Group of 3 North Texas Preschools with Real Estate

$3.6M

Revenue

$1.5M

SDE

6.8x

Multiple

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Full Editorial Writeup

This is a package of three preschools in the DFW metro area of North Texas, sold together with the real estate they occupy. Each location serves the full childcare age spectrum from six weeks old through school-age, which is the most valuable enrollment mix in the industry because infant and toddler care commands premium tuition and captures families early, generating years of downstream retention as children age up through the program.

The schools generate roughly $3.58M in combined revenue and $1.5M in owner cash flow, a healthy 42 percent margin that signals real operating leverage and disciplined staffing. Critically, day-to-day operations run through a full-time Director rather than the owner, meaning this is a manager-run group rather than an owner-operator job. The seller is exiting because they are divesting all of their education holdings in the DFW area, not because the business is troubled.

The $10.25M asking price bundles the operating businesses, the underlying real estate, buses, and all furniture, fixtures and equipment. That real estate is doing heavy lifting on the headline 6.81x multiple: a buyer needs to separate the value of the going concern from the value of the dirt to understand what they are actually paying for the cash flow. On operations alone, the multiple is materially lower once you back out the property at market value.

Why we like it

Earnings quality is strong: $1.5M of cash flow on $3.58M of revenue is a 42 percent margin, which is high for childcare and suggests full or near-full enrollment across all three sites. Tuition is collected monthly and largely prepaid, so the revenue is predictable and cash converts fast with minimal receivables risk.
Durability and moat come from the licensing and physical footprint. Childcare is heavily regulated, capacity-constrained by square footage and staff ratios, and parents are notoriously sticky once a child is enrolled and thriving. Owning the real estate at all three locations locks in the physical moat and removes landlord and relocation risk entirely.
Market tailwinds favor this asset. North Texas is one of the fastest-growing regions in the country, with strong household formation and dual-income families driving persistent demand for infant-through-school-age care. Childcare is recession-resistant because working parents cannot simply stop needing coverage during a downturn.
The operator advantage is real: each school already runs under a full-time Director, so this is a manager-led group, not a job you buy. A buyer with existing childcare infrastructure can layer these into a platform and absorb back-office, marketing, and procurement with little added overhead.

How to improve it

Audit and optimize enrollment mix within the first 90 days. Prioritize filling infant and toddler slots, which carry the highest tuition per child, and identify any classrooms operating below licensed capacity. Even a few incremental infant enrollments per site can move margin meaningfully given the fixed-cost base.
Implement a tuition review and annual escalator policy. Many family-run childcare operations underprice relative to market and skip regular increases. Benchmark against competing DFW centers and institute modest, predictable annual tuition bumps to protect margin against wage inflation.
Tighten staffing and labor scheduling to the exact ratios required by Texas licensing. Labor is the single largest cost in childcare, and small improvements in scheduling efficiency and reduced overtime drop straight to cash flow without touching the child-to-teacher ratios parents care about.
Add ancillary revenue streams that parents already want. Enrichment programs, extended-hours care, summer camps, meal programs, and transportation fees (buses are already included) can raise revenue per child with high incremental margins and modest incremental cost.
Build a simple digital marketing and waitlist engine. Localized Google presence, review management, and tour-scheduling automation reduce reliance on word of mouth and keep classrooms full. A managed waitlist lets you fill vacancies same-week rather than losing tuition to slow turnover.
Separate and evaluate the real estate as its own return stream. Consider a sale-leaseback on one or more properties post-close to recover capital, or refinance to unlock equity, since owner-occupied childcare real estate in growth markets is financeable and can lower blended cost of capital.
Formalize Director retention with incentive comp tied to enrollment and margin. The entire operating model depends on the full-time Directors, so lock in the key people with bonus structures before close to protect continuity through the transition.

Diligence notes

Get audited or accountant-prepared financials broken out by individual school. A three-site package can hide one weak location subsidized by two strong ones. Confirm each school is independently profitable and understand enrollment trends, tuition rates, and capacity utilization site by site.
Scrutinize the real estate allocation. Obtain independent appraisals for all three properties so you know exactly how much of the $10.25M is dirt versus going concern. The true operating multiple could be far below 6.81x once the property is valued separately, which changes the deal entirely.
Verify all state childcare licenses, inspection histories, and any citations or corrective actions. A single serious licensing violation or a lapsed permit can shut a location and destroy value. Confirm licenses transfer cleanly to a new owner and review any outstanding compliance issues.
Assess staff and Director tenure, employment terms, and turnover. Since operations run through full-time Directors, confirm they intend to stay and understand teacher retention and wage pressure. High turnover would signal hidden labor cost risk and enrollment instability.
Confirm enrollment is stable and not seasonally or one-time inflated. Pull monthly enrollment and revenue for at least 24 months, check the current waitlist, and understand any recent tuition increases or capacity expansions that may not be sustainable.
Review why the seller is exiting all DFW education holdings. Confirm there is no pending zoning, regulatory, demographic, or competitive change affecting these specific locations. Understand whether other schools in the portfolio are being sold to competitors who could pressure these three.

Source

Originally listed on BusinessBroker.net. View original listing →