Selling a Tutoring & Test Prep Business

Most tutoring and test prep businesses trade on a multiple of SDE or EBITDA. The range usually comes down to outcome proof (score gains and academic progress), how deep the tutor bench is, and how predictable revenue looks across the school-year calendar. Higher multiples are more common when the owner is not the primary tutor, retention is steady, and lead sources are diversified. To get a quick reality check, use Rejigg’s free valuation calculator to model profit levels and add-backs against real transaction data.

Often, yes. SBA 7(a) is common for profitable tutoring and test prep businesses, especially when financials are clean and the business does not rely on one person to teach or close every sale. Lenders usually focus on documented cash flow, a sensible add-back schedule, and deferred revenue from prepaid packages because those hours still have to be delivered. Seasonality matters, too, since slow months still need to cover debt service. You can model down payment and monthly payments with Rejigg’s SBA loan calculator.

Most tutoring and test prep sales take about 3–8 months from “ready to market” to closing, depending on how fast you can answer diligence questions. The common slowdowns are missing deferred revenue support for prepaid hours, unclear seasonality, or school contracts sitting near renewal with no clear timeline. Rejigg can shorten the back-and-forth by combining buyer vetting, digital NDAs, a built-in data room, and deal tracking. Follow the checklist here: prepare to sell your business.

You do not have to use a broker. Many brokers charge 5–10% for outreach, process management, and paperwork, which some owners prefer to run themselves if they are organized and have the right tools. Rejigg gives you broker-like infrastructure: pre-vetted buyers, digital NDAs before sharing sensitive details, a secure data room for financials and tutor rosters, direct messaging, and an offer dashboard. Sellers use Rejigg for free, while buyers pay. Start at the Rejigg homepage.

Working capital can be tricky in tutoring because cash on hand may be offset by hours you still owe from prepaid packages, plus timing gaps on school invoices. Many deals use a working capital target so the buyer has enough net current assets to operate normally after close, without you effectively paying twice for obligations already collected. Most of the time, the cleanest prep is a month-end snapshot that includes AR aging, AP, deferred revenue from packages, and payroll timing. Rejigg helps you compare offers that treat working capital differently: negotiate a deal.

Prepaid packages are typically treated as deferred revenue, which means a liability the buyer inherits because they must deliver the remaining hours after closing. Buyers usually request a cutoff-date report showing remaining hours by family or program, then negotiate a purchase price adjustment so they are not paying for revenue you already collected. You can protect value by keeping an auditable package ledger and clear policies for refunds, expirations, transfers, and bonus hours. Rejigg makes it easy to share the report securely after NDAs are signed: due diligence checklist.

Expect buyers to diligence operations alongside financials. Common requests include three years of financials plus YTD, add-backs with support, a tutor roster and capacity summary, outcomes snapshots by program, a 24-month seasonality view, a package and deferred revenue report, cancellation and refund policies, school contracts with renewal notes, and proof that you own your curriculum and content. Having these ready prevents deals from stalling on “prove it” questions about results and staffing. Rejigg includes a built-in data room to upload once and control access: due diligence and closing.

Common add-backs include owner pay above market, one-time marketing tests (like a short Google Ads push), personal travel or auto, non-recurring legal or software costs, and unusual hiring or training expenses tied to a one-off expansion. A frequent tutoring-specific issue is owner teaching time. If you teach meaningful hours, many buyers treat replacement labor as a real cost, not an add-back. Keep the schedule simple, consistent, and tied to source documents. Rejigg’s prep guidance walks you through buyer-ready add-backs: prepare to sell your business.

Earnouts come up when post-close performance is hard to underwrite, such as retention through peak season, school renewals, or lead flow after the founder steps back. In tutoring, earnouts often tie to revenue, gross profit, or retained households over a defined window, often a full school-year cycle. The main risk is misalignment if the buyer changes pricing, staffing, or marketing, which can change the earnout result. If you accept an earnout, nail down definitions, reporting cadence, and which operational changes are allowed. Rejigg’s offer dashboard helps you compare earnouts to cleaner cash terms.

Seller notes are common in smaller deals and in SBA-backed deals where structure matters for the buyer’s down payment and early cash flow. In tutoring and test prep, seller financing also gets used to bridge concerns about seasonality or tutor retention. Terms vary by deal size and buyer strength, but it is worth negotiating interest rate, amortization, and whether any portion is performance-based. If your cash flow is heavily peak-season, buyers may ask for interest-only periods that match the calendar. Rejigg helps you compare offers with different mixes of cash, notes, and contingencies so you can choose the best risk-adjusted outcome.

Buyers typically ask for a non-compete and a non-solicit because goodwill in tutoring is tied to families, tutors, and school partners. Expect negotiation around radius, duration, and whether online tutoring counts as competing in your market. You should also clarify what you can still do professionally, like teaching in a school, consulting, or creating educational content that does not compete. Overly broad language can slow closing, so it helps to keep restrictions realistic for your geography and delivery model. Rejigg’s workflow helps you track restrictive covenant terms across offers: deal negotiation guide.

Often, they do. Buyers want current agreements that cover confidentiality, ownership of any materials tutors create, and non-solicitation of families. If you use contractors, buyers may also look at classification risk and whether key tutors could leave right after closing. The smoother path is to have updated agreements in place before going to market, plus a communication plan that reassures tutors on pay, scheduling, and expectations, especially before peak season. Some buyers will propose stay bonuses for top tutors. Rejigg’s data room helps you organize tutor agreements and roster details so diligence stays orderly.

Concentration in tutoring often hides in patterns, not in one large account. Buyers look for dependence on one exam (like SAT), one grade band, one referral partner (a specific counselor or consultant), or one school contract. They will usually ask for revenue by program plus lead source trends to see what could break if policies shift, like test-optional cycles, or if a referral relationship changes. Concentration can be acceptable if you can show a plan to expand into adjacent programs and prove that demand already exists. Rejigg helps you present the mix clearly so buyers can assess risk using data, not guesses.

In-center tutoring deals usually include lease terms, room capacity constraints, and local reviews tied to the location. Online tutoring businesses lean more on scheduling systems, time-zone coverage, and digital marketing performance. Both models still rise and fall on outcomes and the tutor bench. The structure differences often show up in working capital and transition needs. Centers may require an on-site manager and local staffing coverage, while online models may need a strong ops lead and documented processes. Rejigg helps you find buyers aligned with your delivery model and compare terms side-by-side so you are not forced into the first “standard” offer.

Taxes depend on whether the deal is an asset sale or equity sale, how purchase price gets allocated (including goodwill), and how earnouts or seller notes are treated. Many tutoring and test prep businesses sell as asset deals, which can change what is taxed as ordinary income versus capital gains. If you have depreciated equipment or furniture, depreciation recapture can matter, too, even if it feels small operationally. It is worth modeling scenarios with your CPA before you sign an LOI so you understand net proceeds, not just headline price. Rejigg’s deal tracking helps you compare offers as terms evolve through diligence.

A typical transition is 4–12 weeks, and it can run longer if you are mid-peak season or you have school renewals in motion. In tutoring, transition work usually includes introducing the buyer to key staff, stabilizing parent communication, ensuring the schedule and billing run smoothly, and transferring partner relationships with schools, counselors, and consultants. If you are the main tutor or the closer on consults, plan on a longer ramp with scripted handoffs and retention tracking. Rejigg’s transition guidance helps you plan and document this so buyers know what support they are buying: transitioning after the sale.

Confidentiality matters in tutoring because rumors can trigger parent anxiety, tutor churn, or a school pausing a renewal. Keep the process tight by sharing sensitive information only after an NDA, limiting documents that reveal student identities, and planning a staged disclosure to staff. It also helps to avoid public signals like obvious job postings to replace the owner or broad announcements to partners before you have a clear transition plan. Rejigg is built for this. Buyers are pre-vetted, NDAs are signed digitally, and you control document access in the data room. Learn more here: finding buyers guide.

Package seasonality so a buyer can underwrite it. Show a full school-year cycle and connect spikes and dips to real drivers like test dates, registration deadlines, AP season, finals, summer programs, and school budget timing. Then share the playbook you use to smooth the year, which might include off-season academic support, summer intensives, or earlier cohort launches, plus a staffing plan that matches peak evenings and weekends. Most buyers are fine with seasonality when it is predictable and supported by data. In Rejigg, you can upload a 24-month seasonality view and supporting metrics to your data room: prep guide.

In tutoring, terms can matter as much as price because payout and operational risk often live in the details. Compare how each offer handles prepaid hours and deferred revenue, the working capital target, earnout math and reporting, seller note terms, transition expectations, and any conditions tied to tutor retention or school renewals. A slightly lower headline price can still win if it has more cash at close and fewer post-close contingencies. Rejigg’s deal tracking and offer comparison tools let you line up cash, notes, earnouts, timelines, and conditions side-by-side so you can choose the best total outcome.