Group of 4 North Texas Preschools with Real Estate

$3.6M

Revenue

$1.5M

SDE

7.4x

Multiple

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Full Editorial Writeup

Package of four (4) preschools and the real estate. All preschools enroll students from 6 weeks old through school-age. Three are profitable operating schools with a full-time Director running the day-to-day operations. One is a vacant preschool. The asking price includes the operating businesses, real estate, buses, furniture, fixtures and equipment. Each school is well-equipped. The operating schools have an experienced and knowledgeable staff. The owner is selling because they are selling all of their education holdings in the DFW area. Interested buyers should have a minimum net worth of $1,000,000. The ideal buyer would have experience in the child care industry. This is neither an offer nor a solicitation to sell securities. Real Estate Brokerage License on file. For more information, please contact Gateway Mergers & Acquisitions.

Why we like it

Earnings quality is anchored in an essential, non-discretionary service: parents keep paying for childcare because they need to work, and the 6-weeks-through-school-age range spreads revenue across multiple enrollment cohorts. The $1.5M in cash flow on $3.58M revenue implies roughly 42 percent margins, which is healthy for a multi-site preschool operation.
Durability comes from the real estate ownership and the local moat childcare enjoys. Parents rarely switch providers mid-year, licensing creates barriers to new entrants, and owning the land at four sites removes lease risk and landlord leverage that squeezes most childcare operators.
Market tailwinds favor childcare in growth markets, and North Texas is one of the fastest-growing metros in the country. Rising household formation and dual-income families in DFW support sustained demand for infant and toddler care where supply is chronically tight.
The operator advantage here is structural: three schools already run under full-time Directors, so the model is manager-run and scalable rather than owner-dependent. A buyer with existing childcare infrastructure can layer these sites onto shared back-office, marketing, and procurement without adding much overhead.
The vacant fourth school is an embedded free option. If a buyer can license and fill that facility, they add a fourth revenue stream on real estate they already own, improving the effective multiple on the whole package.

How to improve it

Reopen the vacant preschool as the first priority. Model the licensing timeline, renovation cost, and staffing ramp, then treat the incremental enrollment as pure upside on real estate already inside the purchase price. This single lever can move blended cash flow materially within 12 to 18 months.
Audit enrollment and capacity utilization at the three operating schools within 90 days. If any location is running below licensed capacity, targeted local marketing and waitlist conversion can lift revenue with almost no added fixed cost given the Directors are already staffed.
Review tuition pricing against DFW market rates. Childcare pricing power is real in growth markets, and even a modest annual increase on a full roster flows almost entirely to the bottom line given the fixed-cost structure of staff and facilities.
Consolidate back-office functions across the four sites. Centralize billing, payroll, marketing, and vendor procurement to strip duplicate cost and create a platform that can absorb additional acquisitions in the DFW area the seller is exiting.
Add or expand ancillary revenue such as before/after-school programs, summer camps, transportation fees using the included buses, and enrichment add-ons. These carry high margins and deepen the relationship with existing families.
Lock in the Directors and key staff with retention agreements before close. In a manager-run childcare group the Directors are the business, so securing them protects enrollment and the earnings the multiple is priced on.
Evaluate a sale-leaseback or separate financing of the real estate post-close. Because the price bundles land and buildings, a buyer can potentially recapitalize the real estate to lower the effective cash-in on operations and improve return on equity.

Diligence notes

Separate the real estate value from the operating value immediately. Get independent appraisals on all four properties plus the buses, then recompute the multiple on operations alone; the 7.41x headline is misleading when a large share of the $11.15M is hard assets.
Verify licensing status, capacity, and inspection history at each operating school and for the vacant facility. Confirm the vacant school can actually be re-licensed, what it would cost, and whether any prior violations or closures explain why it sits empty.
Scrutinize enrollment trends and revenue concentration by site. Confirm whether the $3.58M revenue is stable or declining, how it splits across the three schools, and whether any single location carries an outsized share of the $1.5M cash flow.
Dig into staffing dependency and turnover. Childcare margins live and die on wage costs and Director retention, so review payroll, staff-to-child ratios required by Texas licensing, and whether current cash flow assumes any understaffing.
Confirm the reason for sale and whether the seller retains competing schools in DFW. The owner is exiting all education holdings, so verify there is no residual competition and understand what is included versus what is being sold elsewhere.
Assess deferred maintenance and capex on the buildings and bus fleet. Owning the real estate means owning roofs, HVAC, playgrounds, and vehicle upkeep, so budget realistic capital reserves that the reported cash flow may not fully reflect.

Source

Originally listed on BusinessBroker.net. View original listing →