Business Overview
RE: GROWING DAYCARE 30 MIN OUTSIDE OF OMAHA
Located roughly 30 minutes west of Omaha, this growing daycare has huge facility expansion potential of 4,500
sq. ft., and the seller is willing to finance all but $50,000! Opened in October 2013 and never advertised, the
current owners have had to turn away business to suit their own needs. Licensed for 60, there are currently
40 enrolled, with the Nebraska DHHS always looking to place children in this daycare.
The facility, built in 2013, has 3,900 sq. ft. with a full kitchen used for food preparation. No outside food
programs are used, but the daycare does prepare food based on the OPS schedule. Children from infants to
toddlers are engaged in music, crafts and reading in preparation for kindergarten. As this is strictly a daycare,
there is no curriculum and the 8 teachers encourage play with an educational emphasis.
Rates run from $185/week for babies to $179/week for those 18 months and older. While children come from
close by, an untapped growth area is the many nearby businesses employing over 1,500. A new
owner/operator could easily advertise services to these businesses and perhaps work out a discount program.
Growth also exists in opening the daycare to Title XX. It is currently licensed to do so, but the sellers have not
explored that avenue.
At a purchase price of $188,000, a buyer could purchase this daycare for $50,000 with 73% seller financing.
After yearly debt payments of $30,873 to the seller, a new owner/operator would net $28,696 the first year.
Business Highlights
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Year Established: 2013
Location: 30 minutes west of Omaha
Demographics: nearby businesses employ over 1,500; new residential developments within 1 mile
Enrollment: 40 with capacity for 60
Program: music, crafts and reading in preparation for kindergarten
Rates: $185/week for babies, $179/week for 18mo +
Lease: 3,900 sq. ft. for $1,750/month – full kitchen with food following OPS schedule
Reason for Selling: Exiting industry
Employees: 8 teachers
Hours: Mon – Fri 6:30am – 6pm
Seller Training Period: 90 days
Growth Opportunities: Title XX – licensed but not currently offering; advertise services in nearby
businesses; room for a 4,500 sq. ft. addition
Current Owner’s Responsibilities: financials, bookkeeping, payroll, DHHS
Financial Highlights
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List Price: $188,000
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2016 Gross Sales: $251,230
2015 Gross Sales: $211,669
2014 Gross Sales: $159,018
Cash Flow: $59,569
15% increase in sales during 2016
23% profit margin
$22,987 in FFE included in the purchase price
Intangible Assets: reputation – sellers have never done advertising but have turned away business to
maintain a smaller enrollment; young facility with lots of growth potential
Build-Out: $245,000 in construction – built in 2013
Cash Flow Analysis
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15% increase in sales during 2016
23% profit margin
Services
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Prices increased by 12% in 2016
o $179/week for 18 months+
o $185/week for babies
Age appropriate curriculum to give children a head start before they start school
Stimulating, cognitive, emotional/social and physical development activities
o Reading
o Talking
o Dancing
o Holding
o Singing
o Playing
o Arts/crafts
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o Writing
Large outdoor playground with fence
UV air circulating system to constantly move and clean air in order to reduce the spread of germs
Growth Opportunities
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Offer Title XX – daycare is already licensed for this but the sellers have not explored adding this service
Advertise services in nearby businesses
o There are over 1,500 employees within a 1-mile radius
Capitalize on the new residential developments going up nearby
The lot has room for an additional 4,500 sq. ft. expansion of the facility
o Build an addition to increase enrollment and program
o Offer before and after school care for older children
License for preschool
o Current curriculum resembles preschool to get children ready for kindergarten
o Adding preschool would increase enrollment
Valuation Details
The Firm Business Brokerage used a Cash Flow Valuation methodology to determine the Purchase Price of
the business. The formula used is as follows:
Cash Flow
x
Multiplier
=
Price
“Cash flow” is the sum of net income plus any owner perks and non-onward going expenses.
“Multiplier” is a prescribed number between 1 and 5 determined by a 100-point, 20-question rating system
used to determine the business valuation (average is 3).
The Cash Flow for 2016 is $59,569.
The prescribed multiplier is 3.2.
With this information, the computation result follows:
$59,569
x
3.2
=
$190,620
The List Price for the business is set at $188,000.
Funding Example
Purchase Price:
$188,000
27% Buyer Down Payment: $50,000
73% Seller Financing:
$138,000
All but $50,000 will be financed by the seller!
Seller Financing 5-year term at a rate of 4.5% equals a monthly loan payment of $2,573.
After business expenses and loan payments, a buyer with a down payment of $50,000 would retain a profitable
net operating income of $28,696 which results in a 57% return on investment in the first year!
Attachments
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Business Summary
o Identifies important business information in an organized quick-reference format
Recasted Profitability Statement
o The owner’s profit is the sum of business net income + any owner’s perks & any non-onward going
expenses (cash flow)