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Category Archives: Buying A Childcare Company or School

What Are the Initial Questions I Should Ask About an Early Education Company If I’m Interested in Buying It? 

 

The Initial Questions have only one goal. Determine whether a company is interesting to you or a waste of your time as quickly as possible. While the questions won’t be exactly the same for everyone, the following should cover most if not all of you first look.

  1. Location
  2. Annual Revenue
  3. Annual Cash Flow. Specifically, EBITDA and EBITDAR. It is important to closely define “cash flow” as many people have very loose definitions for this term. A misunderstanding here can cost you time and money.
  4. Current appraised value of any real estate included in the deal.
  5. The original cost or current market value of any furniture, fixtures and equipment (FF&E) included in the transaction.
  6. The market value of the business component and how that market value was determined.
  7. The total asking price.
  8. Whether the company is properly licensed and in good standing with regulators.

You’ll certainly have other questions, but these first few can save you time, energy and money when you’re trying to identify the right candidate.

As always, we hope it helps.

Best to you…

Brad Barnett, President
BFS®

(Legal Disclaimer: Always consult the proper professionals before taking action. By and before the use of the information provided herein, reader agrees that BFS® is not responsible for viewer’s actions related to said information.)

Funding Your Early Education Company

  Many of us need money from other people to start and grow companies. The money comes from banks, partners, investors, venture capitalists, equity funds…and/or our closest friends and family. No matter what the source is, understand two things. One, there is always a cost to using someone else’s money. Two, the cost can varyContinue Reading

How Can I Get the Best Loan Terms For My Early Education Company?

  The answer is….don’t just shop multiple banks, shop them aggressively and meticulously. If you’re not the kind of person that wants to do that type of work, there are people who will do it for you and those people are far less expensive than the quarter-century mistake you can make by accepting the wrongContinue Reading

Market Timing in the Early Education Industry

  In every industry and economic cycle, there are always people who believe that they can predict the future usually because they have some business model that’s been right at least once. This authority will point to their example of being right without discussing how many times they have been wrong and explain that you’reContinue Reading

Choosing The Right Bank For Your Loan

  In this industry and this era, there really is no choosing the right bank or the right banker over the long-term.  If you want the best odds of getting the best results for you and your business, then choose banks and bankers on a case-by-case basis.  There are a lot of exceptionally good peopleContinue Reading

How Much Down Payment Money Do I Need To Buy A Childcare Company?

  Unfortunately, the answer to this question is one that many people learn the hard way.  We can make it easier for you here.  The amount of down payment required for your purchase of a childcare company or school is determined primarily by the following four factors: 1.  Your credit score. 2.  Your occupational background.Continue Reading

How High Does My Credit Score Need To Be?

  Here are a couple of general rules for your consideration. Your minimum credit score needs to be at least 650. If your credit score is below 650 then there are ways to fix it.  Here’s how it works… A. You can challenge anything in your credit report.  If the merchant can’t provide proof ofContinue Reading

What Information Should a Letter of Intent (“LOI”) Include?

  As it pertains to the buying and selling of an early education company (childcare centers or schools), a Letter of Intent (“LOI”) is a written statement expressing the intention of the participating parties to enter into a formal agreement. A LOI is not a formal agreement or a binding contract. The LOI serves theContinue Reading

SBA Fees Explained

  To offset the costs of its loan programs to the taxpayer, SBA charges a guaranty fee and a servicing fee for each loan approved and disbursed. The amount of the fees is based on the portion of the loan guaranteed by the SBA. The lender may charge the upfront guaranty fee to the borrowerContinue Reading

Should I Use Conventional Financing or SBA Financing?

  The answer to this question isn’t right or wrong. It is a matter of what is better for you. “Conventional” financing is typically defined as a bank loan that is not guaranteed by the SBA (Small Business Administration). While terms are always negotiable with lending institutions, the primary advantage of using this type ofContinue Reading