Why Do Childcare Businesses Sell for Higher Multiples?

In Australia’s SME market, most businesses trade within a relatively stable band—typically 2.5x to 3.5x EBITDA, particularly for traditional, owner-operated models. But there’s one sector that consistently beats those odds: childcare.

Even single-site operators regularly transact at around 4x EBITDA, and standout assets can achieve even more. The recent Seidler Equity Partners investment into Young Academics, a Sydney-based childcare provider, underscores just how high the ceiling can go when the fundamentals align.

🔍 What the Young Academics Deal Tells Us

The deal valued Young Academics at more than $200 million, implying a 10x to 12x EBITDA multiple—extraordinary by SME standards. While the business operates 40+ centres with another 50 in development, this transaction shows just how attractive the sector remains to private equity, especially when:

The business has scale and a growth pipeline.

There’s strong governance and a seasoned founder remaining onboard.

It’s anchored in high-demand locations like Sydney’s growth corridors.

This kind of multiple is an outlier—a strategic-level valuation, far above what most private operators can expect. But it sharpens the spotlight on the sector overall.

🎯 Where Most Deals Actually Land

For private, non-chain childcare centres, here’s the realistic spread in 2024–25:

Business Type EV/EBITDA Multiple

Average, single-site operator 3.2x – 4.5x

Strong performing centres Up to ~6x

Strategic, multi-site platforms (rare) 10x – 12x

✅ 4x EBITDA is the realistic anchor for most well-run centres in the current market.

🧠 Why Are Childcare Centres So Valuable?

1. Recurring, Government-Backed Revenue

The Child Care Subsidy (CCS) provides income stability few sectors can match.

2. Low Churn Rates

Parents stick with trusted centres—creating a steady, defensible revenue stream.

3. Supply Barriers

Tight planning rules, zoning, and staff regulations limit new entrants—protecting existing players.

4. Strategic Buyer Demand

Roll-up groups, private equity, and institutional operators are hungry for quality bolt-ons. The Young Academics deal reflects this dynamic in action.

📈 Multiples Rise with EBITDA

Just like other industries, size matters:

EBITDA Range Typical Multiple

Under $500k 2.0x – 3.5x

$500k – $1.5 million 3.5x – 5.0x

$1.5m – $5m+ 5.0x – 7.5x+

Larger centres (or groups) get better multiples due to stronger systems, lower owner-dependence, and better financing options.

🧾 Key Takeaways for Sellers & Buyers

Sellers:

A single quality centre with strong occupancy, compliance, and governance can target ~4x EBITDA.

Higher valuations require more than performance—they need scale, strategic location, and market positioning.

Buyers:

Expect to pay a premium for stability, not just growth.

What looks expensive (e.g. 4x+) may reflect lower risk and stronger cash flow reliability.

⚖️ Reality Check

The 10x–12x multiple achieved by Young Academics?

That’s a strategic premium—not the market norm. Think of it as the “unicorn event” in a sector that otherwise reliably delivers 4x on solid fundamentals.

If you're considering buying or selling a childcare business, remember:

📌 Multiples are a guide, not a guarantee. But the right business—priced right, run well, and well-positioned—can absolutely attract a serious buyer.