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How Long Does It Take To Sell A Childcare Company?

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If you talk with enough brokerage companies, you will likely receive every answer from three weeks (not true) to a year.  The amount of time it takes to actually sell your childcare company varies from 90 days (about a 20% probability) to a year….and occasionally it takes more than a year to sell a childcare.

The amount of time is directly related to nine factors that can be affected by the seller or seller’s representatives.  The factors are as follows:

1. BROKERAGE FIRM – Choose the right one as a professional brokerage firm organizes and coordinates all of the professionals involved in the sales transaction.  If the brokerage doesn’t lead, then the buyers, attorneys, appraisers, inspectors, CPAs, lenders (banks / private equity firms), SBA personnel, and licensing representatives don’t know what is needed or when to act.

2.  BUYERS – Make sure they are always qualified financially and educationally.  Many potential buyers will not survive the rigors of the due diligence, financing and licensing processes on the way to closing a transaction.  Given the current marketplace, it is more important than ever to be sure that buyers are well-qualified.

3.  LENDERS – Make sure that buyers have dependable lenders.  From private equity firms to credit unions, sellers and buyers need to know more than “the lender is interested”.  Know that the lender understands the early education industry and makes loans for the acquisition of companies in this specific industry.

4.  ATTORNEYS – Hire the right type of attorney.  Attorneys typically focus on an area of expertise.  Your attorney may be the best patent attorney in the world, but that doesn’t make him or her the right person to guide the legal parameters of your transaction.

5.  ACCOUNTANT / CPA – At some point in your transaction (assuming it is handled properly) you are going to be asked the following question:  How to you want to accept the money?  Make sure your CPA is prepared to answer the question with all of the best options for you specifically.  Remember, the only part of the money that counts for you and your family is the part you get to keep.

6.  LOAN DOCUMENT ORGANIZERS – Whether the function is fulfilled by a bank or a mortgage broker, make sure they have a track record for contributing to loans that close.  Any company can accept fees and get half way through the process.  Don’t be afraid to ask about a track record.  It could save you fees, time, energy and frustration.

7.  LICENSING PROCESS – If your transaction is going to close, then it is going to be blessed by state licensing.  Given the need for discretion in our industry, it is imperative to be well-prepared for this conversation as well as timing the conversation perfectly.

8.  CLOSING – Always have the closing managed by a professional law firm, title company or escrow company.  It isn’t very expensive, and it helps ensure that nothing is overlooked.

9.  TRANSITION – Many people are so focused on getting through closing that they forget the importance of transitioning the centers or schools smoothly to the new owners.  When a transaction is managed properly, buyers and sellers will be well-organized and template documents will be provided to buyer and seller so the transition is as comfortable as possible for the seller, buyer, staff and parents of the centers or schools involved.

Please tell us if you found this article helpful….or tell us what other topics you would like for us to discuss. Also, comment below to share your thoughts on this blog post.

Click Here to see more blog posts on selling a childcare company, Montessori, preschool, or special needs school.

(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.)

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