First, which kind of school
This guide is about for-profit independent schools, the ones that have an owner. A nonprofit school has no owner and can't be sold, so the question there is a different one, about who leads and runs it, and we cover it in how an independent school changes hands.
For a for-profit school, the honest answer to the question in the title is that the school is worth what a buyer will pay for the earnings it produces, plus whatever the real estate is worth on its own if you own it. Everything below is about how buyers arrive at those two numbers, and what makes them larger or smaller.
Two numbers, not one
Most owners think of the school and the building as one thing, because that's how they've lived it. Buyers separate them on the first call. The operating business is valued on the earnings it throws off, and the property is valued the way any commercial property is, by an appraisal that looks at comparable sales and the rent the building could command.
That separation matters because the two numbers move for different reasons. A school with flat enrollment in a building the owner bought twenty years ago can be worth more as real estate than as a business. A school with a waiting list in a leased strip-center space is the opposite. Knowing which of the two you actually have tells you what kind of buyer to expect and what they'll want to talk about.
What buyers look at, in the order they look
Enrollment, and its direction. The first question is how many students the school has, and the second is what that number was three years ago. A school at 220 students that was at 160 three years ago is a different asset from one at 220 that was at 280, even though today's revenue is the same. Buyers also want re-enrollment rates by grade, the size of the inquiry pipeline, and how many families are on financial aid or scholarships, because all three predict next year's number better than this year's does.
Earnings after the owner is paid. Buyers don't value revenue. They value what's left after every real cost, including a market salary for whoever runs the school day to day. If you've been paying yourself less than a head of school would cost, a buyer will add that cost back before valuing anything. If you've been running family expenses through the school, they'll add those back in your favor. This adjusted figure, sometimes called owner's discretionary earnings or adjusted EBITDA, is the number a multiple gets applied to.
The building and the lease. If you own the property, a buyer can purchase it with the school, or lease it from you, and either can work. If you lease from someone else, the length of the lease, the rent relative to market, and whether it can be assigned to a new owner all feed into the price, because a buyer with three years left on a lease is buying a school with a deadline.
The team that stays. A school where the head of school, the admissions lead, and the senior teachers are staying is worth more than the same school where the owner is all three. Buyers ask who the parents call when something goes wrong, and if the answer is always you, they'll price in the cost and the risk of replacing you.
The program. Accreditation in good standing, a curriculum families chose the school for, specialized programs that competitors don't have, and clean licensing and inspection history all support the price. A pending accreditation visit or an expired license doesn't stop a sale, but it moves money into escrow until it's resolved.
The market around the school. Buyers look at the households within a twenty-minute drive, what nearby schools charge, whether the local public options are strong, and how much room the campus has to grow. A full school in a growing county with room for two more classrooms is the best version of this. A full school with no room to expand in a flat market is a good business with a ceiling, and buyers price the ceiling.
How the multiple works
Once a buyer has your adjusted earnings, they apply a multiple to arrive at the value of the business. The multiple isn't a fixed number. It rises with size, with the steadiness of enrollment, with how little the school depends on the owner, and with how much of the earnings are recurring tuition rather than one-time fees. It falls with concentration risk, meaning a school where a handful of families, one employer, or one scholarship program account for a large share of revenue.
Large groups buying many schools at once can pay more per school than a single-school buyer, because they're pricing what the school is worth inside a larger portfolio. That's real, and it's also the reason those buyers tend to change more after closing. A family operator buying one school prices what the school is worth on its own, and tends to change less. Neither is wrong, and which one is right for you depends on what you want the school to be in ten years, not only on the number.
We don't publish multiples, and we'd be careful with anyone who quotes you one before they've seen the school. Two schools with the same enrollment and the same earnings can be worth meaningfully different amounts for the reasons above, and the only way to know is to let a serious buyer look.
What lowers the number, and what you can fix
Most of what lowers a school's value is fixable, and most of it takes a year or two rather than a month. Financial statements that mix personal and school expenses can be cleaned up by an accountant. A lease that expires next year can be extended before you start a conversation. A school that runs entirely through you can develop a second leader who families already trust. Declining enrollment is the hardest thing to fix quickly, and it's also the thing buyers discount most, which is the argument for having the conversation while the trend is flat rather than after it turns.
Deferred maintenance is the other common discount. A buyer's inspection will find the roof and the HVAC, and the cost comes off the price, usually with a margin for the risk. Fixing what you know about before a sale almost always returns more than it costs.
How to get a real number
An owner can get a defensible sense of the school's value with three documents: three years of financial statements with the owner's adjustments noted, enrollment by grade for the same three years with re-enrollment rates, and the lease or the deed. With those, a buyer or an advisor can put a range on the business in a first conversation and a firm proposal after a visit.
Our succession readiness checklist walks through the twenty-eight things a buyer asks about, so you can see where the school stands before anyone else looks. And if you'd like to know what we'd see in your school, the conversation is confidential, and it costs nothing to have.
