Investing in the Childcare Industry
The Childcare Industry has existed for many years and has increased in size consistently each year. The services provided have expanded from one of care to education and well being of young children.
Government support is in recognition of the economic and social values contributing to children, parents and the overall economy. The Childcare Industry is a major employer, the value of which permeates through other sectors of the economy.
Increasing the Value of Your Business
When planning to sell your Childcare Centre you may need to undertake some ‘house duties’ to ensure National Regulations and Standards are being met prior to putting the centre on the market for sale.
Presentation, the standard of service and equipment will be assessed by Buyers and may impact on the value from the sale.
Preparing an exit strategy beforehand will enable you to negotiate terms with the Buyer in an informal manner. Highlighting the strengths and important aspects such as the quality of the service as provided and the staff employed will give confidence to a Buyer in pursuing the purchase of the centre.
Return on Investment
As with any ‘open market’ the returns (yields) received on your investment will fluctuate over time and reflect current interest rates, the general economy and demand.
The Childcare Industry, as a source of income from business operations and as a return on an investment for investors, has been in demand by operators and investors for some time. This demand is due in part to the quality of the businesses and properties in the Childcare Industry.
Business operators may also take into account ‘lifestyle factors’ in comparison to other types of business investments.
Easy Access for Investment
If you’re thinking of investing in a childcare centre then the process can be made easier with the professional assistance from Childcare Property Sales.
Childcare Property Sales are aware of the latest trends, market and pricing in the industry and can assist with the process to enable a quick and easy process of acquiring a childcare centre in a seamless transition from Seller to Buyer.
The benefit of using the services of Childcare Property Sales is that the negotiations will be carried out in a professional and confidential manner.
Buying a Childcare Centre Considerations
1. Value of The Business/Property
This is important as it will determine the amount of funding required either from equity or bank loans. The selling price is normally determined by the Seller and may take into account current market values for similar properties and guidance from the agent.
Other factors to take into account include:
- Land/building size &
- Licence capacity
If a bank loan is to be used, then the bank will appoint a registered valuer to determine a value that the bank considers suitable to lend against. Note; not all registered valuers match the agreed selling prices.
The location and position of the Childcare centre is impoartant and can play a role in determining occupancy levels and overall revenue. Demographics and environment will indicate residential growth, access to schools and shopping centres.
3. Building Condition & Resources
Assess the current condition of the building and the amount and state of the resources, If further expenditure is required to bring up to the standard the building presentation and replace resources then this expenditure will need to be taken into account.
Professional Due Diligence should be sought to assess the current financial operations of the business and to determine on-going profitability. Bank interest and repayments need to be funded from profits. The level of profit may indicate the amount of existing/type of management applied to the business.
Existing staff numbers should be compared to staff rostering based on current occupancy levels. The Director/Supervisor may be contact or non-contact. Length of service each staff members have been employed at the centre will indicate staff turnover rate and if staff are stable.
Staff qualifications are required to comply with National Regulations/Standards and therefore should be assessed. In most centres a ‘qualified teacher’ is to be employed.
In general professional legal and accounting Due Diligence should be undertaken to assess the centre operations and viability. Childcare Property Sales can assist with general Due Diligence areas and provide some guidance in those areas.