How To Arrive at a Selling Price for Your Private School that You Want to Put Up For Sale
This is the essential question for any owner of a private school who is considering selling their school on the open market.
You will not find an easy calculator on the Internet to determine the value of your school. The only way to arrive at a reasonable valuation of your school is by talking to experts within the field such as Halladay Education Group. We can assess the factors and benchmarks against recent prices achieved for similar schools. As we are the industry leader in school sales, we have the most recents comparables on the market regarding the selling price for a private school.
There is no simple formula that you can use to value your private schoo for salel. There are multiple factors that need to be considered when preparing valuation of your school. Many of today's school buyers are international investors, equity firms, and/or school operators looking for safer areas to invest their money or expand their portfolio. Due to the reputation of the educational system, schools are considered safe investment tools for investors. The broad figures for goodwill calculations are somewhere between four to six times a multiple of the net profit plus the commercial value of the freehold property. An market assessment is also important as this will assess your local competition, reputation of the school, recent trends in numbers attending the school, regulatory reports, and supply and demand.
However, the basic answer to the question, "How do I value my school?", is based on a variety of elements, including the sum of fixed assets of the school's business plus a goodwill calculation.
On the first element of "fixed assets", this can be attained from your recent set of full accounts. It comprises all of the physical items that your school business owns and includes freehold commercial value of any property that your school owns.
The second element is a goodwill school valuation component that is not as apparent or easy to determine as the fixed asset element to your overall school valuation.
There are three methods commonly used to value the goodwill of your school:
- A multiple of the net profit generated by the school;
- A multiple of the EBITDA (Earnings Before Interest, Tax, Depreciation, and Amortization), and;
- A multiple based on gross turnover of the school.
There are also a number of other factors to be considered when making a goodwill valuation, including:
- Local reputation;
- Outstanding legal claims against the school;
- Recent regulatory reports;
- Fluctuations in freehold/leasehold rent negotiations and break periods;
- Fluctuations in enrollment; and
- Loyalty and motivation of the staff.
So that we can better assist your needs regarding your interest in a valuation of your K-12 private school, boarding school, post secondary institution, college, ESL language school, or any educational business, please complete the form below and we will make arrangements to contact you confidentially.
Do not hesitate to contact HEG if you would like to find out more about our services. You can set this up by sending an email to firstname.lastname@example.org or calling directly at +1-800-686-1492. Click here for an overview of our schools for sale. We also invite you to continue browsing our web site.