Key Valuation Drivers Every Owner Should Know
One of the most common questions we hear from private school owners is, "What is my school worth?" The answer isn’t always straightforward, but understanding the key drivers of value can make all the difference when preparing to sell. At Halladay Education Group (HEG), we specialize in helping school owners across North America determine fair, market-aligned valuations that reflect the true worth of their institution.
Whether you're operating a K-12 private school, boarding school, ESL institute, or career college, here's what you need to know:
1. Understand What Buyers Are Looking For
Serious buyers evaluate schools based on a combination of quantitative and qualitative factors. These often include:
- Revenue and Profitability Trends: Is your financial performance strong, stable, and growing?
- EBITDA and Adjusted EBITDA: This baseline profitability metric is often multiplied by market benchmarks (typically 5x to 7x for education businesses).
- Enrollment and Retention: Growing or stable enrollment is a major indicator of long-term viability.
- Program Demand: Schools offering high-demand programs (e.g., healthcare, tech, skilled trades) command stronger valuations.
- Licensing and Accreditation: Full compliance and strong audit histories give buyers confidence.
- Domestic vs. International Students: A healthy balance helps mitigate policy risk.
- Real Estate Ownership: Owned facilities can significantly increase value.
2. Know Your Valuation Approaches
There are several methods to value a private school:
- Income Approach (DCF): Projects future cash flows, adjusted for risk.
- Market Approach: Compares your school to similar institutions that have sold recently.
- Asset Approach: Values tangible and intangible assets, often used for asset-heavy schools.
Most buyers rely on the income or market approach, using EBITDA and multiples as a baseline for valuation. However, the final number is influenced by growth potential, operational strength, and transferability.
3. Improve What You Can Before Going to Market
Maximizing value often comes down to preparation. Consider:
- Cleaning up financial statements
- Streamlining operations
- Clarifying leadership succession
- Documenting compliance and licenses
- Demonstrating scalability and future program growth
Even modest improvements in efficiency, clarity, and compliance can result in stronger offers.
4. The Value of an Independent Assessment
Owners often overestimate their school’s value by focusing on legacy, emotion, or internal metrics. An objective, third-party valuation provides clarity and ensures you're not leaving money on the table or pricing yourself out of the market.
At HEG, we combine decades of education-sector insight with market data and buyer feedback to deliver realistic valuations that support successful outcomes.
Curious about your school’s true value? Let’s schedule a confidential assessment. Contact HEG at info@halladayeducationgroup.com or call 1.800.687.1492 to start a conversation about what your school could be worth.