Who Runs Your Child Care? The Quiet Private Equity Consolidation of a Public Service
Every few months, an envelope arrives.
The paper stock is heavier than necessary. The typography is restrained. The name in the return address is unfamiliar but carefully neutral, something that sounds adjacent to education, adjacent to growth, adjacent to partnership.
Inside is a letter congratulating us.
We have built something meaningful, it says. We have developed a strong reputation. We are well positioned in a fragmented market. They specialize in helping founders unlock value. We could retain leadership. We could continue operating under our name. We could expand. Sometimes, even a veiled offer to pay us to close and enjoy a nice sum as a break from a stressful career. There is sometimes even a preliminary valuation, printed as if it were a compliment to us.
If you operate a child care program long enough, you’ll get them. These letters begin to feel less like flattery and more like reconnaissance.
They are not love letters. They are acquisition attempts.
Private equity firms have discovered what those of us in early childhood have always known. Child care is essential. It is chronically underfunded. It is perpetually in demand. It is also deeply fragmented. Thousands of small providers operate independently, each carrying their own administrative burden, each bound by licensing regulations, each rooted in a particular community.
To an investor trained to consolidate industries, fragmentation signals opportunity.
People often assume acquisitions target struggling programs to shove out competition. In reality, stability is the asset. A center with consistent enrollment, strong community trust, and a respected reputation presents less risk and more opportunity. The very qualities that make a program beloved make it attractive to buyers.
What follows is often invisible.
The name remains. The website remains. The five star reviews remain. The director may remain. Five new locations in a year? Maybe. Expanding to different cities under the guise of a “naturally growing small business”? Sure. From the outside, nothing appears to change. Families enroll believing they are joining the same community-based organization that earned that reputation over years of relational care.
But ownership has shifted. With it, priorities.
Governance moves upward. Decision-making becomes centralized. Growth is no longer organic but strategic. Profit targets enter conversations that once centered on pedagogy and the daily emotional lives of children, and having great relationships with their families.
This shift is rarely dramatic. It is structural.
International research has begun to map what those structures produce.
In the Netherlands, private equity backed child care providers were associated with higher tuition fees and spillover price effects in surrounding markets. Consolidation did not merely change the centers that were acquired. It altered pricing dynamics across communities.
In England, scholars studying financialization in early childhood education identified leveraged buyouts and debt layering within large child care chains. Companies were purchased using borrowed money, and that debt was placed onto the child care businesses themselves. Those centers were then expected to generate enough surplus not only to operate but to service the financial instruments used to acquire them.
In North America, investor backed chains report margins that exceed the historic norms of the sector. Child care has traditionally operated on thin margins because labor is both the largest expense and the core of quality. When margins widen significantly in a labor intensive industry, the surplus is coming from somewhere.
Supporters of consolidation sometimes point to lower rates of regulatory violations among these large portfolios. On its face, that statistic is reassuring. But scale brings advantages that are administrative rather than relational. Large organizations maintain compliance departments, legal teams, and internal reporting systems. They can shift staff and resources between sites. They can address documentation gaps quickly, or have maintenance staff on site in minutes, where smaller programs may have to sit on a local contractor’s schedule for weeks. Many licensing violations concern paperwork and facility standards that do not directly measure the quality of care or the strength of the curriculum at play.
Administrative capacity is not the same as pedagogical integrity.
As consolidation advances, something quieter begins to erode: the mixed delivery of this public service.
Mixed delivery is not policy jargon. It is the ecosystem that allows families to choose who cares for their children in their most vulnerable years. It maintains the economy of centers, family home providers, culturally specific programs, faith-based environments, play-based schools, Montessori and Reggio Emilia programs, corporate chains, and public sites. It protects philosophical diversity and local accountability. It allows different communities to shape care in ways that reflect their values.
When private equity consolidates independent providers into chains or forces them out of business through their consolidation efforts, that diversity evaporates. Even when names remain distinct, governance becomes centralized. Choice becomes aesthetic rather than structural.
There is also a paradox at work.
As private equity depletes independent ownership, large consolidated firms lobby against universal child care frameworks. Universal funding does not have to eliminate private providers. Many countries operate universal systems within the aforementioned mixed delivery models. Private programs can and do participate. But universal systems mean more monetary regulation. They impose guardrails. They distribute market share more broadly.
From an investor perspective, those constraints reduce upside.
Consolidation advances while guardrails are resisted. Over time, communities may find themselves with fewer independent providers and greater concentration of ownership. If instability follows leveraged growth or tuition climbs beyond reach, the public narrative shifts. Child care begins to look too fragile, too corporate, too inequitable to remain privately operated at all.
The sector is then framed as a choice between corporate concentration and full public delivery of child care. In this attempt to grab market share of the private industry is a self-destruct button that will dissolve the private child care economy entirely.
We are not arguing that profit has no place in this system. Many programs, including the one I operate, are for profit small businesses. Private enterprise has long been part of this landscape, and private businesses operating with accountability to the communities they serve are a hallmark of a free market, and, again, necessary to the mixed-delivery model. But there is a structural difference between a locally governed business accountable to its community and a portfolio company accountable to investors with defined return timelines.
The public deserves transparency about that difference.
Early childhood is not just another service sector. It shapes attachment, development, and family stability during the most vulnerable years of life. Ownership structures shape incentives. Incentives shape decisions. Decisions shape children’s daily experiences.
When we ask who runs your child care, we are not asking rhetorically. We are asking structurally.
And in early childhood education, that distinction matters.
Sources
Bansraj, Daniel, and Jiayi Xu. The Role of Private Equity in Childcare: Evidence from the Netherlands. SSRN Electronic Journal, 20 June 2025. SSRN, https://doi.org/10.2139/ssrn.5045089.
Simon, Antonia, et al. “Financialisation and Private Equity in Early Childhood Care and Education in England.” Journal of Social Policy, 2024, https://doi.org/10.1017/S0047279424000617.
Stienon, Audrey, and Melissa Boteach. Children Before Profits: Constraining Private Equity Profiteering to Advance Child Care as a Public Good. National Women’s Law Center and Open Markets Institute, June 2024.