How Much Is My Daycare Business Worth? (And How to Get More of It)

The most common question we hear — after 37 years and more than 1,000 closings — is still the first one sellers ask: what is my center worth? The answer is always a range, always context-dependent, and almost always different from what the seller expects.

Here is exactly how childcare businesses are valued in 2026, what moves the multiple, and what you can do before you go to market to capture the top of the range.

The Short Answer

Owner-operated childcare centers — where the owner is the director or an active operator — typically sell for 2.5× to 4.5× SDE (Seller's Discretionary Earnings). Multi-site operators with a professional management layer trade at 4.0× to 7.0× EBITDA.

Those ranges are wide because the specific factors — enrollment trend, owner dependency, licensing status, lease terms, and staff tenure — can swing the multiple by a full turn or more. A center at 90% capacity with stable enrollment and a director who stays post-close will trade near the top. A center at 62% capacity with the owner-director planning to leave at closing will trade near the bottom.

SDE vs. EBITDA: Which One Applies to Your Center

Seller's Discretionary Earnings (SDE)

SDE is net income plus owner compensation, owner benefits, depreciation, amortization, and documented one-time or non-recurring expenses. It represents the total economic benefit available to a single working owner-operator. SDE is the right metric for any center where the owner is also the director, lead teacher, or primary operator.

EBITDA

EBITDA — Earnings Before Interest, Taxes, Depreciation, and Amortization — is appropriate for multi-site operations where a professional director and management team are already in place, and the owner is truly an investor. EBITDA does not add back owner compensation because a replacement manager is already costed in.

If you are an owner-operator who works in the business every day, your business will be valued on SDE, not EBITDA. Using EBITDA for an owner-operated center inflates the number on paper but misleads buyers — and creates problems with lender underwriting.

7 Factors That Move Your Multiple

Buyers and their lenders scrutinize these factors when deciding where in the range your center lands. Strengthening each before you go to market can move your multiple by a full turn.

• Enrollment trend over 24 months — declining enrollment is the single biggest discount factor
• Owner dependency — is the center fully reliant on you as director? A replacement director already in seat adds value
• License status — any open corrective actions must be resolved before closing; citations are priced in
• Lease terms — under 3 years remaining without renewal options is a serious financing problem
• Staff tenure — lead teacher turnover above 40% annually signals a culture problem
• Revenue trend — lenders want to see the trailing 12 months at or above the prior year
• Enrollment as % of licensed capacity — below 70% in toddler and preschool rooms is a yellow flag

When Real Estate Is Included

If you own the building the center operates in, the real estate and the business are valued separately and then combined for the total sale price. The business is valued on SDE or EBITDA multiples. The real estate is valued by a certified appraiser using comparable sales and cap rate analysis.

Do not try to fold real estate value into a higher business multiple — buyers, lenders, and appraisers will separate them anyway, and it creates friction early in the deal. A common structure for real-estate-included deals uses SBA 504 on the real estate component and SBA 7(a) on the business — both closing on the same day.

Before You Go to Market

The three things that consistently move sellers from the bottom of the range to the top:

• Fix enrollment — even 6 months of positive trend changes the story lenders tell themselves
• Hire and train a replacement director — or at least document the management structure so buyers can see the center runs without you
• Clean up your financials — three years of tax returns that match your P&Ls, documented add-backs, and no unexplained deposits

We recommend scheduling a confidential valuation 12–18 months before you intend to sell. That gives us time to identify what's suppressing your value and gives you time to address it — before it becomes a negotiating point for a buyer.