Preschool 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 comparable sold businesses to provide insight into the business for sale market and important benchmarks for pricing and evaluating preschool businesses relative to industry standards.

See also: Day Care & Child Care Business Valuation Benchmarks

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Highlights of Preschools Sold on BizBuySell

Preschools and early learning centers listed and sold on BizBuySell are privately owned small businesses that provide care and education for children, primarily aged 3-5. While most preschool businesses sold are independently operated, franchise brands do appear among those sold, and are included in this data set. Generally, preschool and early learning centers operate out of dedicated commercial property, with fewer than 5% operating out of a home. Sizes vary greatly, but most of these businesses are licensed for 10-50 children.

Preschool Business Transaction Trends

The median sale price of preschool businesses listed and sold on BizBuySell has generally been flat, though volatile year-to-year, since the end of Covid-era closures. The five-year change in median price is -27%, but fluctuates +/- 30% between years, depending on whether more larger or smaller preschools enter the for-sale market.

Preschool 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.

Preschool valuation multiples have generally followed the broader market, falling from 2021 through 2023 as rising interest rates made acquisition financing more expensive, before leveling off through 2025. The relative difference in earnings and revenue multiple trends is a consequence of rising and falling average profit margins.

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 preschool 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 preschool businesses were valued between 1.90 and 3.55 times their annual seller discretionary earnings, with 25% of popular, larger schools 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 preschool business to its peers in the market.

Preschool Business Revenue and Earnings Trends

Median revenue of preschools sold on BizBuySell rose following the Covid-era lockdowns, as those businesses that survived saw a resurgence of income and chose to exit. Since then, median revenue has fluctuated annually but remained generally flat. Owner earnings remained strong, but profit margins were pressured in 2024 and 2025 as inflation drove up expenses.

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 of preschool 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 preschools sold over the past five years, as well from 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 preschools that consistently generate higher revenue (and maintain reasonable profit margins) tend to sell for earnings multiples on the higher end. So, a preschool with annual revenue of $1MM may sell at an earnings multiple over 3.5, while a smaller school with sales below $400k may sell at 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.

Sector Comparisons

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

Most education and child care related businesses tend to be valued similarly, as they share core business characteristics, with the primary driver of higher valuations being volume of sales. Preschools generate average sales on the high end and strong average profit margins, so they tend to command earnings multiples on the higher end as well.

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