Childcare centre valuation
Australian childcare centres typically value at 3.5 to 5.5 times normalised EBITDA, driven by licensed places, sustained occupancy and the term of the lease. Where the operator also owns the site, the property is valued separately.
Childcare is one of the few SME sectors with genuinely durable demand and government-supported revenue, which is why multiples sit above the general band. The risks are specific and knowable: occupancy, staff ratios, the assessment rating and whether the site is secure for long enough to matter.
Quick answer
What is a childcare centre worth?
Normalised EBITDA multiplied by 3.5× to 5.5×, cross-checked against a value per licensed place. A centre running above 85 per cent occupancy with a long lease, a stable director and an Exceeding rating sits at the top. Sub-70 per cent occupancy, agency-staff reliance, a Working Towards rating or a short lease pull the multiple down sharply.
What moves the number
What decides a childcare multiple
Occupancy is the headline number, but the valuation tests whether that occupancy is sustainable at the current cost base.
| Factor | Pushes toward the top | Pulls toward the bottom |
|---|---|---|
| Occupancy | Above 85 per cent sustained across two or more years, with a waitlist | Below 70 per cent, or occupancy propped up by discounting |
| Licensed places and mix | A place mix matched to local demand, particularly under-twos capacity | A licence weighted to age groups the catchment does not need |
| Lease or freehold | Fifteen-plus years including options, or freehold owned in a related entity | Under seven years remaining on a purpose-built site |
| Staffing | Stable qualified team, ratios met without agency, a long-standing centre director | High turnover, agency dependence, a director whose departure is imminent |
| Regulatory standing | Meeting or Exceeding the National Quality Standard, clean compliance history | Working Towards, open compliance notices, or a recent serious incident |
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Occupancy
↑ Above 85 per cent sustained across two or more years, with a waitlist
↓ Below 70 per cent, or occupancy propped up by discounting
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Licensed places and mix
↑ A place mix matched to local demand, particularly under-twos capacity
↓ A licence weighted to age groups the catchment does not need
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Lease or freehold
↑ Fifteen-plus years including options, or freehold owned in a related entity
↓ Under seven years remaining on a purpose-built site
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Staffing
↑ Stable qualified team, ratios met without agency, a long-standing centre director
↓ High turnover, agency dependence, a director whose departure is imminent
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Regulatory standing
↑ Meeting or Exceeding the National Quality Standard, clean compliance history
↓ Working Towards, open compliance notices, or a recent serious incident
Normalising the earnings
Normalising a childcare P&L
Government subsidy flows, related-party rent and owner management roles are the three adjustments that shift the earnings figure most.
How the earnings method works →- Owner management role Costed at a market salary for the centre director or area manager work performed
- Related-party rent Where the owner controls the property entity, rent is brought to a market level
- Agency staffing spikes One-off agency cost isolated from the sustainable staffing cost base
- Subsidy timing Child Care Subsidy receipts matched to the periods they relate to
- Bad debt and gap fees Uncollected parent gap fees assessed against actual recovery history
- Setup and refurbishment costs Capital spend coded to repairs, reclassified and depreciated
Worked example
Worked example: a 75-place long day care centre
Revenue is $2.6m at 82 per cent average occupancy. Reported profit is $520,000, but the owner acts as area manager without drawing a wage — a $140,000 market cost. Rent is paid to the owner’s property trust at $180,000 against a market rent of $230,000, so a further $50,000 comes off.
Normalised EBITDA is $330,000. The lease has twelve years including options, the centre is rated Meeting with two Exceeding elements, and occupancy has held above 80 per cent for three years — supporting 4.6×.
$1.52m for the operating business, with the freehold valued separately
Illustrative only. Every engagement is scoped to the specific business, its records and the purpose of the valuation.
What a buyer, a bank or an opposing expert will test first
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01
Occupancy quality
Average occupancy hides a lot. We look at it by room, by day and by age group, because under-twos capacity behaves differently from over-threes.
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02
The lease
Purpose-built childcare premises are expensive to replicate. A short lease on a good site is a serious risk to the earnings stream.
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03
Assessment rating
A Working Towards rating affects both enrolment and price. Rating history is read alongside the compliance record.
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04
Competitive supply
New centres approved within the catchment can undo an occupancy trend quickly. Local approvals are checked, not assumed.
On earnings, with a per-place figure used as a cross-check. Value per licensed place is a useful market benchmark, but it ignores occupancy, fee levels and cost structure — two 75-place centres can differ by a million dollars. The report leads with the earnings conclusion and shows the per-place cross-check alongside it.
Separately. The operating business is valued on earnings normalised to a market rent, and the property is valued as real estate. Asset Valuations Group values both in the one engagement, which matters because buyers and lenders treat them as distinct assets.
Yes. A Working Towards rating suppresses enrolments, limits fee increases and signals remediation cost to a purchaser. Moving to Meeting or Exceeding before a sale is one of the most reliable ways to lift the multiple in this sector.
A ramping centre is valued on maintainable earnings at a defensible occupancy level, not on the current month and not on the operator’s target. Where a genuine ramp is underway and evidenced by enrolment data, a discounted cash flow approach is often the fairer method.
Yes. Outside school hours care and family day care operate on different cost structures and licence conditions, so the band differs, but the framework — normalised earnings, occupancy quality, regulatory standing, site security — is the same.
Reviewed by a Certified Practising Valuer
Reviewed by Jarrad Khoury, Director and Head of Valuations — Registered Valuer (QLD, Not Limited), Licensed Valuer (WA, Not Limited), CPV and CBV. Published by Business Valuations Brisbane, the business valuation division of Asset Valuations Group.
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