How do I value a childcare business?

A buyer of a childcare centre needs the legal right to keep running it after the sale, so check the licence or permit before the equipment and the lease. The operator holds a government licence, and how that licence behaves on a sale differs by province. Earnings still matter, but ask which of them would survive a change of ownership. For a general view of how daycares are priced, see what a daycare business is worth.

The licence sets the limit

Alberta’s licensing page says that under the Early Learning and Child Care Act a licence is required to operate a childcare program above a set number of children, not including your own. The same page points to Part 1, Step 9 of the Licensing handbook for a change in ownership, a sale of shares or a sale of corporation assets. Read that step before you assume the licence goes with the business. Other provinces run their own regimes, so confirm the rule with your own licensing office before you set an asking price.

Quebec treats the permit differently

Quebec’s Educational Childcare Act says a permit is not transferable. It also says that when shares carrying at least the proportion of voting rights the Act sets in a legal person holding a day care centre permit are transferred, the Minister may suspend, revoke or refuse to renew the permit if the new shareholder falls within cases the Act lists. So a buyer of the assets cannot take over the seller’s permit, and a share purchase raises the questions above. Our guide to child care licences on a change of ownership in Quebec goes further.

Funding is part of what a buyer is pricing

Alberta’s page says its Affordability Grant page explains how sales and change of ownership affect funding eligibility. Quebec’s Act says that when a childcare centre permit holder ceases to operate, is dissolved or has its permit revoked, the assets it acquired out of subsidies are transferred to a non-profit legal person with similar objects designated by the Minister. Ask your funder which assets and payments carry over to a buyer, and get the answer in writing before you discuss a price.

Earnings that depend on you

Ask your accountant to separate earnings that rest on you, such as your own pay and unpaid hours, from earnings that would continue under a hired director. Ontario’s licensing manual says it is the responsibility of licensees to meet the rules under the Child Care and Early Years Act, its regulations and binding Minister’s policy statements, so check your own compliance record before you list. A professional business valuator can put a figure on all of this. Deavo does not.