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Consolidation in the Early Education Market

by Daniel Alfe and Andrew Snow
March/April 2018
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Article Link: http://exchangepress.com/article/consolidation-in-the-early-education-market/5024030/

After several years of relatively few large-scale mergers in the child care market, there has been a marked increase in activity over the past three years. Buyers had perhaps been chastened by the difficulties experienced by several players who began consolidating the space in the mid 2000s, most notably ABC Learning. As a result, there were relatively few “platform” deals for several years, though the smaller acquisitions continued to take place. 

During this period, business performance was generally tepid, with tuition pricing, enrollment, and new school openings impacted by the slowdown in the broader economy. As a result, both “strategic” buyers — generally big companies with an existing footprint in the industry — and so-called “financial” buyers, like private equity firms, normally steered clear of the sector. From 2014 on, however, it’s been a very different story. Learning Care Group, Little Sprouts, KinderCare, Nobel Learning, Rainbow Early Education, The Learning Experience, Cadence Education, and BrightPath Early Learning — all Exchange Top 25 providers — completed change of control transactions.

Renewed investor interest in the sector has been due, in part, to the improving economy, industry players stringing together multiple quarters of positive growth, and attractive unit-level economics. This growth ...

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