Every preschool owner knows their enrollment number. Fewer know the metrics that buyers actually use to evaluate — and value — a childcare business. KPIs, or Key Performance Indicators, are the data points that tell the story of your school’s health, growth, and transferable value. Understanding them before you sell helps you present your business at its best and negotiate from a position of knowledge rather than guesswork.
Why Buyers Use KPIs
A P&L tells buyers what the business earned. KPIs tell them why — and whether it will continue earning after the sale. Buyers and their advisors use KPIs to assess operational health, identify risks, and benchmark your school against comparable transactions. Better KPIs support a higher multiple and a faster deal close.
Enrollment Utilization Rate
Current enrollment divided by licensed capacity. A school licensed for 100 children with 88 enrolled has an 88% utilization rate. Most buyers want to see 80%+ as a baseline, with 90%+ signaling strong demand.
Example: A school licensed for 120, currently enrolled at 110, has a 91.7% utilization rate. That premium signal tells buyers there’s genuine demand and limited available capacity — often commanding a 0.25x–0.5x higher multiple than a comparable school at 75% utilization. On a school with $200,000 SDE, that multiple difference is worth $50,000–$100,000.
Waitlist Status
A waitlist is one of the most powerful valuation signals in childcare. It tells buyers that demand exceeds supply — they’re not stepping into a school where they’ll need to market aggressively to fill slots. Even a modest waitlist of 20–30 families can meaningfully increase buyer confidence and support a higher multiple. Document your waitlist, track it consistently, and present it prominently in listing materials.
Revenue per Licensed Slot
Annual revenue divided by licensed capacity. For a 100-licensed-capacity school in Texas generating $1.2M annually, revenue per slot is $12,000. Schools with higher revenue per slot demonstrate pricing power and strong enrollment at premium rates — both signals that support a higher valuation.
Staff Turnover Rate
High turnover is expensive and operationally disruptive. The childcare industry has notoriously high turnover (30–40% annually nationally), so if your school has consistently lower turnover, that’s a genuine competitive advantage worth documenting and presenting. Track your annual turnover rate. If it’s meaningfully below industry average, that’s an eX-Factor worth highlighting.
Year-over-Year Revenue Trend
Buyers want to see growth or minimum stability. A school that grew revenue from $900,000 to $980,000 to $1,050,000 over three years tells a fundamentally different story than one that peaked at $1,050,000 three years ago and is now at $950,000. The trend matters as much as the current number.
SDE Margin
SDE as a percentage of revenue shows how efficiently the business converts revenue into owner earnings. Well-run childcare businesses typically target 15–22% SDE margins. A school with $1.2M revenue and $200,000 SDE has a 16.7% margin. Above 20% signals excellent cost management — and often commands a premium multiple.
Presenting Your KPIs for Maximum Impact
The sellers who get the best offers present their KPIs in a three-year comparative format that makes the trend immediately visible. A table showing enrollment, utilization, revenue, SDE, and SDE margin across three consecutive years tells a story that a single-year P&L never could. When that story shows consistent improvement, buyers feel the momentum — and are more likely to offer a premium to get in front of it.
What This Means for You
Pull together your KPI data today — monthly enrollment, monthly revenue, quarterly SDE estimates. The sellers with the most compelling stories are the ones who’ve been tracking consistently long enough to show a genuine trajectory. Know your numbers, understand what they tell buyers, and if any of them aren’t where you want them, you have time to change them before you list.
