Hi guys! Recently, I stumbled upon a language school that is up for sale. I had already visited the school, and the interiors looked pretty nice. I enquired the owners, and they said they have about 20 students currently at the school. Their asking price for takeover however is NT 500,000 for facilities, class materials and student count. Note the cramschool is in Kaohsiung, and rent costs NT 30,000 per month, it is also across from the sides of an elementary school.
Is the price reasonable? What else should I look into?
Safety of the neighborhood. Protection fees. Tuition fees. Students’ attitude. Rental agreement contract. If students will be continuing after the school is sold. Teachers’ salaries. Taxes. If there are any lawsuits pending or ongoing against the school.
20 students, seems like very few. Not much margin before it’s not worth running school anymore.
I’ve seen schools advertised for NTD1 million or more, but guess the price depends on how successful the school is.
Obvious questions:
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Why are they selling if they’re making good money? A cram-school should pretty much run itself once the staff are all hired and students have started coming in. Is it losing money? Can you ask to see financial statements and records (I wouldn’t believe what they say without paper evidence).
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Why are the student numbers so low? It’s in a prime location, should be packed every weekday. Does it have a bad reputation?
20 students and it is making money? I really can’t see how they are making any money at all considering that the rent is 30K, a secretary costs 20-25K and a foreign English teacher costs 50-60K. How much do they charge for tuition for what amount of classes? The only way this makes sense is if they are providing an all day program and charging 10-15K/student but then you need more staff (costs).
Is it a buxiban, anchinban or kindergarten?
Where did you see schools advertised?