What Every School Founder Should Know Before Considering An Exit

By Vipul Bhargava, Managing Director, Novistra Capital

When founders begin thinking about selling their school, one question almost always dominates the conversation:

“What multiple can I achieve?”

Implicit in that question is another assumption: that the value of a school is primarily determined by its EBITDA.

EBITDA undoubtedly matters. It remains one of the first metrics investors examine. But after advising founders through education transactions across multiple markets, I’ve learned that schools rarely succeed or fail in a transaction because of EBITDA alone.

In fact, one of the most interesting conversations I had recently was with a buyer evaluating a school. I asked a simple question:

“If you had to choose between a school with growing EBITDA but declining student enrollment, or one with flat EBITDA but consistently growing enrollment, which would you choose?”

The answer came without hesitation: 

“I’d choose the school with growing enrollment.”

At first glance, that feels counterintuitive. Isn’t EBITDA what determines valuation?

Not entirely.

Investors are not just buying today’s profitability. They’re buying tomorrow’s potential.

Growth Tells a Story That Profits Cannot

A school can increase EBITDA by raising fees while admitting fewer students. On paper, profitability improves. Yet declining enrollment immediately raises more difficult questions.

• Has the school reached saturation?
• Is demand beginning to weaken?
• Has growth peaked?

Growing enrollment, on the other hand, signals something much more valuable: strong demand without the need for significant discounting.

It tells investors that demand remains healthy, the proposition continues to resonate with families, and there is still room to create value after acquisition.

The Three Clocks of an Exit

Many founders believe they can simply decide when to sell. In reality, successful exits happen when three different ‘clocks’ align simultaneously.

• Market timing – Is investor appetite strong? Are capital markets supportive? Has the sector become overcrowded?
• Business timing – Is the school still demonstrating growth, with operational headroom and room for expansion?
• Personal timing – Is the founder genuinely ready for the next chapter?

Miss one of these clocks, and you risk leaving value on the table.

We’ve seen situations where founders delayed a transaction for perfectly understandable reasons, only to find that market conditions had changed significantly. The business remained strong, but the environment around it had shifted.

Waiting for the “perfect” moment can sometimes mean missing the best one.

Your Valuation Is Built Long Before Due Diligence Begins

Many founders assume preparation starts once they appoint advisors.By the time due diligence begins, many of the factors that determine valuation have already been shaped.

Buyers pay close attention to factors that never appear in a headline multiple:

• Student growth and churn
• Staff retention and leadership stability
• Parent satisfaction
• Operational systems
• Financial controls and tax structure

None of these are glamorous.

Not Every Buyer Is Buying the Same Future

Price matters. But purpose matters too.

Some buyers are focused on preserving what makes a school distinctive. Others are looking to integrate, consolidate or scale. For many founders, legacy matters every bit as much as valuation.

The best outcome is not always the highest offer. It’s finding the right partner for the next chapter of the school’s journey.

Final Thoughts

The best time to prepare for an exit is not when you’ve decided to sell. It’s when selling still feels like a distant possibility.

That’s when you have the greatest ability to influence the factors that ultimately shape value, and the widest range of options when the time is right.

One lesson I’ve learned is that the strongest exits are rarely created during negotiations. They’re built through decisions founders make years before the sale process ever begins.

If you’re beginning to think about what the next chapter might look like, even if it’s several years away, a conversation today can often create far more options tomorrow.

Vipul Bhargava is a Managing Director at Novistra Capital, focused on Education M&A advisory. He is based in London, United Kingdom.