Your School’s Valuation: What’s Involved?

You may be considering purchasing an independent school, developing a new SEND school or sixth form, selling or transferring ownership of a school or simply seeking to reflect the worth of your school in your accounts. In fact, any aspect of holding an interest in property is likely to require a valuation at some stage.

So, what aspects of the operation of the business are tested in practice as part of the valuation exercise?

The calculations will be based on the number of students in each year group, additional income, bursaries and so forth, and the valuer assessing the sustainable level of occupancy or roll numbers. This will have regard to historic occupancy and factors that might affect future occupancy. The level of fees being charged will also be considered, as will scope for fee increases and other potential revenue generating activities.

The four main assessment categories are:

• Staffing
• Direct costs
• Premises costs
• Administration costs

The end figure, or the ‘Market Value’, is a number that includes the property, the fixtures and fittings and any goodwill attributable to the business. To reach this, the level of operating profit is multiplied by the appropriate multiple, known as a Years Purchase (YP) for that property. The valuer will primarily have regard to transactions involving other broadly comparable schools. This evidence of actual sales is then interpreted in relation to the subject property.

For more information and for a confidential chat regarding your business valuation, contact Richard Green: richard.green@christie.com / 07717 335 613