Childcare & Education

UK Market Overview

2024 saw heightened childcare and education business acquisition, merger and investment activity amid a more stabilised inflationary environment and the settling of interest rates.

Alongside wider market dynamics, investor interest has been fuelled not only by the extended early years entitlement and increased government-backed income in the sector, but also by a shift in investors focussing on social impact investment opportunities, ethical investing, and ESG considerations. The past 12 months saw a notable increase in medium-sized groups making selective acquisitions to expand their regional footprints.

There has been no shortage in demand from investors and buyers seeking platform acquisitions and opportunities to consolidate via the acquisition of high-quality, larger capacity settings within the UK’s children's day nursery sector. Ahead of the Autumn Budget, October proved to be an unprecedented month for completions as owners progressed sales processes endeavouring to close deals, which many did, ahead of the announced policy and tax changes. This led to a surge in business owners deciding to sell, thus Q4 proved to be exceptionally busy.

In 2024, there was significant disruption across the UK independent school market. Buyers, investors, and lenders evidenced heightened caution due to the lack of visibility following the announcement of the introduction of VAT on private school fees effective January 2025, loss of business rates relief effective April 2025, and latterly employers’ NIC increases. Uncertainty in the UK domestic independent school market led to opportunistic sector-agnostic interest from property developers and investors gathering pace amid the expectation of increased school closures, while international trade buyers have focused interest on acquisitions in countries which have award greater visibility and stability while continuing to be open to strategic mergers and takeovers in the UK.

The voracious appetite from buyers across the UK’s specialist childcare and SEND education markets continued to be wanting. A dearth of opportunities which has, for some time, prevailed, continued to heighten the prices that buyers are willing to pay for high-quality businesses, especially those with strong management teams in situ, enabling platform purchases for buyers to facilitate consolidation, expansion and growth.

Global Market Overview

Childcare and education markets have been largely buoyant, seeing heightened demand, especially in the day nursery/early childhood education and care (ECEC) and K-12 education sectors. There has been no shortage of buyers and investor interest in established, high-quality businesses with well-embedded positive cultures, consistent earnings, and additional prospects for growth.

Transactions - whether small groups or multi-million portfolios - are rarely plain sailing and, in recent years, we have seen a stark increase in deal volatility with buyers’ due diligence processes becoming increasingly detailed and thorough, leading to an increase in the length of time that some transactions take. The ability of vendors to produce comprehensive information to satisfy buyers’ due diligence enquiries, along with the vendors’ advisors being suitably experienced in overcoming potential challenges, is increasingly key.

Some notable international Childcare & Education transactional highlights from 2024 include:

• In February 2024, Embark Early Education acquired nine childcare centres, comprising 917 places located across Victoria and Queensland, Australia for $25.2 million (AUD)
• In October, the sale of Children 1st Day Nurseries, renowned for providing the highest levels of childcare across 24 day nursery settings, plus a leading ECEC training centre were sold to UK nursery group Storal
• In October, KinderCare, the private provider of early childhood education, was listed on the New York Stock Exchange at $24 per share, which is within the expected share price range, valuing the company at $2.75 billion (US$)
• One of the most notable Education transactions of the year was Wendel’s acquisition of Providence Equity Partners circa 50% stake in Globaleducate. Supporting 40,000 students, Globaleducate provides primary and secondary education across a network of 67 bilingual and international schools, across 11 countries primarily in Europe, alongside delivering online programmes