How to Value a Multi-Location Childcare Business in 2026

Single-location daycares are a small-business asset. A group of five or more licensed centers is a completely different animal — and the market prices it that way. Over the last decade I've watched childcare go from a fragmented mom-and-pop industry to one of the most actively rolled-up sectors in private equity, with KinderCare, Bright Horizons, Learning Care Group, Spring Education, and Endeavor Schools all paying real money for quality platforms.

If you own 5-30 centers, the gap between what a broker tells you and what a sophisticated PE buyer will pay can be several turns of EBITDA. Here's how the math actually works.

The Multi-Unit Premium

A standalone center doing $150K of owner earnings sells for 2.5-3.5x SDE to another operator. Bundle ten of those same centers together with clean books, shared administration, and a consistent brand, and the aggregated business sells for 7-12x EBITDA. That isn't a markup for paperwork — it reflects real structural differences. Multi-unit operators have professionalized back office, diversified enrollment risk across locations, and eliminated the key-person discount that kills single-center valuations.

Here's the rough multiple grid I see in the current market:

• Add-on to an existing PE platform (5-9 centers): 6-8x EBITDA. Buyers like KinderCare and Endeavor are tucking these in at mid-single-digit multiples because they already have the shared services.
• Regional platform (10-20 centers, one state): 8-10x EBITDA. Enough scale to matter, but geographic concentration caps the multiple.
• Multi-state platform (20+ centers): 10-12x EBITDA, sometimes higher. This is genuine platform territory — a PE firm will use your company as the anchor for a new roll-up.
• Premium/private-pay concepts with waitlists: add 1-2 turns. Primrose, Goddard, and similar franchised concepts with waitlisted centers trade at the top of the range.

A group doing $4M of pro-forma EBITDA across 12 centers in Texas could reasonably expect $32-42M in enterprise value. The same $4M coming from a single large center wouldn't see half of that.

How Buyers Build Pro-Forma EBITDA

The number you report on your tax return is not the number a PE buyer will value. Every serious childcare diligence process builds a pro-forma EBITDA that adjusts for a handful of predictable items. You need to understand this before you go to market, because the gap between reported and pro-forma is typically 15-30%.

Owner compensation normalization is always the first adjustment. If you're paying yourself $250K to run a 10-center group, a buyer will replace you with a regional director at $120-140K and add back the difference. That alone can add $100K+ to EBITDA. Read our guide on adjusted EBITDA add-backs to see how this plays out line by line.

Rent normalization matters when you own the real estate. Many founders lease from themselves at below-market rates. Buyers will mark rent to market — usually $20-30 per square foot in suburban markets, higher in metros — and the adjustment is almost always negative to EBITDA. Plan for it.

Enrollment run-rate is the most contested adjustment. If you opened a new center 8 months ago and it's still ramping, buyers will either use trailing 12-month actuals (low) or annualized current run-rate (high). Which one they pick depends on how well you document the ramp curve across your existing centers. I always tell clients to build a cohort chart showing enrollment-by-month for every center from opening — it's worth real dollars in negotiation.

Subsidy and COVID-era adjustments. Federal childcare stabilization grants, ERC, and state subsidy bumps inflated 2021-2023 numbers across the industry. Any buyer worth their salt will strip these out. If your 2023 EBITDA included $400K of one-time grant revenue, expect it gone from pro-forma.

State Licensing: The Hidden Value Driver

Childcare is regulated center-by-center, state-by-state, and the licensing regime has enormous impact on value. This is the part most first-time sellers underestimate completely.

In a stock sale, licenses transfer with the entity. In an asset sale — which is what most PE buyers prefer for tax reasons — every single center needs to be re-licensed to the new owner. In some states (Texas, Florida) that's a 30-60 day process. In others (California, New York, Massachusetts) it can take 4-9 months per center and requires in-person inspections, background checks on new ownership, and sometimes facility upgrades to meet current code.

PE buyers price this friction in. A 10-center group concentrated in California will trade at a 1-2 turn discount to an identical group in Texas, purely because of licensing complexity. If you operate in a slow-licensing state, the workaround is to structure as a stock deal with a tax gross-up — but that only works if you can find a buyer willing to inherit your legal entity.

Citation history is the other licensing landmine. One serious citation — a child safety incident, a staff-ratio violation, a failed inspection — within 24 months of sale will spook institutional buyers. I've seen deals fall apart in diligence because a single center had an open Department of Children and Families investigation. Clean up your regulatory file before you go to market.

Unit Economics That Buyers Actually Care About

Every childcare diligence process eventually lands on four per-center metrics. Know them cold for every location in your portfolio before the first buyer call.

Utilization rate. Licensed capacity versus actual enrollment. Centers at 85%+ utilization are considered full — buyers assume minimal upside from operational improvement. Centers at 65-75% are the sweet spot because they throw off cash today and offer a clear lever for a new owner. Centers below 60% raise hard questions: bad location, weak leadership, or a structural demand problem?

Revenue per child per week. Suburban infant rates run $350-500 per week; toddler and preschool rates run $250-400. Premium concepts (Primrose, Goddard, Challenger) command 20-40% more. If your ticket is meaningfully below the local market, buyers will assume you have pricing power and model price increases into their synergy case — good for you.

Labor ratio. Labor is 55-68% of revenue at a healthy center. Above 70% and the center is structurally broken. Below 55% and buyers will assume understaffing or ratio violations coming. Target 60-64% across the portfolio.

Director tenure. A center with a director in place 5+ years is worth materially more than one that's had three directors in three years. Director turnover drives enrollment churn, and enrollment churn drives EBITDA volatility, and volatility kills multiples.

What Destroys Multi-Location Childcare Value

I've watched good businesses leave 2-3 turns on the table for avoidable reasons. Here are the four biggest.

Commingled center-level P&Ls. If you can't produce a clean month-by-month P&L for every center going back three years, you're going to get beat up in diligence. Buyers need to see which centers are carrying the group and which are dragging it down. Invest in the accounting system before you market the business.

Lease concentration risk. If your top 3 centers all have leases expiring within 24 months and no renewal options, you're selling a depreciating asset. Get renewals signed before the process starts — even at slightly unfavorable terms. Lease certainty is worth more than rent savings.

Founder-dependent operations. If you personally approve hires, handle parent complaints, and sign payroll, buyers will discount heavily for transition risk. Build a regional director layer at least 12 months before sale.

A single underperforming center. One center losing $200K a year can mask a platform that's otherwise worth 10x EBITDA. Consider closing or selling the dog before the group process — the remaining portfolio will trade at a much higher multiple.

Preparing for a PE Process

If you think you're a candidate for a platform sale, start 18-24 months out. The playbook is well-worn: get audited financials, build center-level reporting, professionalize the management team, clean up licensing and HR files, and document your curriculum and operational playbook. Buyers pay for repeatability — the more your business looks like a replicable system rather than a founder's life project, the higher the multiple. Our 18-month sale prep guide walks through the full timeline.

The Bottom Line

Multi-location childcare is one of the few SMB categories where the EBITDA multiple genuinely doubles once you cross the platform threshold. Getting there takes operational discipline — center-level accounting, clean licensing, a real management bench — but the payoff is real. A founder who treats their 8-center group as a small business will sell for 4-5x. A founder who treats it as a platform and prepares accordingly will sell for 9-11x. Same assets, very different outcomes.