Day Care & Child Care Business Valuation Benchmarks

Business owners, prospective buyers, and industry investors rely on a diverse set of financial benchmarks to assess the value of a business. We have compiled data from current BizBuySell listings and sold businesses to provide insight into the business for sale market and important benchmarks for pricing and evaluating day care centers and child care businesses relative to industry standards.

See also: Preschool Business Valuation Benchmarks

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Highlights of Day Care and Child Care Centers Sold on BizBuySell

Day care and child care centers sold on BizBuySell engage in the care and early education of children - typically aged 6 months to 5 years. These businesses range in size from small owner-operator businesses with fewer than 10 children to larger early education facilities with multiple care takers and 50 or more students. Day care and child care businesses listed and sold on BizBuySell are primarily independent, local brands, though occasionally franchise units are sold. Both are included in the data on which this report is based.

Day Care & Child Care Center Business Transaction Trends

The median sale price of day care and child care businesses listed and sold on BizBuySell has been mostly flat with some volatile growth. In the five years from 2021 through 2025, median sale price rose 22%. The exception to this trend is sale prices in 2022, which rose 78% YoY, driven by a small number of larger, higher value businesses sold.

Day Care and Child Care Business Valuation Multiples

Valuation, or pricing, multiples are financial tools that allow for comparisons between businesses that have different levels of revenue and earnings. They represent the sales price of a business relative to its financial performance, and given enough individual business sales data, they represent what the market is willing to pay for a business given its revenue and earnings.

Valuation Trends

Business values and associated multiples fluctuate over time, influenced by a variety of macroeconomic factors such as interest rates, inflation, consumer spending, and overall economic growth.

Child care and day care business valuation multiples are generally stable but surged in 2022 with a relatively small number of larger businesses trading at high values, then returned just below the mean in 2023 and rose steadily through 2025, even as higher interest rates put pressure on the market.

Earnings Multiples

Earnings multiples represent the value of a business relative to its owner’s discretionary earnings or "cash flow". Arguably the most important valuation metric - as seller's discretionary earnings will often dictate how much a buyer is able to borrow to finance the business acquisition - most business valuations will hinge on the earnings multiple.

Revenue Multiples

Revenue multiples represent the value of a business relative to its overall sales or revenue. In conjunction with an earnings analysis, revenue multiples are commonly used to value a business based on its overall sales.

How to Interpret These Multiples

Recent Listings vs. Sold Businesses

We calculate and provide valuation multiples from two sources: Current and recent listings of day care and child care center businesses for sale, and our database of "comparable" businesses sold on BizBuySell. Multiples based on listing data are generally higher due to owners setting asking prices above what their businesses might typically sell for. This occurs either intentionally as a negotiation strategy, or incidentally due to business owners’ common tendency to overvalue their own businesses.

Multiples based on comparable businesses - "comps" in business broker parlance - are much more useful as they represent the prices at which businesses ultimately get sold. Business brokers and valuation professionals will always turn to local comps when pricing businesses for sale or evaluating businesses for acquisition. We provide both sets of data at the national level to offer general context. Local business sale comps by sales class suitable for pricing and negotiations are available in BizBuySell's Business Valuation Report.

Quartiles, Median, and Average

No two businesses are identical, and as such, valuation multiples exist in a range. We have carved out four common values within this range: Lower quartile represents the value under which the lowest 25% of valuation multiples fell. Upper quartile represents the value above which the highest 25% of multiples fell. Median is the middle of the range, and average is the mean of the set. Mean is almost always higher than the median, driven by a minority of high volume, high value businesses sold at multiples above the upper quartile.

Businesses with consistent financial performance, above average revenue and earnings, demonstrable growth potential, low owner involvement, unique competitive advantages, and a seller willing to finance will command a multiple at or above the upper quartile. Lower volume businesses with thin profit margins, full-time owner involvement, and many direct competitors will trade at or below the lower quartile. Most businesses will fall somewhere in the middle.

Based on this data, half of child care and day care center businesses are valued between 1.94 and 4.03 times their annual seller discretionary earnings, with 25% of popular, larger businesses trading above this range, and 25% of smaller, less popular ones trading below.

Financial Benchmarks

To determine how a business compares in terms of revenue and earnings relative to industry peers, it’s necessary to have some insight into industry standards. "Benchmarking" describes the practice of comparing a business’s financial performance to typical industry standards to determine where a business falls relative to other businesses in the same industry. These benchmarks can help guide owners and investors towards appropriate valuation multiples from the range above.

To that end, we have aggregated financial ranges useful for comparing an individual day care or child care center business to its peers in the market.

Day Care and Child Care Center Business Revenue and Earnings Trends

Median revenue of day care and child care centers sold on BizBuySell has been consistent, with the exception of 2022, when a disproportionate number of larger, higher grossing businesses were listed and sold. These were likely the healthier businesses that survived the Covid-era lock-downs and work-from-home policies. In general, day care and child care businesses tend to be some of the more consistently profitable businesses in our dataset.

Earnings Ranges

Discretionary earnings (used interchangeably with the terms "cash flow" and seller's discretionary earnings or SDE) is often the crux of business valuations, so it is important to benchmark it relative to other businesses traded on the market. Below you will find discretionary earnings ranges for day care and child care businesses sold over the past five years, as well as recent for sale listings.

Revenue Ranges

Sales volume plays a large role in business valuation, as it measures the size of the potential income opportunity for new ownership. It's not uncommon for buyers to select an earnings multiple range based on overall revenue. The table below includes revenue ranges of child care and day care centers sold over the past five years, as well as recent for sale listings.

How Revenue and Earnings Level Affects Business Values

Clearly higher levels of earnings lead to higher valuations, even given the same multiple. However, valuation multiples also tend to rise with business sales volume. Successful child care and day care centers that consistently generate higher revenue (and maintain reasonable profit margins) tend to sell for earnings multiples on the higher end. So, a child care center with sales of $850k annually may sell for an earnings multiple near 4, while a smaller day care with sales below $400k may sell for an earnings multiple closer to 2 or less.

This tendency for higher sales volumes to fetch higher valuation multiples is largely driven by the economics of business acquisition financing. Higher volume businesses give buyers more cushion to cover debt service obligations and still have enough left over to pay the new owner a reasonable income.

The other major factor that will affect valuation multiples is the real estate involved in the transaction, and whether its owned or leased.

Sector Comparisons

For a more complete understanding of the market and valuation standards, consider comparisons within the broader child care and education category when benchmarking day care and child care centers. The chart and table below include key metrics from sales of select child care and education businesses on BizBuySell between 2021 and 2025.

There is a clear relationship between sales volume and earnings multiple across all child care and education businesses sold. The larger the business, greater the number of students, and lower the churn rate, the more valuable the business relative to its earnings.

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