First-Time Childcare Centre Buyer: What You Need to Know

Most first-time childcare buyers spend weeks looking at listings and months dreaming about returns — but almost no time understanding the three things that actually determine whether the deal works: how much of the asking price is real, how much a bank will lend you, and how long government approvals will take. Get those three wrong, and the rest doesn’t matter.

Australia’s childcare sector is now worth an estimated $23.6 billion (BizBuyScore, 2025), and the pipeline of first-time buyers has never been deeper. The Three Day Guarantee, which started in January 2026, has expanded subsidised demand, making the economics even more attractive on paper. But the gap between “attractive on paper” and “good deal in practice” is where first-time buyers get hurt.

This guide covers what you actually need to know before committing capital — not the theory, but the practical realities we see in transactions every week.

Understand What You’re Really Buying

A childcare centre isn’t a passive investment. You’re buying a regulated business that requires government approval to operate, qualified staff to run, and families to fill. Miss any one of those three elements and the numbers collapse.

There are two acquisition types, and they work very differently:

Leasehold (business only): You buy the business — the brand, the staff, the enrolments, the furniture, and the right to operate from a leased premises. Prices typically range from $500,000 to $3 million for a single site. You don’t own the building.

Freehold going concern (business + property): You buy both the business and the real estate. Prices range from $3 million to $16 million or more, depending on location, licence size, and lease structure. For a detailed breakdown of how these two models affect value, see our leasehold vs freehold guide.

Know What a Centre Is Actually Worth

Childcare businesses typically sell at 3 to 5 times adjusted EBITDA for single-site operations, according to industry transaction data (Benchmark Business Sales, Hinge Advisors). A well-run centre with strong occupancy and a long lease might push toward 5x. A centre with occupancy below 70%, a short lease, or a Working Towards NQF rating will trade at the lower end — or struggle to sell at all.

The key word there is adjusted. The EBITDA on the seller’s profit and loss statement is almost never the number a buyer should use. Owner salaries, above-market rent, one-off expenses, and irregular CCS income all need stripping out before you have a reliable figure. We cover this in depth in our complete valuation guide — if you haven’t read it, start there.

For first-time buyers, the most common pricing mistake is trusting the headline EBITDA without running your own adjustments. The gap between stated and adjusted EBITDA can be 20 to 40 per cent. That gap is real money.

Get Your Financing Right Early

Banks treat childcare differently from other commercial purchases. The sector’s government-backed revenue (through the Child Care Subsidy) makes lenders more comfortable than with most small businesses — but their requirements are specific.

Here’s what the major lenders typically look for, based on current market practice (Green Finance Group, Home Loan Experts):

For leasehold purchases: Expect a loan-to-value ratio (LVR) of 50 to 60 per cent. That means you need 40 to 50 per cent of the purchase price as equity — either cash or security against other property.

For freehold going concern: LVR can reach 65 to 70 per cent for purpose-built childcare facilities, meaning a 30 to 35 per cent deposit.

Common bank requirements: Most major lenders want to see a centre with more than 25 licensed places, occupancy above 80 per cent, and at least two times interest coverage (meaning the centre’s net income is at least double the annual interest cost).

Interest rates on secured childcare loans currently sit in the 5 to 10 per cent range depending on the lender, your credit profile, and the asset. Specialist childcare lenders like Finexia and Green Finance Group often structure deals differently from the big four banks — it’s worth talking to both.

Navigate the Approval Maze

This is where first-time buyers lose the most time. Operating a childcare centre in Australia requires multiple layers of government approval, and you cannot trade without them.

Provider Approval: If you don’t already hold ACECQA Provider Approval, you need to apply before — or at the same time as — acquiring a centre. The regulatory authority must decide within 60 days, but if they request further information, that clock pauses. In practice, allow 60 to 90 days. Since April 2025, new providers must also supply a Statement of Tax Record as part of their CCS approval application (Department of Education).

Service Approval Transfer: The existing service approval must transfer to you as the new provider. This requires a 42-day notification to the regulatory authority before the transfer date, using ACECQA forms SA04 and SA05.

CCS Approval: You need separate approval to administer the Child Care Subsidy. Without it, families can’t claim their subsidy at your centre — which means they won’t enrol.

Working with Children Check (WWCC): Every person involved in the management of the service needs a current WWCC. This is non-negotiable.

New for 2026: The National Early Childhood Worker Register became mandatory, with providers required to enter workforce information by late March 2026. Child safety and child protection training must be completed by late August 2026 (ACECQA). Factor these compliance costs into your acquisition modelling.

For a full walkthrough of the regulatory steps, see our step-by-step buying guide.

Do Your Due Diligence Properly

We’ve published a detailed due diligence checklist that covers all six dimensions a buyer should investigate. But for first-time buyers, here are the areas where we see the most costly mistakes:

Occupancy is not enrolment. A centre might show 90 per cent enrolment on paper, but actual attendance — the number that drives CCS revenue — could be 70 per cent. Always ask for attendance data, not just enrolment records.

The lease is the business. For leasehold purchases, the lease terms determine your business’s value, your exit options, and your bank’s willingness to lend. A centre with three years left on its lease is worth fundamentally less than one with 15 years plus options. Read the lease before you read the P&L. Our lease terms guide breaks down exactly what to look for.

Staff are the operation. With 90 per cent of Australian childcare centres reporting difficulty filling educator positions (Australian Childcare Alliance), the staff who come with the business are often its most valuable asset. Check tenure, qualifications, and agency reliance. If the centre is running on 30 per cent casual or agency staff, that’s a cost and risk problem you’re inheriting. See our educator shortage analysis for the full picture.

Compliance history matters. Request the centre’s NQF rating history, any compliance notices, and waivers. A Working Towards rating isn’t a dealbreaker, but it affects what buyers will pay when you eventually sell — and it signals operational issues you’ll need to fix.

Build the Right Advisory Team

No first-time buyer should attempt a childcare acquisition without professional support. At minimum, you need:

A commercial lawyer experienced in childcare transactions — not a general practitioner. Childcare sales involve ACECQA regulatory transfers, employee entitlement calculations, and lease assignments that general commercial lawyers routinely miss.

An accountant who can verify the seller’s financials, run their own EBITDA adjustments, and model your post-acquisition cash flow. The seller’s accountant works for the seller — you need your own.

A finance broker with childcare sector experience. Specialist brokers understand which lenders are active in the childcare space and how to structure the deal to maximise your borrowing capacity.

A childcare business broker who knows the market. Not a residential agent. Not a general business broker. Someone who transacts childcare centres and understands what drives value in this specific asset class.

Key Takeaway

Buying your first childcare centre is one of the most complex small business transactions in Australia. The regulated nature of the sector, the multi-layered approval process, and the specialist financing requirements mean you can’t treat this like buying a cafe or a retail shop. Get your financing pre-approved, understand the approval timelines, run proper due diligence, and surround yourself with advisors who know childcare. The buyers who do this well build strong, profitable businesses. The ones who skip steps learn expensive lessons.

Considering your first childcare centre purchase? Talk to ChildcareLink for confidential, obligation-free guidance on what’s available and what it’s really worth. Visit childcarelink.com.au or contact our team directly.

Sources

• BizBuyScore — Childcare Industry Report 2025 (market size)
• Benchmark Business Sales and Hinge Early Education Advisors — EBITDA multiples
• Green Finance Group and Home Loan Experts — financing structures and LVR benchmarks
• Finexia — specialist childcare lending
• ACECQA — provider approval process; National Worker Register; regulatory timeline
• Department of Education — CCS approval; Statement of Tax Record requirement
• Australian Childcare Alliance — educator shortage data
• Corestone Lawyers and Owen Hodge Lawyers — legal requirements
• ChildcareLink — transaction experience

Disclaimer: The information provided in this article is for general informational purposes only and does not constitute financial, legal, or professional advice. ChildcareLink recommends seeking independent professional advice tailored to your specific circumstances before making any business or investment decisions.