Frequently Asked Questions

1. What do I need to provide to pre-qualify as a prospective buyer?

Pre-qualifying as a buyer is the first step in the search process. There are three pieces of documentation needed. Our “Buyer Profile Package” includes the following:

 

1. Acceptable Credit Score - allow access to your credit report or provide a current one yourself to us.

2. Personal Financial Statement – the PFS list all your assets and liabilities

3. Management profile – this form is like a résumé and outlines your education and professional work experience.

 

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2. Will I have to sign a confidentiality agreement?

Yes. Confidentiality for buyers and sellers is STRICTLY ENFORCED. As a buyer you can be assured your private information will remain that way.

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3. What happens when I find a childcare center I want to buy?

Once you have been pre-qualified as a buyer, we will consult with you on determining what your needs and goals are. We provide you with profiles of schools for you that meet your personal preferences, location and budget. You will then begin the process of confidentially previewing schools. Once you have found a school that you are interested in buying we prepare and present a purchase contract outlining the terms of your offer. If the offer is accepted by the seller he will move on to the due diligence process.

 

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4. What is due diligence?

Due diligence is the terminology used to define the process by which a buyer gains access to detailed financial and business information as well as the opportunity to inspect the property that is being sold with the business. The property may include the building, land, inventory and vehicles. The “due diligence period” allows a buyer a time period for inspection prior to making a commitment to purchase.

 

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5. How long can I expect the whole purchase process to take?

From acceptance of the purchase contract, closing can range on average from 90 to 120 days.

 

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6. Do I need an attorney?

It is always advisable to protect your interest and seek the advice of an attorney, and it's very important you deal with an Attorney you trust and is someone who has experience in the acquisition of a childcare center.

 

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7. What is business brokerage?

Business brokerage involves a sale of assets other than real estate, such as personal property (inventory, furniture, fixtures and equipment and vehicles) and Goodwill.

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8. Why should I use a business broker who specializes in daycare centers?

Daycare centers are highly regulated by each state. There are many licensing requirements that must be adhered to. The rules are further defined by county administrators. Enlisting a professional business broker who specializes in the industry is extremely important in protecting yourself from unseen pitfalls.  Understanding the confidentiality of transitioning is so important and most realtors are not aware of this great importance.

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9. What is Goodwill?

In a business sale, goodwill is the intangible asset portion of the purchase price attributed to a businesses reputation and the expectation of continued consumer loyalty. Other intangible assets to add value to a business include licenses, franchises, copyrights (example: name of a business), patterns, websites and existing advertising campaigns.

 

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10. How does TradeMarc Preschool Realty get paid?

As in most real estate in business transactions, TradeMarc Preschool Realty is paid by the seller of the business.

 

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11. How are businesses priced?

The price is determined by many factors such as location, capacity and historical profit and or loss. When purchasing a business, of highest importance is the debt service of the loan (also known as your mortgage payment), which must be able to be covered by an acceptable percentage of the cash flow required by the lender.

 

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12. How can I finance my purchase?

Loan programs including SBA and conventional, for purchasing schools with real estate typically require a 10% down payment of the total “Project Cost”. The project cost includes the purchase price, closing costs and working capital. The down payment also known as the “cash injection” can be raised from your personal savings, 401(k)s, Family loans, current lines of credit or notes held by the seller. The term of the loan or loans can range from 10 to 25 years. Loan programs for purchasing schools that are business only typically require 25% down.  For additional information, please visit our Financing Page or Contact us. 

 

13. Who arranges financing and insurance during the sale process?

TradeMarc Preschool Realty has developed strategic partnerships with lenders, insurance providers, payroll leasing companies, suppliers, accreditation consultants and accountants to offer our clients a complete business solution.

 

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14. Do you help in obtaining licensing?

Yes, we will assist in ensuring that all your licensing needs are taken care of in a time sensitive manner, licensing requirements can vary by county and are an important issue when transferring ownership of a daycare.

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15. Do you provide arrangements for 1031 tax deferred exchanges?

Yes, we can assist you in your 1031 tax deferred exchanges and help defer paying large capital gains taxes by reinvesting your proceeds.

 

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