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How to value a child care business?
We are in the process of negotiating to buy a child care business in NJ which has been in business for about 10 years, well run and has about 75 kids. The annual revenue is, say 750K with net profit being 250K. What should be our offer?
Hi Edward,
Thanks for your feedback. Yes, we will be reviewing the financials. If everything is in order, then what should be the value ?
BTW, 10000 per child is reasonable in NJ.
4 Answers
- 1 decade agoFavorite Answer
In general you calculate the value of the business using the following formula:
(Net Profit * Index) + Real estate value + Equipment value + Inventory
Index is 2 for business that have personal working for the company.
Index is 1 for the sole owner operator.
Business appraiser can evaluate business much more accurate.
Sincerely,
Marina Lando
President
Business Loan Quest
- edLv 71 decade ago
$10,000 per year, per child?
$933.00 per month, per child? 20-22 days?
$42-46 per day.
Net Profit=33% ? After all expenses?
Insurance, employees, food, etc?=$500,000.00
Those numbers sound unrealistic to me.
Been a long for time me, but is this what people are paying for child care?
I want to see records, P&L, and personal IRS tax returns for past 3-5 years.
Source(s): 50 years in business. Sold mine after 35 yrs. - Anonymous1 decade ago
If you are going through a reputable business broker, it seems that you should already have an idea of what to offer.
- Anonymous1 decade ago
50k
