Advice on valuation of daycare: business + property. Anyone?

[Kevin Zwieg]

Looking for some advice on valuation of an existing day care. My wife and I are looking at purchasing an existing business + property in the area. We are early in the process as we have not had an opportunity to comb through the financials, yet. 

The real estate valuation seems straight forward: appraisal and/or income method based on similar commercial spaces and cap rate...

The business, beyond assets less liabilities seems more fuzzy to me...how much value for the existing clientele, a good reputation, etc? 

Ultimately, we will be making the decision based upon our comfortability with the cash flow situation vs. our time investment, but any insight and expertise on sale/acquisition of this type of business would be appreciated!

[Priyanshu Adathakkar]

The business and real estate need to be evaluated separately. While in this case the real estate should be evaluated based on comps the business valuation should be on EBITDA  (Earnings Before Interest, Taxes, Depreciation and Amortization) basis. Once you determine the value do a real estate purchase contract and do a bill of sale for assets, this way you do not take on business liabilities!