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Valuing a boarding or daycare facility involves a layer of complexity that pure service businesses like dog walking don’t have: real estate and specialized equipment that need to be valued separately from the operating business itself, then reconciled into a single purchase price.
Separating Real Estate From the Operating Business
If you own the property, it typically gets valued independently via a commercial real estate appraisal, separate from the business’s SDE-based valuation. Many boarding and daycare sales instead involve a leased facility, in which case the lease terms — remaining length, renewal options, rent escalations, and transferability — become a critical part of what’s being sold, since a buyer is essentially inheriting your real estate arrangement along with the business.
Valuing Specialized Equipment and Buildout
Kennels, fencing, HVAC systems designed for animal facilities, drainage and flooring built for cleaning and odor control, and security or camera systems all represent real capital investment that a generic small-business valuation might undervalue if it’s only looking at SDE multiples. Get a fair market valuation of this equipment (accounting for age and condition, not just replacement cost) and make sure it’s itemized clearly for buyers rather than lumped into a vague “fixtures and equipment” line.
Capacity Utilization Matters More Here Than in Most Pet Businesses
A facility running at 90% of kennel capacity most months is a fundamentally different asset than one running at 50%, even with identical square footage and equipment, because the first has much less room to grow revenue without capital investment while the second has real organic upside for a buyer. Be prepared to show occupancy rates over time, not just revenue, since sophisticated buyers will ask for this specifically.
Regulatory and Zoning Considerations
Boarding and daycare facilities often operate under specific zoning permissions and local licensing requirements that don’t automatically transfer to a new owner in every jurisdiction. Confirm exactly what transfers automatically with a change of ownership versus what requires a fresh application, since a gap here can delay or complicate closing in ways that are easy to overlook until late in the process.
Deferred Maintenance Is a Common Deal-Killer
Facilities that have deferred maintenance on HVAC, drainage, or fencing often look fine on a walkthrough but reveal themselves during a professional inspection, and a buyer who discovers this late in the process will either walk away or demand a significant price reduction to cover the repair costs. Getting an honest facility assessment done before you list, and either fixing known issues or pricing them into your asking price transparently, prevents this from derailing a deal at the worst possible time — right before closing, when both sides have already invested months into the transaction.
The Bottom Line
A boarding or daycare facility sale is really two valuations happening together — the operating business and the real estate/equipment behind it — and treating them as a single blended number tends to undervalue one or the other. Get both pieces professionally assessed separately, then present them together clearly for buyers.
