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. We can still achieve good results for these services, but it will affect the final sale price.
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, although we have achieved results in catchments as low as 0.68:1)
…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 industry benchmark)
Make sure you have clear, easy-to-read records, including:
- Profit and loss statements
- Occupancy/utilisation reports
- Details of any government funding (CCS, grants, or kindy 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. Buyers will often pay more for centres that are “under management” with a strong director and staff in place.
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 daycare 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 (varies by location)
- 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 to ensure you approach this strategically.
7. Reputation and Community Trust
Your reputation is a critical factor. Parents talk, and buyers listen. Signs of strong reputation include:
- Positive Google reviews
- Strong word of mouth
- Long-standing community presence
- Unique programs (e.g. music, languages, nature play)
Awards or local recognition should also be highlighted. Negative online feedback or past 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 Childcare Centre Value
1. What can we do to improve our occupancy rate?
Improving occupancy means attracting and retaining more families. Some effective strategies include:
- Converting more tours into enrolments with a structured follow-up system
- Having a third party appraise your centre’s playscape, cleanliness, and resources for an unbiased perspective
- Running open days and local promotions
- Building relationships with nearby schools, playgroups, and health clinics
- Offering flexible hours or session options
- Investing in your website and social media presence (many parents research online first)
- Asking current families for referrals or testimonials
- Highlighting unique programs (e.g. nature play, languages, music)
The more visible and community-focused your centre is, the more attractive it becomes to families.
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, where demand outstrips supply
- Coastal towns with young families and few local centres (e.g. Sunshine Coast, Northern Rivers)
- New housing estates, where an influx of young families creates growing demand
Premium multiples typically come from strong occupancy, high local demand, and limited nearby competition.
3. What are the best financial management systems for a daycare?
Commonly used systems in Australia include:
- Xero – user-friendly accounting software suited to small and medium centres
- MYOB – widely used with bookkeepers and accountants
- Explor / Kidsoft / OWNA – childcare-specific platforms combining enrolment tracking, CCS reporting, and financial management tools
Whichever platform you choose, ensure it allows you to produce clear profit and loss reports, track expenses, and maintain well-organised records. This is critical when selling.
4. How can we improve staff turnover?
High staff turnover lowers value, so it is worth addressing. Some proven strategies are:
- Offering fair pay and flexible working hours
- Providing training and career development opportunities
- Building a positive workplace culture where staff feel supported
- Recognising and rewarding staff contributions (small gestures such as shout-outs or team lunches help)
- Conducting exit interviews to understand why staff leave and how to improve retention
A stable, qualified team inspires confidence in both families and buyers.
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.
If your lease is short, consider:
- Speaking with your landlord about renewing or extending it before going to market (seek broker advice first to manage the discussion strategically)
- Securing an agreement that allows a new buyer to take over the lease
A longer, flexible lease significantly increases your centre’s appeal and value.
6. How can I increase my online reviews?
Online reviews build trust and improve reputation. You can:
- Ask happy parents to leave a Google or Facebook review
- Make it easy by sending them the direct link or using a QR code at sign-in
- Respond politely to all reviews, even neutral ones
- Avoid offering incentives (like discounts), which may undermine credibility
Over time, positive reviews boost both visibility and buyer confidence.
7. Will buyers want to meet my staff before buying?
Generally, buyers do not meet your staff until a deal is close to completion, as confidentiality is critical. However, they will want to know:
- The roles of your team members
- Their experience and qualifications
- Whether they are likely to stay after the sale
A team that is expected to remain makes your centre more attractive and easier to transition.
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 to avoid disruption. When the time comes, you can plan a smooth and well-timed handover for staff and families.