Demand for Early Childhood Education Remains Strong

Early childhood education covers the nurseries, daycares, and preschools that care for and educate children from infancy through age eight, the years when social, cognitive, and motor skills take shape. Demand has held firm through a stretch of rising prices and receding federal support, for a straightforward reason: more parents of young children are working, and more of them are convinced that the quality of those early years matters. Over 68% of women with children under six are now in the workforce, up from 64% in 2014.

That demand is meeting a highly fragmented supply base, and private equity has taken notice. North American ECE transaction count has compounded at roughly 19% a year since 2020, volume rose 27% from 2023 to 2024, and PE firms or PE-backed platforms accounted for more than a third of global ECE deals in the first half of 2025. Eight of the eleven largest childcare chains in the United States are now PE-backed. What follows is our read on the demand drivers underneath that activity, where the deals are happening, and how the public comparables are trading.

Early Childhood Education at a Glance

The ECE industry is comprised primarily of nurseries, daycares, and preschools, providing care and education to children from infancy through the age of eight and helping them develop the social, cognitive, and motor skills that later schooling depends on. Alongside private-pay families, the industry benefits from federal funding through programs like Head Start and Early Head Start as well as grants including the Childcare and Development Block Grant (CCDBG) and the Preschool Development Grant Birth through Five (PDG B-5). State spending has also been on the rise in recent years, particularly for preschool education, which reached an all-time high in 2024 as more states begin to implement universal preschool.

Federal funding has waned since the pandemic, but overall industry growth has been driven by increased labor force participation among parents combined with a growing awareness of the benefits of early education and care. This is especially the case for early programs like daycares and nurseries, which in spite of reduced federal funding are expected to see steady revenue growth in coming years.

Market Size and Growth

IBISWorld projects the US daycare market at $71.7 billion in 2025, rising to $74.3 billion by 2029, with nursery schools at $17.1 billion growing to $17.4 billion over the same period. Neither trajectory is steep. Category revenue is close to flat, which puts the emphasis on occupancy, pricing, and consolidation rather than on category expansion, and helps explain why so much of the value creation in this sector now runs through M&A rather than through organic market growth.

Childcare Remains a Top Priority for Parents

A key factor in the demand for ECE is an increasing willingness among parents to invest in quality care, likely driven by a growing awareness of the importance of early education. Studies over the past decade have consistently shown the long-term benefits afforded by quality education during early years, and both parental surveys and childcare spending trends illustrate an increased recognition of these findings. One survey of 1,500 American parents with children under the age of five found that a program’s quality of care ranked second only to safety in importance when selecting childcare. Cost ranked as low as fifth, behind the provider’s accreditation, reviews, and emphasis on individualized attention, and only 23% of parents reported compromising on cost in selecting a program.

Spending patterns tell the same story. According to Care.com’s 2025 Cost of Care Report, a survey of over 3,000 parents in the US, more than half reported spending 20% or more of their annual income on childcare, compared to just one-third in 2018. Over the same stretch, daycare costs in the US increased from $211 per week in 2018 to $343 per week in 2024. Even as costs have risen, parents of young children are allocating more of their budgets to early education, reflecting a broader prioritization of the early years in household spending.

Growing Labor Force Participation and Return to Work

Another significant driver of demand for early childhood education services is the rising workforce participation among parents of young children. Between 2020 and 2024, the share of families with children under six in which both parents are employed increased from 56% to 63%. Among women with children under six, labor force participation has climbed from 64% in 2014 to 68% in 2024. Working mothers have also seen a steady rise in wages over this period, with weekly earnings increasing from $722 in 2014 to $1,083 in 2023, and the wage penalty traditionally associated with motherhood has dropped significantly, with college-educated mothers now experiencing a notable wage premium.

This combination of higher labor force participation and rising maternal incomes has meant greater demand and willingness to pay for full-day childcare services. Return to in-person work post-COVID has added to that pressure. As reported by the Wall Street Journal, companies’ shift back to in-person models is pressuring parents, especially teleworking mothers, to resume in-office roles in order to avoid missing out on career advancement opportunities. Access to reliable childcare alleviates that pressure, enabling parents to balance professional success with caregiving.

ECE M&A Growth and Private Equity Interest

M&A activity in early childhood education continues to accelerate. Over the past five years, the number of transactions in North America has grown at a CAGR of approximately 19%, significantly outpacing other education sectors such as K-12 (9%), higher education (5%), and corporate training (1%). In 2024 alone, ECE transaction volume increased by 27% year over year, compared to just 6% across the broader education and training sector. Although ECE deals still represent a relatively small share of overall education M&A, that share is expanding, rising from 4.6% in 2020 to 7.4% in 2024.

Private Equity Is Driving Consolidation

A major driver of this growth is the increasing interest from private equity firms in nursery, daycare, and preschool services. Attracted by the sector’s recurring revenue model and strong consumer spending trends, PE investors have built a substantial presence in the space, backing eight of the eleven largest U.S. childcare chains. In the first half of 2025, over one-third of all ECE transactions involved PE firms or PE-backed companies, demonstrating their growing role in driving consolidation in the market.

The shape of that activity follows from the structure of the market. Where category revenue grows slowly but demand is close to non-discretionary and supply is highly fragmented, the returns go to operators who can add centers, lift occupancy, and professionalize a back office across a larger base. That thesis reads the same to a sponsor and to a strategic acquirer, which is why both continue to compete for the same regional platforms, and why the mid-market operators sitting between single-site owners and the national chains remain the most contested assets in the sector.

Notable Transactions

United States

July 2025: Harvest Partners acquired The Learning Experience, a leading provider of early education and childcare services in the United States. Founded in 2002, The Learning Experience operates over 375 centers across the country, serving children from six weeks to six years old with a proprietary curriculum focused on cognitive, physical, and social development.

April 2025: Avathon Capital acquired Yellow Brick Road Early Childhood Development Centers, a leading provider of early education services across Minnesota, Nebraska, and Iowa. Founded in 2004, Yellow Brick Road operates a network of centers focused on play-based learning and nurturing environments. The deal supports the company’s continued growth while preserving its community-centered values.

November 2024 to March 2025: Big Blue Marble Academy, a portfolio company of Leeds Equity Partners, made three acquisitions of childcare centers in five months. In November 2024 it acquired West Cobb Prep Academy, a daycare and preschool operator based in Georgia. In December 2024 it acquired the Oak Brook School, a Texas school providing education and after-school services to children from six weeks to 12 years old. In March 2025 it acquired The Cedarhouse School, the operator of a kindergarten and preschool located in Virginia. The cadence is a clean illustration of the platform-and-add-on model now standard in the sector.

International

May 2025: UK nursery operator Nurtured Childcare completed its acquisition of Elmore Kindergarten Group. Founded in 2021, Nurtured Childcare operates 11 nurseries across Northern England, catering to over 790 children and employing nearly 300 staff. Elmore Kindergarten Group is a Sheffield-based operator of three daycares providing services to 324 children and employing 77 staff.

March 2025: Kids Planet Day Nurseries completed its acquisition of Perfect Start Nurseries, an operator of eight nurseries across Surrey, West Sussex, and Kent, England. Kids Planet is a leading early education provider in the UK, operating over 230 nurseries and catering to over 30,000 children. The acquisition marks its first expansion into the UK’s Home Counties.

November 2024: UK middle market private equity firm Livingbridge invested in Kindred Education, a UK-based early education provider operating 48 nursery locations. Livingbridge acquired Kindred from Unigestion, which had backed the group since 2017. With the acquisition, Livingbridge aims to strengthen Kindred’s national presence while enhancing support for staff, children, and families across its network.

October 2024: Combiwel voor Kinderen (CvK) was acquired by Groep Maatschappelijke Kinderopvang (GMK), a group that also includes Dutch daycare and preschool operators Akros and Impuls. Combiwel voor Kinderen is an Amsterdam-based provider of early childhood education and after-school programs. Together, the expanded group will cater to over 5,400 children across 113 locations and employ over 900 professionals.

Selected Transactions

The table below covers ECE transactions announced or completed between September 2024 and July 2025. The geographic mix is itself informative: the United Kingdom and Japan account for a large share of activity, much of it single-site and small-group nurseries rolling up into regional platforms, with Kids Planet Day Nurseries and Big Blue Marble Academy among the most active serial acquirers.

Public Company Data

The listed ECE comparables trade across a wide band. Bright Horizons carries the premium multiple on the strength of its employer-sponsored model and margin profile, while AcadeMedia and G8 Education trade in the mid-single digits on EBITDA. KinderCare, the most recent listing in the group, sat at 34% of its 52-week high at the measurement date. The spread underscores how much of the value in this sector depends on payer mix, occupancy, and geography rather than on the category itself.