Buying a childcare centre is one of the more rewarding acquisitions you can make, and also one of the most misunderstood. The sector is backed by government subsidy, long-term demand and steady demographic growth, which is exactly why it attracts first-time buyers, experienced operators and passive investors alike.
But the process looks nothing like buying a café or a franchise. Regulatory approvals, lease structure, staffing ratios and occupancy all shape the deal in ways that catch people out.
Step 1: Decide what you are actually buying
Before you look at a single listing, get clear on the type of purchase you want. Childcare acquisitions fall into three broad categories, and they are genuinely different businesses.
- A leasehold business is the operating business on its own: the goodwill, enrolments, staff, fit-out and equipment. You take an assignment of the existing lease and you do not own the building. This is the most common childcare centre for sale you will see, and the lowest entry point, commonly ranging from around $500,000 to $3 million depending on size, location and occupancy.
- A freehold going concern is the property and the operating business together. It suits buyers who want both the rental security of owning the building and the operational upside of running the centre. These trade higher, often from $2 million to well beyond $10 million.
- A freehold investment is the property alone, with a childcare operator already in place as your tenant. You collect rent and have no involvement in day-to-day operations. This is a passive property play, valued on capitalisation rates rather than earnings multiples.
Each carries a different risk profile, financing structure and return. Deciding which one fits your goals before you start will save you months of looking at the wrong deals.
Many first-time buyers gravitate to leasehold businesses because the price looks approachable and can be easier to scale if you want to grow a portfolio. But the lease terms often decide whether that business holds its value. A cheap centre with a short lease and no options can be worth less than you paid within a few years. Always read the lease before you fall for the profit and loss.
Step 2: Understand what a centre actually costs
Most people arrive asking how much it costs to buy a childcare centre, and the honest answer is that price follows earnings, not the other way around.
Australian childcare businesses typically trade on a multiple of adjusted EBITDA, usually somewhere between three and five times, with the strongest metropolitan centres pushing higher.
The word that carries all the weight there is "adjusted". The profit figure on a centre's books almost never reflects what a buyer should pay for. Owner wages above or below market, personal expenses run through the business, rent that is not at market, one-off repairs and unusual subsidy timing all need to be normalised first.
Here is how that looks in practice on a mid-sized leasehold centre:
- Reported net profit: $420,000
- Add back owner-operator wage above a market manager rate: $50,000
- Add back personal and non-business expenses: $25,000
- Add back one-off legal and maintenance costs: $15,000
- Adjusted EBITDA: $510,000
At a four-times multiple, that business is worth roughly $2.04 million. Skip the adjustment work and you either overpay or misjudge the deal entirely.
It is also worth learning the metric the market quotes quietly among itself: price per licensed place. A 70-place centre selling for around $2 million works out to near $26,000 per place for the business. Comparing centres on a per-place basis is a fast sanity check on whether a price is sensible for its size, before you get into the finer detail. Please note these can vary widely - for context the we currently have services under contract at north of $70k per place. Best to really understand the other valuation metrics first before applying this overlay.
What lifts or lowers the multiple comes down to a handful of things. High occupancy, ideally above 80 per cent, supports a stronger price. So does a long remaining lease, a metropolitan or growth-corridor location, and a strong rating under the National Quality Standard.
Room mix matters too, though not in the way people often assume. The under-two rooms charge the highest daily fees, but they also carry the tightest staffing ratios, at one educator to every four children. Those staff costs usually outweigh the higher fees, which makes the under-twos the thinnest-margin rooms in a centre rather than the strongest. Their real value is as a pipeline. They feed children through into the three-to-five-year rooms, where ratios ease, staff costs fall, and most of the profit actually sits.
Step 3: Find the right centre and screen it hard
Childcare centres come to market through specialist brokers, commercial agents and, occasionally, private sale. A large share of good transactions happen off-market, because sellers want confidentiality to avoid unsettling staff, families and competitors. Working with a specialist broker is often how you see the better opportunities before they are advertised, whether you are looking in Sydney, Melbourne, Brisbane or a regional catchment.
When you assess a listing, start with the factors that are hardest to change after settlement:
- Location and demographics. Is the centre in a growth corridor with young families moving in? What does the child population look like within a few kilometres, and how much competing supply is nearby? The Australian Bureau of Statistics publishes population data by local government area, which is the right place to begin.
- Approved places. A 60-place centre and a 120-place centre are different businesses. The service approval sets the maximum number of children by age group, and that ceiling caps your revenue. There are different buyers for different centre sizes; we find the sweet spot for most buyers is 80-100 places in the current market, but many first-time operators are gravitating towards smaller 50-70 place services to offer a boutique environment, which is also growing in popularity with parents. Decide which is the best fit for your circumstances.
- Occupancy, not just enrolments. Occupancy is the number that matters, and it's worth looking at how it's measured. It's also worth seeing how occupancy holds across the week. Mondays and Fridays typically run softer than midweek, and a centre that's full Tuesday to Thursday but quiet on the edges has a different revenue profile to one that's steady across all five days.
- Lease tenure. For a leasehold purchase, buyers and lenders both want to see at least 15 years remaining, including options. Anything shorter compresses value and makes finance harder to secure.
Step 4: Do the due diligence childcare demands
Due diligence on a childcare centre covers far more ground than a standard business purchase, because you are buying a regulated service, not just a set of numbers. There are five areas worth working through: the financials, regulatory compliance, the lease, the physical site, and staffing.
The financials
The biggest advantage of childcare due diligence is that most of the income is government-backed, which means you can verify it against source records rather than take the seller's figures on trust.
Start by requesting:
- at least three years of profit and loss statements
- Child Care Subsidy (CCS) reconciliations
- debtor ageing
Together, these show what the centre bills, what it actually collects, and how reliably.
If you want to go further, the most thorough check is to match reported income directly against CCS remittances and occupancy reports. Because the subsidy is paid per enrolled place, these give you an independent record of what the centre earned, separate from its own accounts. In practice, most deals don't need to go to that depth.
There's also a quick tell on experience here. First-time buyers tend to ask for tax returns and BAS statements, while seasoned and corporate operators rarely bother. They know the CCS and occupancy records give a cleaner, more direct read on the income.
Regulatory compliance
Obtain the centre's most recent assessment and rating from ACECQA, and check for any compliance notices, enforcement actions or conditions on the approval.
Pay close attention to the rating itself. A "Working Towards" rating is a harder problem than it used to be. In the current climate it weighs on parent confidence and enrolments, not just on the specific quality area where the centre fell short, so factor in both the cost of lifting the rating and the drag it may put on occupancy while it stands. Where the shortfall sits on safety or staffing, expect to invest quickly to bring it up.
The lease
Have a specialist review it in full, ideally a commercial lawyer with childcare experience. Rent review mechanisms, assignment rights, and any landlord consent required for the sale can all change the value of the deal.
Start by establishing what type of lease it is. A typical childcare lease is a net lease, meaning the tenant covers everything except the roof and structural repairs. Some are triple net, where the tenant is responsible for those too. That difference sits directly on your bottom line, so read the outgoings clauses carefully rather than assuming a standard arrangement.
The most common way to benchmark a childcare lease is rent per place. This varies with location and with the age and condition of the building, and the range is wide. It can run from around $2,500 per place up to more than $11,000, the latter being at the very top of the market in an exclusive inner-east Sydney suburb. A figure on its own means little until you set it against comparable centres in the same catchment.
Then look at rent as a percentage of revenue, which tells you whether the lease is actually viable for the business it sits on. Around 12 per cent is a healthy middle ground. As it approaches 14 per cent it will start to attract valuer scrutiny. The exception is a low-occupancy turnaround, where the centre is working off a low revenue base and the ratio will naturally look high until enrolments build.
The physical site
Think about space differently to how a first-time buyer might. You're buying a licensed, operating business, so the premises has already been approved against the space, fire safety, fencing and kitchen requirements. The more useful question is whether the site has room to grow.
Licensed places cap a centre's revenue. If the space can support more places than the current approval allows, there may be scope to lift the licensed number and, with it, the value of the business. Two figures set the limit:
- 3.25 square metres of unencumbered indoor space per child
- 7 square metres of unencumbered outdoor space per child
Measure the usable space against both to see whether the centre is at capacity or has headroom.
This is where an inspector familiar with childcare facilities earns their fee. "Unencumbered" excludes passageways, toilets, nappy-change areas, cot storage and staff rooms, so the usable figure is always smaller than the floor plan suggests. A specialist can tell you what the site could realistically support, not just what it holds today.
Staffing
Review contracts, qualifications and tenure. Every service needs a qualified Educational Leader and must meet educator-to-child ratios, which vary by age group and state. It's also worth getting a feel for staff continuity, since a settled, experienced team is part of what you're buying. This is something to understand rather than worry about, and in most cases a well-handled transition keeps the team in place.
One practical thing to work through is accrued leave entitlements, which are a genuine negotiating factor for both sides at settlement. The common starting point is a 75/25 split, with the seller carrying the larger share. In practice the detail is where it matters: long service leave under five years is often excluded, as is sick leave, and how these are treated can make a real difference to the final settlement figure. Understand exactly what's in and what's out before you agree the number.
Step 5: Apply for provider approval and lodge the transfer notice
This is the step that surprises buyers from other industries. You cannot simply buy a childcare centre and open the doors the next morning. Two approvals stand between you and operating.
Provider Approval is held by whoever operates the service. If you do not already have one, you apply to your state or territory regulatory authority, complete the required modules, pass a fit and proper person assessment and demonstrate an understanding of the National Law and Regulations. This also includes an interview and an exam and is becoming harder to obtain. Sellers will not enter into sharing sensitive info with buyers who are not qualified. Alternatively, there are a few reputable firms who offer management services and can assist you with obtaining your AP and, in some circumstances, even let you use the AP for a small period.
Service Approval transfer applies to the centre itself. The existing approval must be transferred from seller to buyer, and the two parties jointly notify the regulator at least 60 days before the intended transfer date. Families must be notified at least seven days before it takes effect. But we find best practice is to have notification day 14 days prior to settlement to ensure everything that needs to get done can be done, but also not leave staff in limbo for too long.
The practical lesson is to start your Provider Approval application well before you sign anything. The process can take months; sellers will not enter into a contract with someone subject to provider approval.
Step 6: Arrange finance the right way
Financing a childcare purchase is not like a home loan. Lenders look at the business cash flow, occupancy history and lease security alongside any property value (if the freehold is also being sold)
Expect to fund a deposit in the range of 30 to 40 per cent for most acquisitions, with stronger operators and longer track records sometimes accessing better terms. Commercial finance pricing moves with the cash rate, so confirm current rates with a broker rather than relying on a figure you read months ago.
Lenders generally want to see a few things before they'll fund a childcare purchase: at least two years of profitable trading, occupancy comfortably above 70 per cent, a lease with a decade or more of tenure, your Provider Approval underway, and a clear plan for how you'll hold or grow the centre after handover. Like all things, these policies can be waived based on the buyer profile and financial backing.
A word on who you borrow? Use a specialist broker, or the right person in the bank with childcare experience. The person who arranged your home loan is almost never the right person to fund a childcare centre, since it's a different kind of lending and they won't know the sector. We can point you in the right direction if required.
Step 7: Exchange, settle and protect the first 90 days
Once due diligence, finance and approvals are lined up, you exchange contracts. The contract will normally carry conditions covering finance, satisfactory due diligence, landlord consent and the service transfer.
Between exchange and settlement, plan the handover with the seller. Notify staff and families, confirm staff contracts carry over on existing terms, arrange your insurances, set up Child Care Subsidy access with the Department of Education (this is recommended to be submitted as soon as you sign the contract to have no CCS on settlement, and establish banking, payroll and supplier accounts).
The first 90 days after settlement decide a lot. Keep your experienced staff, honour what families already expect, and resist making dramatic changes before you understand how the centre runs. Occupancy lost during a clumsy transition is slow and expensive to win back.
The 3 Day Guarantee
One recent change deserves a buyer's attention. From 5 January 2026, the 3 Day Guarantee replaced the old Child Care Subsidy activity test, so every eligible family can now access at least three days, or 72 hours a fortnight, of subsidised care regardless of how much they work or study.
For buyers, that matters because it supports demand at the margins, particularly in centres that previously carried families limited to one or two subsidised days. It is not a guarantee of full rooms, but it is a genuine demand-side positive when you are weighing a centre's occupancy trajectory.
How long the whole process takes
Realistically, from starting your search to settlement, plan for around four to nine months. Finding the right centre can take the longest and is the hardest part to rush. Due diligence typically runs four to six weeks, and the regulatory approvals run partly in parallel but set the floor on how quickly you can settle.
Buyers who begin their Provider Approval early and line up finance before they find a centre move considerably faster than those who start from scratch after signing. Being ready to execute a contract gives you far more leverage in negotiations than someone who appears to be browsing and just starting the process.
Common mistakes to avoid
- Valuing the business off reported profit instead of adjusted EBITDA
- Reading the profit and loss without reading the lease
- Not evaluating the upside potential
- Not understanding the occupancy and occupancy trends
- Making sweeping changes in the first few months and losing families in the process
Where to start
Buying a childcare centre rewards patience and preparation. Understand what you are buying, value it on real earnings, investigate it thoroughly, secure your approvals early and finance it conservatively, and you give yourself a strong foundation.
If you are considering a purchase, Mollard Advisory works across Brisbane, Sydney and Melbourne and sees many quality centres before they reach the open market.
Talk to us for a confidential, no-obligation discussion about what is available and what it is genuinely worth.
FAQ
How long does it take to buy a childcare centre in Australia?
The purchase process commonly takes several months, depending on due diligence, finance approval, lease assignment, regulatory approval and service transfer timing.
Can a first-time buyer buy a childcare centre?
Yes, but preparation matters. Lenders and regulators will consider experience, financial capacity, management ability and the team in place to operate the service.
What is the difference between provider approval and service approval?
Provider approval relates to the approved provider entity. Service approval relates to the specific education and care service. Buyers need to understand both before committing.
What should I check before buying a childcare centre?
Key areas include financial performance, occupancy, lease terms, staffing, NQS rating, compliance history, local demand, competition, property condition and regulatory approval pathway.