Daycare Valuation Template

Work through the SDE Multiple Approach and Value Drivers Scorecard together. The SDE normalization is critical for childcare because owner-directors frequently pay themselves below the market rate for a replacement director, or run personal vehicle and phone expenses through the center. The replacement director wage used in the model defaults to $55,000–$65,000, which reflects what a qualified, licensed childcare director with center management experience earns in most U.S. markets — adjust this to your local market if needed. The Value Drivers Scorecard is where childcare centers either earn or lose their premium: license transferability alone can swing the multiple by half a turn, and buyers consistently cite staff credential depth and occupancy rate as the two factors that most affect their offer. Work through each scoring dimension honestly, as this is what a buyer and their broker will verify during due diligence.

The typical SDE multiple range for profitable daycare centers is 2.0–3.5x, but most transactions close between 2.2–3.0x. Centers above 90% of licensed capacity, with a majority of private-pay enrollment (rather than subsidy-dependent), NAEYC accreditation, and a teaching staff that isn't likely to leave in the transition routinely reach the upper end of that range. Subsidy revenue itself is not a disqualifier — many highly profitable centers run 40–50% subsidy enrollment — but buyers want to see long-term contracts or stable participation history with the subsidy program, not annual renewals that depend on state budget cycles. Gross margins in well-run daycare centers typically run 30–50%, and net margins land around 10–16% for owner-operators. SDE as a percentage of revenue often falls in the 15–25% range for centers that sell at the high end of the multiple.