Built to Sell: Preparing an Early Learning and Childcare Business for the Right Buyer at the Right Price

Most owners decide to sell long before they are ready to sell.

In many cases, the process follows a familiar pattern. An owner invests two or three decades building and developing a service-led business. Over time, external triggers emerge – a call from a broker, increased activity from competitors, or the growing weight of another operational cycle. Gradually, a realisation takes shape: it may be the right time to consider an exit.

At that point, the owner typically prepares three years of financial accounts, undertakes some operational tidying, and brings the business to market, often with the expectation that its value will be determined solely by the financial figures presented.

At this stage, buyer advisers typically become involved. A business that initially appears well‑established can, under detailed due diligence, begin to present a range of unresolved issues. Informal lease arrangements, operational data that is not systematically reported, and income streams that are misinterpreted or excluded altogether, often due to a lack of sector-specific understanding, can all come under scrutiny.

Each of these issues has the potential to erode value, delay transaction timelines, or, in some cases, lead prospective buyers to withdraw entirely.

Importantly, these outcomes are avoidable. Effective preparation is not a reactive exercise undertaken once a sale decision has been made; it is a proactive, strategic process that ultimately underpins and protects the true value of the business.

The best time to prepare is before you need to

Here is the uncomfortable truth about selling a business: the buyer is not paying you for the business you run. They are paying you for the business they can own – the earnings they believe will still be there after you've gone, minus every risk they can find in diligence.

That distinction changes everything about how you should prepare. Your job in the eighteen months ahead of a sale is not to make the business look busy. It is to make the earnings defensible, and the story provable, so that when a buyer's advisers go looking for reasons to discount, they come up short.

Owners who start this early sell from a position of strength. Owners who start once the process is live spend the whole transaction on the back foot, negotiating down from a number that never fully existed.

Get the earnings story straight

Almost every valuation in this sector turns on one question: what is the sustainable, transferable & maintainable EBITDA of the business? And almost every under-valuation in this sector comes from providing the wrong answer.

The single biggest driver is how the funding is treated. Core Funding, the National Childcare Scheme (NCS) and the ECCE programme deliver recurring, quasi-government revenue, the closest thing to contracted income a small enterprise can have. Treated correctly, that revenue supports a premium multiple, because it is durable and State-underwritten. Treated as though it were discretionary trading income, and the same earnings are priced far below what they are worth. This is precisely where generalist advisers most often get it wrong. They misread the funding model, and the owner pays for it in the multiple.

Then there is earnings normalisation, the adjustments that separate the underlying economic performance of the business from the owner's personal arrangements. The below-market salary you've taken for years. The car, the phone, the property costs that belong to you rather than the business. Every genuine add-back you can evidence is EBITDA a buyer will pay a multiple on. Every cost you can't evidence is a gift to their advisory team.

Staff costs deserve particular attention. With employee churn running at roughly 25% nationally, materially higher in some parts of the country, a snapshot of this year's wage bill rarely reflects the stable cost of running the service. A buyer will normalise it whether you do or not. Far better that you do it first, on your own terms, with the data to back it up.

Make it run without you

The hardest thing for a founder to hear is that their own indispensability is a liability. A business that only works because you hold every key relationship and make every decision is a business a buyer has to de-risk, usually by holding back part of the price until they're sure it survives your departure.

Reducing that key-person dependency is some of the most valuable work you can do prior to a sale. A capable manager who can run the business day-to-day. Documented systems rather than institutional memory. Relationships that belong to the business, not to you personally.

Our Role in the Transaction Process

Childcare is not a generic SME, and it shouldn't be sold like one. Its value is shaped by a nuanced funding architecture, a workforce challenge and a regulatory regime that most advisers simply don't know well enough to defend at the negotiating table.

We work with owners across the full lifecycle of a transaction: defensible valuations that price Core Funding, NCS and ECCE correctly, and a discreet, competitive sell-side process that finds the right strategic or financial buyer and carries the deal through to completion.

We also recognise that selling is rarely a purely financial decision. Letting go of a business you have spent decades building, often alongside the people and families who have grown up around it, is a significant personal and emotional step, and a well-run process should honour that as much as it protects the value you have created.

If you think a sale might be somewhere on your horizon – even a few years out – the most valuable conversation is the early one. Not because you need to act now but because being ready is what turns a good business into the right price.

In summary

The value of an early learning and childcare business is decided long before it reaches the market. Owners who prepare early – getting the earnings story straight, normalising costs on their own terms, and reducing their own indispensability, negotiate from a position of strength.

Selling well is less about how the business looks on the day it goes to market, and more about how defensible its earnings are, what the growth story ahead looks like and how ready the business is to thrive without you.

At HLB Ireland, our Early Learning & Childcare advisory team works with owners and operators across the full lifecycle, so reach out to Eoghan Briody for a confidential conversation - [email protected].

------------------------

*The HLB Ireland Early Learning & Childcare team is led by Eoghan Briody, ACA & QFA, who specialises in corporate finance and transaction advisory across the sector.*

*This article is based on publicly available information and HLB sector analysis. It is intended as general commentary and does not constitute investment, legal or financial advice.*