Common seller tricks in daycare
Sellers may show a waitlist and a full room at drop-off, while enrollment, subsidies, and staffing ratios tell a tighter story, and while the license is more personal and site-specific than the listing admits.
- A waitlist that is stale, duplicated, or not the same as enrolled, paying families.
- The owner as the director of record, with no realistic replacement who can be approved.
- Staffing that only meets ratio because of unpaid family labor.
- Subsidized or voucher enrollment treated as if it were the same as private pay, without the paperwork risk.
- Playground, fire, or facility issues deferred so the center looks ready for a tour.
Which numbers to verify
Ask for enrolled children by classroom, tuition actually collected, and a split of private pay versus subsidy, by month. Reconcile deposits. Look at staff wages and overtime against required ratios. Recast the owner-director’s hours. Deposits and prepaid tuition are liabilities. If capacity is licensed for more than you can staff, the extra capacity is not an asset today.
Licensing and key-person risk
Child-care licensing is typically site-specific and tied to a director and to background-check rules. A sale often triggers a new application, a fire or health inspection, and a review of the facility. Do not assume you can operate Monday under the seller’s license. This is a legal and regulatory question for the state agency and for counsel, not a formality.
Equipment and condition
The building, playground, kitchen, and bus (if any) matter more than toys. Look at fencing, surfacing, fire systems, and any outstanding licensing citations. A lease must allow this use and should have enough term left to match your financing and your license timeline. Vehicles used to transport children have their own insurance and inspection rules.
Seasonality and the calendar
Enrollment can dip in summer or around school transitions, depending on the program (infant rooms are different from after-school). A September that looks full should be compared with July. Staff turnover also has a calendar; the week after a sale is a risky time to lose a lead teacher.
Customer concentration
A few employers, a school contract, or a large share of subsidy from one agency can concentrate revenue. If one company sends twenty families, that company’s remote-work policy is your risk. Private-pay families are more spread out but still follow the director they trust.
Questions to ask before you make an offer
- What is the licensed capacity versus current enrolled, paying children, by classroom, for the last 12 months?
- What does the state require to put the license and the director role in a new owner’s name, and how long has that taken?
- Please reconcile tuition and subsidy receipts to deposits, and list prepaid tuition or deposits I would owe.
- How are ratios met today, and which staff members are family or below a sustainable wage?
- May I review licensing citations, incident logs, and insurance claims for several years?
- What is the lease term, use clause, and assignment language for this site?
- How current is the waitlist, and may I see how it was built?
- What share of enrollment is private pay versus subsidy, and what paperwork is outstanding?
- Which lead teachers will stay, and what is the plan if the current director leaves?
- After an LOI, may I speak with your accountant and, as the state allows, the licensing specialist?