Short answer
The core file connects reported cash flow to source records and connects the proposed handoff to licenses, people, premises, programs, and liabilities. Completeness matters, but so do indexing, reconciliation, redaction, and an honest list of missing or pending evidence.
Key Takeaways
- Reconcile reported earnings to bank, billing, payroll, and attendance records.
- Match staffing schedules to classrooms and regulatory requirements.
- Compare property approvals with the facility as actually operated.
- Index missing, pending, sensitive, and buyer-specific evidence separately.
Longer answer
Financial folders should include requested tax returns, monthly profit-and-loss statements, balance sheets, general ledger, bank statements, payroll filings, billing exports, attendance, public-program remittances, accounts receivable, family credits, deposits, prepaid tuition, debt, grants, and owner adjustments. Each normalized earnings adjustment needs support.
Operating folders should cover anonymous enrollment by room and schedule, inquiry and withdrawal records, tuition agreements, calendar, closure days, vendor contracts, equipment, vehicles, technology, food service, transportation, curriculum rights, insurance, claims, and written procedures. Summaries can precede sensitive detail.
The regulatory and property file should include the current license, amendments, waivers, inspection and complaint records, corrective plans, background-check status summaries, staff qualifications, approved plans, zoning/use evidence, building and trade permits, occupancy, fire, health, environmental, and code records. Do not represent an expired or seller-specific approval as buyer authority.
What it depends on
| Workstream | Core evidence | Reconciliation |
|---|---|---|
| Financial | Returns, statements, ledger, bank and payroll | Reported earnings to cash and filings |
| Enrollment | Contracts, billing, attendance, credits and deposits | Children served to collected revenue |
| Workforce | Anonymous roster, credentials, schedules and benefits | Payroll to classroom coverage |
| Regulation | License, inspections, findings and corrections | Current status to actual operation |
| Property | Lease/title, use, plans, permits and occupancy | Approved record to current site |
| Programs | Subsidy, food, pre-K, quality and grant agreements | Seller rights to buyer requirements |
| Closing | Entity, tax, liens, debt, allocation and schedules | Purchase terms to delivered assets |
Data-room access should reflect sensitivity. A buyer may need aggregate wages and qualifications early, then person-level documents later. Families' and employees' private information should not be released merely because it is available.
Example
A seller's statements report tuition revenue, but the buyer cannot reconcile it to attendance and bank deposits. The seller exports monthly billing, maps payments and credits, separates public reimbursements, and documents two temporary grants. The resulting schedule supports recurring revenue and identifies amounts that should not be capitalized.
The same principle applies to staffing and property: a roster without schedules does not prove room coverage, and a certificate without approved plans does not prove every current use. Documents become persuasive when they agree with one another.
What to do next
Create an index with document owner, period, entity, site, status, sensitivity, and unresolved question. Reconcile the three most important chains first: revenue to cash, payroll to rooms, and approvals to the actual facility. Request missing third-party records early and maintain a written exceptions list.
Use the sale document checklist, preparation guide, buyer diligence checklist, purchase agreement guide, working-capital guide, and deposit guide.
Frequently asked questions
How many years of financial records should a daycare seller prepare?
Prepare all periods requested by the buyer and lender, commonly including multiple completed years plus current monthly results. Reconcile tax returns, statements, ledger, payroll, bank deposits, billing, attendance, public payments, receivables, credits, and unusual items.
Should a seller share child and employee records in the data room?
Share only what is necessary at the appropriate diligence stage, using summaries, redaction, restricted access, and professional guidance. Child, medical, incident, background-check, identity, payroll, and personnel information requires tighter control than ordinary operating records.
Which property records belong in a daycare sale file?
Include the lease or title file, assignments and amendments, approved use, zoning decisions, plans, permits, occupancy documents, fire and health inspections, code cases, environmental records, utilities, repairs, capital projects, and landlord or lender correspondence.
What if the seller cannot locate a required document?
Disclose the gap, request a replacement from the issuing authority or counterparty, document the search, and avoid recreating evidence from memory. A missing record may require a closing condition, holdback, representation, price adjustment, or additional verification.
Sources
Related
An organized file shortens questions only when the records are internally consistent and the exceptions are candidly identified.