Selling Your Private School

Schools are always of interest to investors. But selling your school can be one of the most challenging and critical decisions you will make. You have invested your time, energy, and resources to build your school business. It represents decades, or even a lifetime, of dedicated work; therefore, it is essential that you understand the process of selling your school and how best to prepare when you decide to put it on the market. By "school," we mean a K-12 private school, a boarding high school, a language school, a private career college, a university, or any other type of educational institution.

Owning a private school can be a profitable business. There may come a time with any business, though, when you will consider selling your school. Whether the reason is retirement, illness, death, a partnership dispute, the market is right for a significant payday, you want liquidity to move into new opportunities, or to pursue collaboration with a complementary business, it is crucial to leverage your resources for the best return on your investment. Some owners may consider selling their business when it is not profitable; however, this can make it more difficult to attract buyers. Many characteristics can make your school business appear more attractive, including:

• Increased profits
• Consistent income
• Consistent and expanding enrolment

Selling your school is a significant financial transaction, and it helps if you are prepared to put the work and research in to ensure that you get the best price possible. Often, school owners fail to complete their sales due to a lack of planning or not collaborating with an experienced advisory team to guide them through the process's challenges. Completing a transaction can be complicated, and it often involves mistakes, confusion, missteps, and obstructions. When you decide to sell your school, it is crucial to complete the groundwork ahead of time, so you are in the strongest position possible to maximize your value and facilitate a successful deal closure.

For a sale to be successful, your private school business needs to stand out in an overcrowded, competitive market. By taking preemptive steps now, you will not only be better prepared to handle the sales process, but you will increase your chances of finding the right buyer, maximizing your selling price, and safeguarding a smooth transition. If you do not adequately prepare for your sale, you will most likely not receive a competitive price for your school, leaving money on the table. Furthermore, your school's operations may be disrupted during the process due to inadequate preparation. Ultimately, you may risk the deal falling through if you enter the sales process unprepared and lose months to the process.

That is why it is crucial to carefully prepare what you need to have in place well in advance. This article outlines some critical steps school owners should consider when planning to sell their school.

1). Selling Your School On Your Own Or Retaining An M&A Advisor

Unless you have already sold a business on your own, it is advisable to retain an experienced M&A advisor. The value of retaining an M&A Advisor allows you to focus on running your business, avoid unnecessary stress, and bring on board an experienced team that does this type of work on a day-to-day basis. This team can handle the heavy lifting and find the right buyer at the right price. Accordingly, our advice is to appoint an M&A advisor after verifying their relevant experience in the private school sector, the size of transactions they have handled, their experience in completing transactions, and the depth of their buyers' pool. HEG's clients have peace of mind knowing that they will receive the best price and terms once their transaction is complete. Our team has a proven track record supporting school owners to find qualified global buyers and assist them with their school's sale. From preliminary valuation advice to negotiation and closing, we leverage our transactional and advisory expertise to bring our clients' aspirations to life. Our team converts an owner's hard-earned business equity into cash, helping them achieve their objectives. Our process is handled with the strictest confidentiality and minimum intrusion into the school's operation.

2). Right Time To Sell Your School

When to sell your school can become a predicament for owners. From the minute you decide to sell your school, owners will have a long runway until the transaction is completed. Accordingly, you need to assess when the right time is to initiate the process (e.g., approaching retirement, new competitors entering the market, increased market demand from buyers, or improved profitability). There are several factors to consider when positioning your school for sale. Multiple factors can affect the overall value of your school, including:

• Finances and Regulatory Standing: Is your school financially stable and in compliance with regulatory requirements? Are there concerns regarding cash flow and profits? Is your adjusted EBITDA consistently growing with margins? Are there any legal matters or liabilities that need to be addressed before the sale?
• Standing In Your Market: Does your school have a strong reputation within your market? Do you have a prominent presence in your sector?
• Admissions and Enrolment: Does your school have a high number of enrolments and a waiting list? Are you at capacity, or is there room for a new owner to grow enrolment and profits? Are you facing challenges with recruiting and enrollment?
• Human Resources: Do you have capable staff and faculty? Are you facing staff turnover issues?
• Market Competition: Do you have competition in your market? Are other schools planning to open that would compete with your program?

3). Are You Ready To Sell Your School

Planning the sale of your school should begin well in advance. Developing a strategy will help you identify your school's strengths and weaknesses, prepare for the sale, and ensure you can maintain a business-as-usual approach during a potentially lengthy sales process. The following considerations will help you decide to sell your school, allowing you to be more prepared for the process and increase the probability of a successful sale. You need to develop a strategy that includes:

• Getting Your Books In Order: Buyers appraising your business generally require at least three years' worth of financial information and forecasts. It would be helpful if you cleaned up your financial records to ensure that your numbers add up. An owner can avoid red flags by working with their accountant to produce clean financial statements and business tax returns dating back to at least three years, confirming that all income and expenses are accounted for.
• Understanding True Profitability: Do you need to make changes to your business to increase its value to potential purchasers and bottom line? Most privately-held school businesses claim a variety of non-operational expenses. Make sure that you have supporting documentation for these expenses. What are your key add-backs and adjustments to the income statement to calculate the adjusted EBITDA?
• Organizing Your Paperwork: Have key information available, including historical/forecast enrolment, facilities overview, list of employees, accreditation/licenses, breakdown of suppliers and customers, an overview of the educational program, etc. Are all the key documents readily available regarding operations? Do you have a system in place to provide recent financial statements, payroll information, enrollment details, billing records, student lists, and other relevant data?
• First Impression: Buyers will be visiting your school for the first time, and they need to see order, not chaos. Buyers look for companies that show well, as an orderly school often indicates an orderly management team and back-room operations. You never get a second chance to make a first impression.
• Knowing The Reason For Selling: Buyers are curious as to why an owner wants to exit their business. If it's the Reason for Selling: Buyers are curious about how great it is, so why are you selling? Be prepared to share your reasons.
• Keeping Your Eye On The Ball: Do not let the performance of your school fall off because you are too focused on the sale. This will only provide buyers with added negotiating power to lower their offer. It would be best to keep your foot on the gas pedal as you prepare for the sale. You want to make sure your school's business performance does not decline during the process. Instead, it would help if you worked to increase the business value before putting it on the market. This includes increasing profits, boosting enrollment, reducing expenses, and streamlining workflows.

4). Putting A Good Team In Place To Sell Your School

Preparing to sell your school business is both exhilarating and nerve-wracking. The good news is that you will have a much better chance of selling your school to the right buyer for the right price by following established best practices. Like any other asset, it is crucial to have a rough idea of your school's value well before listing it for sale. Conduct research to find recent comparable sales (comps) for schools of the same size and sector. Obtaining a business valuation is a critical first step; however, there is no guarantee that you will receive the desired amount. A range of related factors will influence your final selling price. If you are sure that now is the time to sell, the next step is to build a solid team of third-party consultants. Your team may include: (i). Lawyers who specialize in mergers and acquisitions; (ii). Accountants who can advise you on your personal and corporate tax situation; and (iii). Merger and Acquisition Advisory can serve as an intermediary to coordinate the selling process and handle all the necessary tasks.

Next Step Selling Your School

Our personalized M&A services include preliminary market analysis, a custom-tailored marketing plan highlighting the school's unique value points, an introduction to pre-screened prospective buyers from our list, an analysis of offers, and advice on preparing the offer sheet with the seller's professional team to complete the transaction.

Our focus rests exclusively on the private school sector. We are recognized as industry experts with extensive knowledge and transaction experience in the private education market, having successfully advised on the sale of numerous private schools in the USA and Canada. Having done business for many years in every imaginable economic cycle, we provide constructive and practical strategies to achieve ownership's financial goals.

If you would like to learn more about our M&A services, including buying or selling a school, or discover the value of your school in today's market, please contact HEG directly at info@halladayeducationgroup.com or our toll-free, confidential number at 1-800-687-1492. We are confident that we will find the right solution for the successful sale of your school. Contact us today to receive our complimentary valuation and schedule a 30-minute one-on-one consultation. You can also click on the following link for additional information on schools we work with www.buyingandsellingschools.com/schools-for-sale.