5-Star Katy Childcare Center, 15-Year Texas Operator

$500K

SDE

2.5x

Multiple

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Full Editorial Writeup

This is a licensed childcare center in Katy, Texas that has operated continuously for roughly 15 years and carries a perfect 5-star Google rating. The center holds licensed capacity of approximately 105 children and has run above 70 percent occupancy since 2023, generating owner cash flow exceeding $500,000 annually. The sale includes a leased facility (with multiple years remaining plus a 5-year extension option), transportation vehicles, playground, furnishings, and a documented curriculum, with long-tenured staff and systems already in place.

Katy is one of the fastest-growing suburban corridors in the Houston metro, with sustained residential and family in-migration that drives organic demand for licensed care. The listing emphasizes that growth was achieved with minimal advertising, meaning enrollment has been built on reputation and word of mouth rather than paid acquisition. With 30-plus percent of licensed seats still open, the operating leverage to grow earnings toward a stated $600K+ at full capacity exists without new facility capital.

The seller is relocating out of state and is selling a going concern: operations, lease, staff, and goodwill. The deal is marketed as SBA approved with 20 percent down at a $1.25M asking price against $500K cash flow, a 2.5x multiple that is attractive for a stable, recurring-demand service business if the earnings prove out in diligence.

Why we like it

Earnings quality is anchored in a returning customer panel: childcare is billed weekly or monthly against enrolled families, so revenue recurs by default rather than being re-won each month. With $500K in cash flow since 2023 and a stated 2.5x multiple, the headline price is well below typical childcare comps that trade at 3-4x.
The moat is reputation and scarcity of licensed capacity. A perfect 5-star Google rating over 15 years plus a hard-to-replicate state license and a long lease with a 5-year extension make this difficult for a new entrant to copy quickly. Switching costs for parents are high once a child is enrolled and settled.
Demand tailwinds are real and structural. Katy is absorbing continuous residential and family growth, and Texas has a documented childcare affordability gap with a subsidy waitlist topping 100,000 children. Essential care for working parents is one of the last line items households cut in a downturn.
Operator advantage is concrete: occupancy sits above 70 percent against ~105 licensed seats, so filling the remaining 30-plus percent drops almost entirely to the bottom line with no added facility spend. Growth was achieved with minimal advertising, leaving an untouched marketing and referral lever for a disciplined owner.

How to improve it

Attack the occupancy gap in the first 90 days. Build a simple waitlist and tour-to-enrollment funnel, tighten follow-up on inquiries, and target the stated path from 70 percent to full capacity, which the seller projects can lift profits past $600K without new facility investment.
Stand up a basic digital acquisition engine. The center grew with almost no advertising, so a Google Business Profile optimization, local SEO, paid search for 'Katy daycare', and a structured parent referral incentive could meaningfully accelerate enrollment at low cost.
Extend hours and program offerings to raise revenue per seat. Adding before and after-school care, summer camp, drop-in care, or enrichment programs monetizes the existing facility and staff for more hours of the day.
Pursue state subsidy and tuition-assistance participation. With a 100,000-plus child subsidy waitlist in Texas, enrolling eligible families through subsidized programs can fill seats with a reliable payer and insulate occupancy from private-pay softness.
Formalize staff retention and succession. Tenured staff are the core asset, so lock in key teachers with retention bonuses, clear wage bands, and a lead-teacher structure to reduce turnover risk and protect quality as you scale occupancy.
Review and reset tuition against market. Confirm rates have kept pace with Katy cost-of-living and competitor pricing; even a modest annual increase on a near-full roster flows directly to cash flow given the fixed cost base.
Install financial and KPI reporting discipline. Track enrollment, occupancy percentage, revenue per child, staff-to-child ratios, and labor as a percent of revenue monthly so the levers are managed rather than assumed, especially if run as part of a multi-site platform.

Diligence notes

Revenue is not disclosed, only cash flow. Demand the full P&L and verify the $500K cash flow against bank statements, tuition ledgers, and tax returns, and confirm what owner add-backs and owner labor are embedded before accepting the 2.5x multiple at face value.
Scrutinize the lease. The facility is leased, not owned, so review remaining term, the 5-year extension mechanics, rent escalators, renewal rights, and whether the landlord relationship transfers cleanly; an expiring or unfavorable lease materially changes the value.
Validate licensing and compliance. Confirm the Texas childcare license, inspection history, any violations or corrective actions, staff-to-child ratios, background checks, and that the license transfers to a new owner without lapse, since the license is the business.
Test enrollment durability and concentration. Review month-by-month enrollment and occupancy, waitlist, and age-group mix; confirm the above-70 percent occupancy is stable rather than seasonal, and that no small group of families or a single corporate contract drives outsized revenue.
Assess staff dependency and transition risk. Identify the lead teachers and director, their tenure, compensation, and whether any plan to leave with the seller; the seller's 1-month training window is short, so quantify key-person risk and continuity of the curriculum.
Confirm the condition of included assets and transportation. The sale includes vehicles and playground equipment; inspect for deferred maintenance despite the 'no capital catch-up' claim, and verify insurance, vehicle titles, and compliance for transporting children.

Source

Originally listed on BizBuySell. View original listing →