Buyer Information

Provider Approval and Service Approval

Before buying or operating a childcare centre, buyers need to understand Provider Approval and Service Approval.

A Provider Approval relates to the approved provider. A Service Approval relates to the individual childcare service, including the site, approved places and type of care provided.

When a childcare centre is sold, the Service Approval may need to be transferred to the incoming approved provider, subject to the relevant regulatory process. Buyers should allow enough time for approval and transfer requirements before settlement.

Childcare4Sale can discuss the purchase process with buyers who do not yet hold Provider Approval. However, detailed centre information is generally provided only once a buyer has been qualified and has signed a Confidentiality Agreement.

Where to Get More Information

Before buying a childcare centre, buyers should review information from ACECQA and the relevant state or territory regulatory authority.

It may also be useful to contact childcare owner associations or industry bodies in the state or territory where you plan to buy. These organisations often provide training, events and information for current and future childcare operators.

Profitability and Valuation

Childcare centres are commonly assessed on maintainable earnings, lease terms, occupancy, fees, staffing, presentation, competition, local demand, capital expenditure requirements and future supply.

The expected return will depend on the type of opportunity, including whether the centre is a leasehold business, freehold going concern, passive freehold investment, development site or portfolio acquisition.

Childcare4Sale can help buyers understand the commercial factors that influence childcare centre values and buyer demand.

Finance

Finance requirements vary depending on the buyer, asset type, trading history, lease terms, property value and lender appetite.

Leasehold childcare businesses, freehold going concerns and passive childcare investments are assessed differently by lenders. Buyers should speak with a finance broker or lender experienced in childcare acquisitions before making an offer.

Childcare4Sale can connect qualified buyers with finance contacts who understand childcare centre acquisitions.

Management

Some buyers operate childcare centres directly. Others use specialist childcare management companies.

A management company may assist with staffing, compliance, enrolments, quality systems, payroll, financial reporting, marketing, training and day-to-day administration.

Buyers should carefully review any management company before engagement, as service scope, reporting quality and operating style can vary significantly.

Confidentiality

Childcare centre owners have the right to protect sensitive business information during a sale.

For this reason, potential buyers are usually required to sign a Confidentiality Agreement or Non-Disclosure Agreement before receiving detailed financial information, operational data, staff information or details that may identify the centre.

Confidentiality protects the seller, staff, families and the ongoing operation of the childcare centre.

Due Diligence

Most childcare centre purchases include a period for legal, financial and operational due diligence.

During due diligence, the buyer and their advisers may review financial records, lease documents, enrolment data, staffing information, compliance history, service approvals, property matters, contracts and other records relevant to the purchase.

Due diligence may occur before or after signing a contract, depending on the sale process and agreement between the parties.

Childcare4Sale encourages buyers to seek independent legal, financial, accounting and childcare-sector advice before completing a purchase.