We've written before about why private equity is buying Indian school chains and how those deals actually get structured. The question we get most often once someone has decided to pursue a transaction is simpler and harder at the same time: what is this institution actually worth?
Why EdTech Multiples Are the Wrong Comparison
It's tempting to reach for EdTech valuation benchmarks since they're better publicised — but they answer a different question. EdTech valuations are typically built on revenue or subscriber multiples because the businesses are earlier-stage and growth is the primary value driver. Physical K-12 and higher-ed institutions with established, recurring tuition revenue are valued far more like mature operating businesses — on EBITDA, not revenue — because the thing being priced is predictable cash flow, not growth potential. Indian EdTech funding fell sharply from its 2021 peak through 2025 according to industry tracking, while PE interest in physical school chains grew over the same period — a real divergence, not a coincidence, and a sign the market is pricing these as fundamentally different asset classes.
The Single Biggest Driver: The PropCo/OpCo Split
The dominant deal architecture in school transactions internationally — and increasingly in India — separates the real estate (the "PropCo") from the operating business (the "OpCo"). This isn't just a structuring preference; it fundamentally changes how the asset gets valued:
- The PropCo — owning the land and buildings — is valued more like real estate: on a comparable sales basis, or a yield basis reflecting the rental income the OpCo pays it. Freehold property in a good location, on a long lease, typically commands a yield premium in the range of 6% to 9% — priced as essential-service real estate rather than generic commercial property.
- The OpCo — running admissions, staffing, curriculum, and compliance — is valued on its own operating earnings, with lease payments to the PropCo as an expense on its books.
- In India, this structure is already visible in named, public transactions — K12 Techno Services, the entity managing Orchids International Schools (the subject of the Vitruvian Partners investment we covered separately), operates precisely this kind of OpCo model, with the underlying schools typically leasing premises from separate property-holding entities.
The practical consequence: whether a deal includes the freehold property or just the operating lease changes the headline multiple substantially — and two deals quoted at different multiples might not be comparable at all if one includes real estate and the other doesn't.
Why the Same Deal Can Print Two Different Multiples
Accounting treatment matters more than most first-time sellers expect. Under IFRS 16, lease obligations get capitalised onto the balance sheet, which mechanically inflates reported EBITDA (since rent moves below the operating line) while also adding lease liabilities to net debt. One well-documented example from international school M&A illustrates this precisely: a single disclosed transaction was reported as roughly 16.7x EBITDA on an IFRS 16-inclusive basis, and roughly 19.4x on an IFRS 16-exclusive basis — the same deal, the same price, two meaningfully different multiples depending purely on which accounting convention is used. Before comparing any two quoted multiples, the first question has to be which basis each one is calculated on.
What Else Actually Moves the Number
- Revenue predictability — multi-year enrolment stability and board affiliation (CBSE, ICSE, IB, Cambridge) reduce perceived risk and support a higher multiple than a newer or less established institution with the same current EBITDA.
- Regulatory cleanliness — clear title, current approvals, and no pending compliance issues remove exactly the kind of risk our PE due diligence coverage flags as a common source of deal friction and multiple compression.
- Single asset versus platform — a chain with replicable operations and management depth across multiple campuses typically commands a premium over a single-site institution of similar current profitability, since the platform itself is worth more than the sum of its current earnings.
- Expansion headroom — sanctioned but unused capacity, or land available for a second campus, adds option value beyond current EBITDA — the same logic behind why strategy has to come before target search, since what "expansion potential" is actually worth depends entirely on what the buyer's own strategy calls for.
Considering a sale, or evaluating a target's valuation?
MAS Advisory works through the actual drivers above with clients directly — not a rule-of-thumb multiple pulled from an unrelated market.
PropCo/OpCo valuation mechanics reflect established international school transaction structuring; the IFRS 16 multiple comparison references Wendel's own publicly disclosed Globeducate transaction figures. Indian EdTech funding figures reflect industry compilation and should be treated as an estimate. General guidance only — every transaction's actual multiple depends on deal-specific facts not covered here; this is not a substitute for a formal valuation.