Did you know surveys indicate that three out of four (75%) business owners regretted the decision to sell their business? Unfortunately, the statistic is true. Business owners often note three primary reasons for regret:

• One is a lack of preparation. They realize they should have started planning their exit much earlier and done more to prepare their child care business.
• Two, they left money on the table. By not maximizing the value of their business, their child care business did not sell for as much as it could.
• And, no personal plan. Their post-transition satisfaction is low because they did not prepare a personal plan for what they would do after their exit. 

Having worked with child care business owners since 1995 as business consultants and mergers and acquisition advisors, we know firsthand that only a very small percentage of child care business owners have a formal Exit Plan. Although most owners think about the day they will exit their child care business—very little is done—other than thinking and dreaming about exiting.

This lack of formal exit planning cannot only delay a child care owner’s exit timeline but often results in child care business owners making bad decisions should an unexpected situation arise that causes the owner to want to exit their business sooner than anticipated.

For instance, many child care owners decided to sell their child care businesses during the Great Recession and COVID. Some sold due to financial problems, and others sold because they did not want to continue with the day-to-day challenges and stress of owning a child care business. Having done little or no exit planning, many owners made decisions that were not in their long-term best interest, including:

• Selling their child care business for less than its true value.
• Agreeing to earnouts or seller financing (with “strings attached”), some never received full payment.
• Leasing their building and land with low rents and terms highly favorable to the buyer.
• Agreeing (often as a buyer’s requirement) to continue to operate the child care business for the buyer after closing for several months—losing all control of operations and decision-making—while still having the stress and headaches of being responsible for running the business.

As the saying goes, “Desperate People Do Desperate Things.” In good times, a lack of exit planning leads to poor decision-making. Challenging, stressful times make it even harder to make good exit decisions. 

At ChildCareOwner, we specialize in helping child care business owners create an Exit Plan that helps them achieve both business and personal exit goals and provide for their financial needs for the next chapter of their lives.