Questions to Ask When Buying a Preschool
For someone weighing the purchase of a preschool, daycare or childcare center that is already open, with questions for the seller, the listing broker and, where the answer is not theirs to give, the licensing agency. They run in the order a purchase tends to go: the sale and the license, inspection and safety records, enrollment and tuition, staff, the building and lease, then the program and the handover to families. Licensing, ratio and subsidy rules are set locally, so put those questions to the licensing office for the school's address as well as to the seller.
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The questions
Each question, and why to ask it
The sale and the license
Why are you selling the preschool, and why at this point in the school year?
Why ask it
Retirement, a move and plain tiredness after years of early mornings are ordinary reasons, and each can be checked. The timing tells you more than it would in most businesses: a sale that closes over the summer rides the normal turnover of a new school year, while one in February asks families to accept a new owner halfway through. Whatever reason you are given, see whether the enrollment history and the inspection record tell the same story.
Does the childcare license stay with the school when it is sold, or do I apply for my own, and can children keep attending in between?
Why ask it
The whole purchase hangs on this, and the answer depends on where the school is. Take it to the licensing agency yourself as well as to the seller: what a change of ownership requires, how long approval takes, and whether the school may operate during the gap. Then ask your attorney about making the closing conditional on that approval arriving.
What is the licensed capacity, how is it divided by age group, and how many children are enrolled in each room today?
Why ask it
Capacity is the ceiling on what the school can earn, and it is normally set room by room and age by age, so a single total hides where the empty places are. Twelve open spots for four-year-olds beside a full infant room is a different business from the reverse. Ask to see the license document itself and read the numbers off it.
How was the asking price worked out, and what has the school paid you, wage and profit together, in each of the past three years?
Why ask it
Find out which figure the price is a multiple of, then trace that figure to the tax returns and the bank deposits. Check whether it already pays someone to do the director's job: an owner who directs the school without drawing a wage is showing you a profit that exists only if you do that work yourself. A number chosen because it would fund a retirement tells you about the seller and nothing about the school.
Is the building part of the sale, and what else is on the written list of what comes with the school?
Why ask it
Childcare centers are listed three ways: with the real estate, with a lease from an outside landlord, or with the seller keeping the property and renting it to you. Once you know which, get a list that covers the school's name, its phone number and web address, the parent messaging app, the classroom furniture, the playground equipment and any vehicle. Whatever the list leaves out, assume the seller means to keep.
Which jobs do you do yourself in a normal week: directing, covering classrooms, the books, driving, cooking?
Why ask it
Owners of small schools often fill three jobs and count none of them as a cost. Write each one down and price a replacement, including the hours spent in a classroom to keep a room within ratio when someone is out. Where the owner is also the qualified person named on the license, ask who would hold that position once you take over.
Are you selling the company that holds the license or only the school's assets, and who answers for a claim that dates from before the sale?
Why ask it
The choice matters for more than tax here. In some places buying the company leaves the existing license where it is, and buying the assets means applying for a new one, but that is not a rule you can assume. Ask the licensing agency and your attorney how each route is treated where the school sits, including an injury claim from a year you did not own it.
May I see three years of profit and loss statements, and what share of tuition goes to payroll, rent, food and insurance?
Why ask it
Wages are the cost you can cut least, because required ratios set a floor on how many adults are in the building. Compare what teachers earn here with what nearby centers advertise: a school that makes money only by paying below the going rate will lose either the profit or the teachers under you. Look as well for the owner's car, phone or family travel among the expenses, and have each one pointed out.
When was the school first listed, and did an earlier buyer get as far as the licensing agency or the landlord before pulling out?
Why ask it
The broker will know the date and whether the price has moved. If someone did walk away, ask where it stalled: childcare sales tend to come apart at the license application, the landlord or the lender, and knowing which one tells you where to dig first.
Who knows the school is for sale, and how can I visit on an ordinary morning without starting rumors?
Why ask it
A rumor of a sale can cost a school teachers and families before any contract exists, so sellers are right to be careful. You still need to see drop-off and a mid-morning classroom with children in it, because no spreadsheet shows whether the rooms are calm and the teachers are down on the floor. Agree with the seller on how you will be introduced, and keep every visit short until the staff have been told.
Would you leave part of the price to be paid later, depending on how many children are still enrolled a few months after closing?
Why ask it
Families decide whether to stay during the first months under a new owner, which is exactly when you cannot yet know what you bought. A portion of the price that depends on the roster at an agreed date shares that risk with the person best placed to reduce it, since a seller with money outstanding has every reason to reassure parents. How the count is taken and how the money is secured is work for your attorney and accountant.
Inspections and safety
May I see every licensing inspection report and citation from the last five years, and how each one was corrected?
Why ask it
Where these records are public, look them up before the meeting and compare them with what you are handed. A missing form in a staff file is a different kind of finding from children left unsupervised or a room over ratio. The same citation appearing on two or three visits means it was corrected on paper and nowhere else.
Have parents, staff or neighbors complained to the licensing agency, and what did each investigation conclude?
Why ask it
Complaints are often logged apart from routine inspections, so ask for both sets. One that was looked into and not upheld is unremarkable for a school that has been open for years. Ask too how families were told at the time, since that shows how the school behaves under pressure and what current parents may still remember.
If I apply as a new owner, will the rooms and the playground be measured again, and could the licensed capacity come out lower?
Why ask it
A school that has held one license for decades may have been approved under space, toilet or exit standards that have since changed. Ask the agency and the local fire authority whether a new application is judged by current standards and what would have to be altered. If fewer children would be allowed, the price should fall by what those places earn.
Has a child ever been seriously hurt, left alone or released to the wrong adult here, and what changed afterward?
Why ask it
Ask it plainly and notice whether the answer comes with a date and a procedure that was rewritten. Follow up by reading the incident log for the past year. The small injuries are worth mapping by room and time of day, because a cluster at four in the afternoon in one classroom points to thin supervision there.
Are there open investigations, lawsuits, insurance claims or unpaid fines against the school, against you personally or against anyone on the staff?
Why ask it
A matter still open with the agency, including a report about a staff member, can hold up your own application, so ask the agency whether it would. For everything else, talk to your attorney about having the seller confirm the answer in the contract and about who pays if something surfaces after closing.
Which insurance policies does the school hold, what claims have been paid, and has an insurer ever refused to renew?
Why ask it
Get your own quote before you settle on a price. Liability, abuse and accident cover for a childcare center may cost a first-time owner more than it costs a seller with a long record, and that difference comes straight out of the earnings you are paying for. Request the claims history as a report from the insurer, since memory tends to drop the small ones.
Does the school hold an accreditation or a quality rating, and does it stay with the school when the owner changes?
Why ask it
A rating can affect what a subsidy program pays and how the school is listed for parents, depending on where you are. Ask the body that issued it whether a new owner keeps it, re-applies or starts from the bottom. If the website advertises a rating that lapses at closing, that is yours to take down and rebuild.
Enrollment and tuition
What has enrollment been month by month for the last three years, room by room?
Why ask it
A preschool year has a shape: fuller in the fall, thinner over the summer, and a sharp drop when the oldest class leaves for kindergarten. Monthly figures by room show whether the school refills each year or has been shrinking a little every September. The roster reports straight out of the billing software are what you want, not a summary typed up for the listing.
How many children attend full time and how many part time, and what do you count as one full-time place?
Why ask it
Forty enrolled children can mean forty full weeks of tuition or forty children sharing twenty-five places. Convert the roster to full-time equivalents and set that against licensed capacity to get the real occupancy. Part-time schedules also leave gaps that are hard to sell, such as a lone Tuesday and Thursday in the toddler room.
How many families are on the waitlist, for which ages, and when did anyone last contact them?
Why ask it
A waitlist is worth something only if it is current. Names taken two years ago for the infant room now belong to toddlers settled somewhere else. Ask how many families paid to hold their place, and how many of the offers made last year were accepted.
How many children leave for kindergarten this year, and how many are already signed up to take their places?
Why ask it
The oldest class goes all at once, so a school can be full on the day you tour and a quarter empty in September. Count the signed agreements and deposits for next year, room by room. If the fall is not yet filled, you want to know that before the price is fixed, and you want the seller still recruiting until the day you close.
Which nearby programs do families compare you with, and has a new center or a free public pre-K class opened since you started?
Why ask it
A free pre-K classroom at the local elementary school can empty a four-year-old room in one fall, and whether one is planned depends on the district and the state. Ask the school district what it intends, then tour two competing centers as a parent would and write down their rates and their openings. A seller who says there is no competition has stopped looking.
Which families have withdrawn in the past two years, and what reason did each one give?
Why ask it
Families moving away and children aging out are background noise. Several departures from one room in one term usually trace back to a teacher, a decision by the director or an incident, so ask what happened that term. A seller who keeps no record of why families leave has never asked, and you can start asking in your first month.
Where do new families come from: other parents, search, a nearby employer, a school or a congregation?
Why ask it
Word of mouth among parents carries on under a new owner as long as the teachers stay. Enrollment that arrives through the owner's own congregation, or one employer's benefit program, is less certain, and you should ask whether that arrangement is written down. Ask as well how many tours are given in a month and how many of those families enroll.
What is tuition for each age group and schedule, when did it last go up, and how did families take it?
Why ask it
Get the rate sheet for each of the past three years. Small, regular increases that parents have come to expect leave you room to continue them. A school that has held its rates for years will need a large rise under your name, in the same months families are deciding whether to trust you.
How much of the income is subsidy or public pre-K funding, and what must a new owner do to keep receiving it?
Why ask it
These payments are often tied to the provider and not the address, so a buyer may have to enroll afresh. Ask the office that pays how long that takes and whether money stops in the meantime, because a gap of even one month with the payroll still due can sink a first year. Compare the subsidy rate with private tuition too, and ask whether parents' co-payments are really collected.
Does the school claim meal reimbursement, grants or other public money, and what conditions come with each?
Why ask it
Food program payments and grants bring record-keeping duties, and some grants carry conditions that outlast the money, such as staying open for a set period. Read each agreement and ask whether anything must be repaid when the school changes hands. Income from a one-time grant should come out of the earnings figure behind the price.
Does the school run all year or follow a school calendar, and what happens to tuition and payroll over the summer?
Why ask it
A program that closes for ten weeks still owes rent for them, and teachers who go unpaid all summer may not come back in the fall. Line up the monthly bank deposits beside the monthly payroll for a full year to find the thin months. If there is a summer camp, ask who staffs it and how many of the current families sign up.
Which families owe tuition right now, how old is each balance, and who collects it after closing?
Why ask it
The billing system can sort unpaid balances by age, and that is the report to request. Tuition three months late is rarely paid, and a long list of it tells you the office chases payment by hand instead of collecting in advance. Settle in the contract whether old balances stay with the seller, so your first act as owner is not sending demand letters.
What deposits, registration fees and prepaid tuition are you holding, and will that money be handed over to me?
Why ask it
A deposit for next fall is cash the seller has banked for care you will be providing. Get the list family by family and ask your attorney how the total is credited against the price or handed over at closing. The same goes for any summer camp or enrichment fees paid ahead.
Which discounts and free places do you give: siblings, staff children, friends, families on a scholarship?
Why ask it
The published rate multiplied by the roster overstates income wherever discounts run deep, so reconcile the two against what was billed. Free or cheap care for teachers' own children is part of their pay, and ending it can cost you the teacher. Find out which of these are written down and which are favors the owner has been doing for years.
Staff
May I see a staff list showing each person's room, hire date, weekly hours, credential and pay?
Why ask it
Names can be blanked out if the seller prefers that for now; the dates and the wages are what you need. Lead teachers who have stayed for years are a large part of what you are buying. A roster full of people hired in the last twelve months is a school you would be rebuilding.
How many teachers have left in the last two years, from which rooms, and where did they go?
Why ask it
Where they went is the useful part. Teachers moving to the center down the road for slightly more pay show you what it will cost to keep the rest, and several leaving one room suggest a problem with whoever supervises it. Ask how long each opening stayed unfilled and how the room was staffed in the meantime.
What staff-to-child ratios do you run in each room, and how close are they to the required minimum early and late in the day?
Why ask it
Required ratios vary by place and by age group, so read the local rules yourself before comparing. A room staffed at exactly the minimum with no floater has no slack: one sick call and it must combine with another or close. Ask for the sign-in sheets and staff schedule from an ordinary week and check 7:30 in the morning and 5:15 in the afternoon.
Who meets the qualification rules for director and for lead teacher, and what happens to the license if that person leaves?
Why ask it
Licensing rules commonly require a named director and lead teachers with set credentials, though what counts differs from one agency to the next, so ask what applies. If the only qualified person is the seller, or a director close to retiring, you need a successor lined up before closing. Ask the agency whether your own education and experience would qualify you.
Are background checks, health records and training hours current for every employee, and may I look through the files?
Why ask it
Inspectors tend to open staff files early in a visit. Pull a sample yourself and look for expired first aid certificates, missing checks and training logs that stop a year ago, since every gap becomes a citation with your name on it. Ask the agency whether checks carry over or must be run again when the employer changes.
Who covers when a teacher is out, and how often did a room close or combine last year because nobody could?
Why ask it
A good answer has names in it: a paid floater, a list of substitutes who have already been cleared to work. If the cover is the owner stepping into the classroom, that cover leaves on closing day and you will be the one in the toddler room at seven.
Is the director staying, and would they put that in writing before closing?
Why ask it
For a first-time owner the director holds the licensing knowledge, the parent relationships and much of the staff's reason to stay. Ask to meet as soon as the seller allows it, and find out what would keep them: pay, title, or a say in how things change. If the director is the seller's relative, have that conversation without the seller in the room.
What do staff count on that is in no contract: a raise each fall, a holiday bonus, paid days when the school closes for snow?
Why ask it
Habits like these are felt as promises. A new owner who skips the December bonus without knowing it existed loses goodwill in the third month for the sake of a small saving. Ask separately how much paid leave has built up and who pays it out at closing.
Which teachers are the reason families enrolled, and what would keep each of them through your first year?
Why ask it
Parents often pick a teacher more than a school, and the seller knows which ones. With those names you can plan something concrete, such as a bonus paid at six and twelve months, and ask whether the seller will fund part of it. Two of those teachers leaving in the first term can take a classroom of families with them.
Building and lease
How long does the lease run, what renewals and rent increases are written into it, and has the landlord agreed to take me as the tenant?
Why ask it
A childcare license is normally issued for one address, so losing the premises can mean losing the school until another building is approved. Ask your lender how long a term it needs to see, and meet the landlord before you are committed. Find out as well whether you would be asked to sign for the rent personally.
If you are keeping the building, what lease would you offer me, and what rent has the school been paying you?
Why ask it
A seller who stays on as landlord keeps a hold over the business for years, so negotiate that lease as carefully as the purchase: rent, increases, repairs and a first right to buy the property. An owner who charged their own company little or nothing has made the earnings look better than they will be for you. Work the profit out again with the rent you would really pay.
Who pays for the roof, the heating and cooling, the plumbing and the parking lot, and what has been replaced in the last ten years?
Why ask it
A broken furnace in January closes classrooms, and closed classrooms mean refunds. Get the age of each major system, have a building inspector look, and read the repair clause in the lease instead of relying on anyone's memory of it. A roof with only a few winters left belongs in the price discussion.
How old are the playground equipment and the surfacing under it, and when were they last inspected?
Why ask it
Licensing inspectors and insurers tend to walk the playground, and they look at fall surfacing, fencing, gates and shade as well as the climbing frame. Ask for the last inspection report and any repair orders. Worn surfacing or equipment past its service life is expensive to replace, so get a quote before you make an offer.
Has the building been tested for lead, radon, asbestos and drinking water quality, and what did the results show?
Why ask it
Which tests are required, and how often, depends on the agency, so ask it. In an older building ask for the reports themselves. If nothing has been tested, consider making it a condition of the sale, because fixing a problem later means emptying rooms that are full of small children.
Is there space, under the license and the zoning, to add a classroom or raise the capacity?
Why ask it
Listings like to mention room to grow. Whether it exists depends on square footage per child, the number of toilets and sinks, outdoor space, parking and what the zoning permits, and only the agency and the planning office can tell you the real number. If the growth is so easy, ask why the seller has not done it.
How do drop-off and pick-up work, and have neighbors, the landlord or the city ever objected to the traffic?
Why ask it
Stand outside at eight in the morning and at five and watch. Cars backing up into the street, or parents parking across driveways, are the kind of thing that ends in conditions on a permit or a tense lease renewal. While you are there, see how the front door is controlled and who can walk in.
Does the school run a bus or van, and who owns, insures and drives it?
Why ask it
Carrying children brings its own set of rules for vehicles and drivers, so ask the agency what applies locally. A van registered to the owner personally is not part of the sale unless the list says so. Where a before-school or after-school program depends on that vehicle, the income goes when the van does.
Program and handover
How would you describe the curriculum, and is any of it franchised, licensed from a publisher or tied to you personally?
Why ask it
Montessori, play-based, faith-based or academic: whatever the label, it is what the current families chose, and changing it quickly is a reliable way to lose them. If there is a franchise or a paid curriculum, ask whether the agreement moves to a new owner and what the fees are. An approach that exists only in the owner's head needs writing down during the handover.
What would current parents call the best thing about the school, and what do they grumble about at pick-up?
Why ask it
Read the online reviews first and compare them with what you hear. Praise aimed at the owner by name is goodwill that may leave with the owner, while praise for particular teachers or the outdoor space stays. The grumbles, often about communication, closures or new faces in the room, make a ready list of what to fix first.
How and when will families be told, and will you sign the announcement with me?
Why ask it
Parents hear a sale as a threat to their child's routine. A letter from the seller that introduces you, followed by an evening where you say what stays the same (the teachers, the hours, tuition for the rest of the year), tends to keep withdrawals low. Fix the wording and the date in writing, and tell staff a day earlier so no teacher hears it from a parent at the door.
When will the staff be told, and can I meet each teacher before the sale closes?
Why ask it
Every teacher will have the same three questions: is my job safe, is my pay the same, is my room the same. Have the answers ready on paper before the meeting. Whether their employment carries over or they are hired afresh depends on the structure of the sale and on local law, so ask your attorney what you can promise.
After closing, will you stay through a full enrollment season or a licensing visit, and on what terms?
Why ask it
The parts of this job that are hardest to learn come round once a year: fall enrollment, the license renewal, subsidy paperwork, staff reviews. A two-week handover in July covers none of them. Set the hours, the pay and an end date, because a former owner who lingers leaves teachers unsure whose decision counts.
What do you plan to do after the sale, and would you promise in writing not to open another program nearby or hire these teachers away?
Why ask it
The case to worry about is a home daycare or small program a few streets away that takes two lead teachers and a dozen families with it. Whether a promise like that holds up where you live, and for how many years or miles, is for your attorney to answer. A seller who is truly retiring has little reason to argue over it.
Which records and accounts come with the school: children's files, parent contacts, staff files, the billing system, the website and the social pages?
Why ask it
Children's records come with privacy and retention rules, so ask the agency what has to be kept, for how long, and whether parents must consent before the files move to you. For everything with a login, get the list before closing and change the passwords that day. Check that the billing software subscription can be moved over with its history intact.
Which room, routine or policy have you meant to fix for years and never got to?
Why ask it
Save this for late in the process, when the price is settled and the seller has less reason to polish. The answer is usually specific, like the nap room that is too bright or the handbook nobody has updated, and it hands you an early improvement that staff have been waiting for.
Checking a preschool before you buy it
Practical guidance for the conversation itself
Calls the seller cannot make for you
The licensing agency
Whether the license transfers, what a new owner has to submit, how long approval takes and what the public record shows. Call early and describe the purchase in general terms; a licensing consultant can ask on your behalf if the seller wants the sale kept quiet. No answer from the seller replaces this call.
The subsidy and pre-K offices
Ask each office that pays the school what a change of owner does to the agreement and whether payments pause while a new one is set up. Ask the school district, separately, whether it plans to open or expand free pre-K classrooms nearby. Both answers change what the enrollment is worth.
The landlord
Where the license is tied to the address, the landlord's opinion of you matters as much as the seller's. Ask, with the seller's agreement, whether the lease can move to you, at what rent, and whether there are other plans for the property.
Your lender and your insurer
A lender may want a minimum lease term and the license approval in hand before releasing money, and an insurer will price a first-time owner in its own way. Get both answers in writing before the price is final, because either one can change what you are able to offer.
Testing what you are shown
Count children three ways
Take one month and compare the roster, the daily sign-in sheets and the tuition landing in the bank statement. Forty names on the roster should mean roughly forty children signing in and forty payments arriving. Where the three disagree, that gap is your first question.
Turn names into full-time places
Add up the days each child attends in a week and divide by five. Sixty names can come to thirty-six full-time places, and against a license for forty-eight that is a school three-quarters full, whatever the listing says about sixty families.
Look at September, not the day of the tour
Subtract the children leaving for kindergarten and add only those with a signed agreement and a deposit for the fall. That figure, room by room, is the school you would be running in your first months.
Spend a whole morning in the building
Arrive for drop-off and stay through the first transition of the day. Look at how many adults are in each room against how many children, how teachers speak to the children when they think nobody is listening, and whether parents linger to chat or hurry out.
Timing the purchase around the school year
Know when the year turns over
Enrollment agreements for the fall are often signed in late winter and spring. A buyer who closes after that inherits a year the seller filled, and one who closes before it has to do the filling as a stranger. Ask when re-enrollment happens here and plan the closing date around it.
Start the license application before you need it
Approval can take longer than the rest of the deal put together, and the agency sets the pace. Ask what can be submitted before the contract is signed: your own background check, your qualifications, floor plans.
Tell staff, then families, then everyone else
Agree the order and the dates with the seller. Teachers who learn of the sale from a parent, or parents who learn of it from a review site, start the new ownership feeling they were kept in the dark.
Change little in the first term
Families and teachers are watching for signs of what kind of owner you are. Keep the hours, the rooms and the rates where they are until the next natural break in the year, and use the time to learn names.
Signs the deal needs more time
Nobody can say how the license changes hands
If the seller and the broker both answer 'it just transfers' and neither has asked the agency, stop until you have the agency's answer yourself. A school you own and cannot legally open is worth the furniture.
Enrollment exists only as a summary
A one-page total with no rosters, sign-in sheets or billing reports behind it cannot be checked. A seller whose numbers are real can print them from the billing software while you wait.
The same citation, visit after visit
One finding that was corrected and never seen again is ordinary. A finding that comes back on each inspection describes a habit, and the people who have the habit come with the school.
The director and lead teachers are already leaving
When the people parents know are on their way out, you are buying a license application, a lease and a room full of small chairs. That may still be worth something, at a price that reflects starting over.
A full school in spring with no deposits for the fall
Either re-enrollment has not been run this year, which the seller should be doing whether or not there is a sale, or families are waiting to see what happens. Find out which before the price is fixed.