Preparing for a Sale of your school Post COVID
Prior to the COVID induced recession, many business owners were strongly considering a sale but instead, put their plans on hold and shifted focus to the daily operations of the business. Developing a vaccine is only a matter of time and we know things will get back to normal. If you are still considering the option of selling your school, buyers are willing to pay a premium and determine the schools valuation using pre-COVID enrollment and financial numbers, as well as taking into consideration the schools reputation and community footprint.
As a leading advisory and brokerage firm, SchoolWise Partners is exclusively focused on serving the needs of private school owners and early education providers. Our advisory services are built on comprehensive industry knowledge, extensive transaction experience, senior-level attention, and a real-time understanding of the industry-specific value drivers. We deliver knowledgeable, honest and customized guidance to our clients seeking to execute transactions and strategic engagements.
To prepare for a sale, however far down the line that may be, business owners should focus on several key items to ensure they are positioning themselves to maximize the businesses value.
Unlocking the Highest Business Value: Key Items of Focus
Develop a Self-Sufficient Management Team
As an owner, you will want to develop a strong Management Team that will be able to seamlessly carry-on the day to day operations of the business after you decide to exit. A smooth transition is key to a successful transaction, buyers want to maintain the relationships you have built with the staff, parents, and children, to carry on operating as if you were still running the operations. Having a strong, self-sufficient management team will help ensure the school maintains the reputation you put so much effort into establishing. There is more value created with a strong management team as investors want to be sure operations will go uninterrupted when the owner steps away, avoiding any unneeded stress to the staff and parents.
Focus on your Brand Name
Over the years, every school will develop a reputation. Whether that be a great Montessori School or known to have the best Spanish Immersion Program in the area, you will want to highlight what makes your school unique and sets you ahead of the competition. Buyers place a premium valuation on high performing schools that are well-focused and executing properly.
Start Organizing Financial Documents
In order to model a proper valuation for your business, an owner will want to have organized and accurate financial information. If you have a bookkeeper or accountant, they will be able to help in the collection of these documents. Before any documents are exchanged, both partied will sign a Confidentiality Agreement to ensure the utmost discretion is kept between both parties. Documents an owner would be expected to provide include monthly profit and loss statements dating back 2-3 years, tax returns, and owners add-backs. Add backs are the one-time, and/or “owner's” expenses. In other words, expenses that will go away once the company is in the hands of the new owner and won’t be incurred again.
Clean up Facilities
Ensure that the building, equipment, and property is well-maintained. Not only will this help drive enrollment, potential buyers want to see owners that care about the reputation of the school by taking care of the facilities properly.
Conduct Review of Operations
When exploring the option to sell your school, prior to closing, there will be an Integration and Transition Planning process to ensure a smooth transition of ownership. As the seller, you will want to have all vendor contracts including utilities, tuition payment systems, and lease documents (if applicable) available for the buyer. Often, buyers will have their preferred HR system or technology portal for parents that they prefer, buyers will need to review and determine if they want to continue each vendor relationship or terminate the contract. Keep in mind, the goal of almost all transactions is to keep the schools operating as normal with no impact to the staff, parents, and children.
Identify Your Team of Advisors
In preparation for sale, you will want to identify a strong team of qualified accounting, tax, and legal professionals as well as leading brokerage and advisory firm to ensure the most value is available to you as the seller. The process will begin with a valuation assessment to be used in developing the best go-to-market strategy, tailored specifically for the seller on a timeline that best suits their goals.
With a vaccine on the way and the economy recovering much faster than originally anticipated, quality buyers are in the market looking for strong performing schools, willing pay a premium. SchoolWise Partners can help you take your schools to market and secure an offer close / at / or above asking price from a quality buyer, whose goal is to maintain the quality and reputation of the school.