A childcare business in Australia is worth 3x to 5x its annual EBITDA. A metropolitan centre netting $200,000 typically sells for $600,000 to $1 million; high-performing urban centres can push beyond that. Regional centres sit closer to the 3x end. Where you land in that range comes down to four things: occupancy, lease quality, compliance rating, and whether the business actually runs without you.
That’s the answer. The rest of this article explains why each of those factors matters — and what you can do about them.
The EBITDA Multiple — and What Moves It
Most Australian childcare sales are priced on an EBITDA multiple. EBITDA — earnings before interest, tax, depreciation, and amortisation — is essentially what the business earns before accounting treatments vary from one operator to the next. It’s what a buyer uses to underwrite a purchase price.
A well-run metropolitan childcare centre with 80+ licensed places, consistent 85% occupancy, and a stable management team regularly achieves 4.5x to 5x EBITDA in Australia. That’s not a ceiling — it’s where strong operators tend to land.
The spread between 3x and 5x might look modest on paper. On a $300,000 EBITDA business it’s the difference between a $900,000 sale and a $1.5 million one. Half a million dollars difference, coming entirely from the quality of the operation — not the number itself.
Two structural reasons drive childcare multiples higher than you’d see in, say, retail or hospitality. First, revenue is unusually predictable. The Child Care Subsidy (CCS) flows directly from the federal government to the centre, meaning your largest income source doesn’t involve chasing debtors. Second, demand for childcare places in urban Australia has consistently outstripped supply for the better part of a decade. Buyers are paying for that structural tailwind, not just this year’s profit.
Institutional buyers — G8 Education, Guardian Early Learning, Goodstart, and the private equity firms that have been circling the sector — have pushed metropolitan multiples up further over the past several years. For a small operator selling a single centre, that’s genuinely good news. You’re selling into a market where serious money is competing for quality assets.
Occupancy Rate: The Number Buyers Obsess Over
If there’s one number to get right before you sell, it’s occupancy. Buyers underwrite on current occupancy — not what you think you could achieve, not what you achieved three years ago during a building boom, not what the waitlist implies.
In Australian childcare transactions, centres running above 85% occupancy consistently attract higher multiples. Below 75%, buyers start discounting. Below 70%, some buyers walk.
The maths aren’t complicated. Take a 100-place centre in a Brisbane suburb running at 90% occupancy, charging $130 per day, five days per week, 52 weeks. That’s roughly $4.3 million in annualised revenue. Drop that to 70% occupancy and revenue falls to $3.3 million — a $1 million difference that flows almost entirely into profit, since your major fixed costs (rent, staff) barely move.
Per licensed place is a secondary valuation check that buyers use as a sanity test. Metropolitan centres in strong catchments trade at $30,000 to $45,000 per licensed place. Regional centres sit at $15,000 to $25,000. A 100-place inner-suburban Melbourne centre at $40,000 per place implies a $4 million valuation — which should reconcile reasonably with your EBITDA multiple. If the two methodologies are miles apart, someone’s maths is off, and a competent buyer will want to know why.
Freehold vs Leasehold: Completely Different Transactions
Whether you own the property or rent it changes the deal structure entirely — not just the final number.
A leasehold centre is valued on EBITDA, and the lease is the single biggest risk factor in the deal. A buyer’s lawyer will scrutinise the lease duration, rent-to-revenue ratio, assignment provisions, and renewal options before anything else. A 15-year lease with options, at a rent-to-revenue ratio below 15%, at a strong site with high foot traffic, is an asset in every sense. A lease with three years remaining, a landlord reluctant to assign, and rent at 22% of revenue is something closer to a liability.
Minimum lease term buyers want to see: ten years remaining, including any options. Below five years, your transaction options narrow considerably. Talk to your landlord before you talk to a buyer — confirm your renewal options are exercisable, get any extension documented, and ideally get it done before you go to market.
A freehold sale is a different beast altogether. You’re conducting a commercial property transaction layered on top of a business transaction, with different buyers and different valuation methodologies for each component. Some operators want the freehold; large corporate buyers often prefer to acquire the business and sale-and-leaseback the property, freeing up capital for further growth. If you own the land and building, get separate commercial property advice. The two valuations inform each other, but they’re not the same exercise.
ACECQA Ratings and What They Do to Your Multiple
Australia’s National Quality Framework rates childcare services on a five-point scale: Excellent, Exceeding National Quality Standard (NQS), Meeting NQS, Working Towards NQS, and Significant Improvement Required.
Most buyers expect Meeting NQS as a floor. An Exceeding NQS rating — achieved by roughly 40% of Australian services — adds genuine value because it supports a marketing premium that flows through to occupancy and allows above-average daily rates.
A centre rated Significant Improvement Required by ACECQA is extremely difficult to sell. The rating signals potential compliance action from the relevant state regulator. Most buyers will either walk or apply a discount so steep that a transaction rarely makes sense.
The rating also reflects — and affects — your staff profile. Exceeding centres typically carry higher qualified educator ratios, which is a cost. But that cost is what earns the rating that supports the premium. Buyers looking at a centre with an Exceeding NQS rating, 90% occupancy, and a waiting list will view those three things as a package.
What Institutional Buyers Are Actually Looking For
The largest buyers in Australian childcare — corporate operators and the PE firms backing them — are looking for something specific: a centre they can absorb into a network without the founder.
If you’re the person who builds the parent relationships, approves the curriculum, manages the educators day-to-day, and knows every family by name — that’s a wonderful thing. It’s also a concentration risk that serious buyers price into the deal. Not as a slight; as maths.
What corporate and institutional buyers want:
- A centre director who runs day-to-day operations independently
- Documented educational programs — not knowledge sitting in the owner’s head
- Childcare management software in use: Kinderm8, QikKids, Xplor, or similar
- A clean compliance history — no ACECQA conditions, no regulatory enforcement actions
- Three years of consistent financial records, preferably prepared by an accountant familiar with the sector
- Scale potential — sites with room to expand licensed places, or existing multi-centre operators
Most of these things develop naturally in a well-run centre by years five to eight. If you’ve been operating for a decade with a strong director, solid systems, and a clean track record, you’re already building a business that attracts a wide buyer pool — including institutional buyers who might pay a premium for a site they want in a specific catchment area.
If you’re still two or three years from selling, read our guide on preparing your business for sale. The actions that move a childcare multiple from 3x to 4.5x take time — they can’t be applied in the six months before you go to market.
Common Mistakes That Cost Sellers
Confusing revenue with profit. Childcare businesses carry significant operating costs. Staff wages alone typically represent 60-70% of revenue. A $2 million revenue business with $500,000 in rent and $1.3 million in wages is not the same as a $2 million revenue business with better cost control. Buyers see through top-line numbers quickly.
Inflated add-backs. Add-backs — costs you run through the business that a new owner wouldn’t incur — are legitimate and expected. Personal vehicles, owner wages above market rate, non-recurring repairs. But inflated add-backs (family wages for minimal work, personal holidays run as staff training, unrelated expenses) rarely survive due diligence. Present them cleanly and with documentation. A buyer who discovers add-backs have been overstated loses trust in everything else in the data room.
Not sorting the lease. A disproportionate number of childcare sales that fall over in due diligence do so because of lease issues — landlords who won’t assign, renewal options that haven’t been exercised, rent that’s reset to market. Fix this before you go to market, not during it.
Overestimating occupancy trajectory. Buyers don’t pay for your waitlist. They’ll ask how long people have been on the waitlist and why those places haven’t converted. A long waitlist at a centre running at 75% occupancy suggests a mismatch in age group demand, not a pipeline of coming revenue.
How to Get a Better Number
The practical steps to move your multiple toward the higher end of the range:
- Push occupancy above 85%. Fill the waitlist actively. Consider a sibling priority policy to lock in family cohorts across multiple years.
- Work toward Exceeding NQS if you’re currently at Meeting. It takes 12-18 months of genuine focus, but the marketing premium and multiple uplift are real.
- Document everything — curriculum frameworks, staff training records, parent communication processes, emergency procedures. Institutional buyers want to see the system, not the person running it.
- Get the lease sorted — ideally ten or more years remaining with options, at a rent-to-revenue ratio below 15%.
- Run three clean years of books. Normalised accounts, add-backs clearly documented with backup, prepared by an accountant who understands childcare.
For a broader view of what you can do to increase your business value before selling, the same principles apply in childcare as in any other sector — reduce owner dependency, document systems, clean up the financials.
And it’s worth getting your head around the tax implications when you sell before you agree on a number. The CGT small business concessions can significantly affect what you actually keep.
FAQs
How much is my childcare business worth?
Australian childcare businesses typically sell for 3x to 5x EBITDA. Metropolitan centres with 80+ licensed places and 85%+ occupancy achieve 4.5x to 5x. Regional centres sit closer to 3x. Per-licensed-place values range from $15,000 in regional areas to $45,000 in major cities.
How much does a childcare centre owner make in Australia?
Well-run centres generate net profit margins of 12-20%. A 100-place centre at 85% occupancy charging $120 per day generates roughly $3.7M in revenue. A strong operator might net $400,000-$650,000 after staff, rent, and running costs — before adjusting for an owner salary.
Is a business worth 3 times profit?
For childcare, 3x profit is the floor — typically for smaller regional centres or those with compliance concerns. High-performing metropolitan centres regularly achieve 5x or more. The multiple depends on occupancy, lease quality, ACECQA rating, and management depth.
How profitable is it to own a childcare centre in Australia?
Childcare can be highly profitable. Well-run centres generate 12-20% net margins, supported by predictable CCS government funding. Margins narrow if rent exceeds 18% of revenue, occupancy falls below 80%, or staff-to-child ratios are stretched beyond regulatory minimums.
If you’re thinking about selling your childcare centre and want to understand what a buyer would actually pay, get in touch. We advise business owners across Western Australia on business sales and can help you work through the numbers properly before you go to market.
Want a rough starting point right now? Try our business valuation calculator — it won’t replace a proper conversation, but it’ll give you a number to work with.