D E D U C T I B L E E X P E N S E S A N D S O M E O F
T H E S E S H O U L D B E T A K E N O U T F O R C A L C U L A T I N G T H E
P R O F I T F O R S A L E P U R P O S E S . W E R E F E R T O T H E S E
T Y P E O F E X P E N S E S A S A D D B A C K S . A D D B A C K S
I N C L U D E I T E M S O F A P R I V A T E N A T U R E S U C H A S A
V E H I C L E N O T U S E D I N T H E B U S I N E S S , I N T E R E S T
P A Y M E N T S , D E P R E C I A T I O N , A N D A N Y P E R S O N A L
E X P E N S E S R U N T H R O U G H T H E B U S I N E S S . A L S O T A K E N
O U T A R E N O N - R E C U R R I N G E X P E N S E S S U C H A S A
S U B S T A N T I A L R E P A I R S O R R E P L A C E M E N T E X P E N S E
W H I C H I S U N L I K E L Y T O O C C U R F O R S E V E R A L Y E A R S .
I F Y O U N E E D H E L P I N D E C I D I N G O N T H E A D D B A C K S ,
Y O U R C H I L D C A R E B R O K E R O R A C C O U N T A N T W I L L B E
A B L E T O A S S I S T .

6. Always remember that it is not a question so
much of what the current owner makes out of the
centre but what you can do under your
management. Some examples of centres ripe for
improvement are centres being run with over
staffing, poor promotion, inappropriate staff and
buildings lacking maintenance giving a poor
impression to prospective parents.

7. Contact Us
WEBSITE
https://www.childcaresales.com.au
FREEFAX
1800 600 371
FREECALL
1800 700 517