From nursery buy-and-builds to private school consolidation and university mergers, each education sub-sector is responding to its own specific challenges. Jason Sinclair looks at what’s driving activity in this busy UK market.
The education sector is a broad one. It encompasses small nursery providers, ripe for consolidation, and independent schools searching for overseas footprints. Then there’s training and apprenticeship enterprises backed by government policy, and EdTech companies tapping into all of the above.
“It’s a market that private equity has liked for a long time because of the core fundamentals,” says Andrew Frame, a Grant Thornton partner who leads their education M&A team. The major fundamental is a “stickiness of revenue” with many customers of nurseries and independent schools locked in for significant time periods.
Add in a combination of economic pressures, regulatory and tax changes, demographic shifts, and the potential for scale and efficiency, and the attraction of the sector to private equity becomes pretty clear.
‘Education is one of those rare areas where the UK is still seen as a global leader’
School assembly
The addition of 20% VAT to private school fees has broadened the divide in the independent schools market between the struggling and the thriving. There are schools that can, thanks to location, reputation or satisfaction levels, justify charging higher fees, and those, often already overextended, that can’t. This has led to private school closures and consolidations, but also to expansions of other private school companies, often backed by private equity.
“Education is one of those rare areas where the UK is still seen as a global leader,” says Frame. That means that ‘exports’ can be a success. Branded public schools are as likely to operate ‘branches’ in Malaysia and Dubai as London or Surrey. Brighton College, for example, has just expanded its global operation to 13 schools, with openings in Madrid, Lisbon and Rome.
In time, these groups can achieve stellar valuations. In October, CVC acquired a 20% stake in International Schools Partnership, which operates 111 schools across 25 countries and is valued at $8.2bn. London-based Nord Anglia schools, which has executed 21 acquisitions since 2017 under (Swedish) EQT Group’s ownership – increasing its holdings to 80 schools across 33 countries – was recently sold to institutional investors in a $14.5bn deal.
What this shows is that in the independent schools market – and this is also true of nursery providers – deal opportunities are consistent, with both buy-and-build acquisitions and ultimate exits keeping advisers busy. Helen O’Kane, corporate finance partner at BDO, believes “market conditions and strategic planning” will inform the acquisition strategy of large school groups, with Latin America being a particular current focus. O’Kane says that despite – or possibly because of – the introduction of VAT, “there are a number of schools that can explore their options from a position of strength,” whether that’s through domestic mergers or international acquisitions.
Private equity investors in the market do have to consider their risk appetite, however. As in any sector that deals in the provision of care, it’s important to tread carefully. “Quality has to be the number-one focus of any business, but I’d say even more so with education,” says Frame, “because that quality is going to be key to keeping your accreditations, your inspection results and parental and personal satisfaction.”
August Equity has invested in various parts of the education sector over the past 20 years. Sector specialist Celine Spencer has been involved with August’s investments in both Impact Futures Group, an apprenticeships and training company, and Family First Nurseries, a 100-site children’s day nurseries platform.
‘Appetite for high-quality, mid-market apprentice businesses is increasing’
She says organic and inorganic growth strategies are important to both businesses, with the children’s nursery sector particularly active, due to extensive fragmentation and the high volume of family-managed operations in the UK. “There continues to be a high level of activity within the children’s nurseries space. Larger consolidators, both domestic and European, are deploying considered buy-and-build strategies, focusing on core regions, level of premiumisation, and the potential for organic growth,” says Spencer. Targets are often owner-managed, which means they “haven’t always had the infrastructure and professionalisation in their operating model. Larger consolidators can realise early returns by supporting the nursery with enhanced resources to supercharge organic growth.”
Turning to training and apprenticeships, she says: “Appetite for high-quality businesses across the mid-market is increasing, particularly as the apprenticeship market matures and there is demonstrable cross-party support for the skills agenda.”
She says August Equity is currently “particularly interested in three main areas for investment: corporate training and the use of technology to support highly regulated and technical training in high-stakes environments; education software businesses that support educators to give them more time in the classroom; and assessment software and services that are driving education compliance and academic integrity.”
International Reach
Reach Cambridge, a residential summer school provider based in the university city, was sold to Guidewell Education, a Sacramento-based ‘education enrichment and preparedness’ business, for an undisclosed sum in September 2025. It’s a deal that confirms the global reach and prestige that parts of the UK education sector hold.
Guidewell, previously backed by Boathouse Capital, made the acquisition following receipt of an investment from Atlanta’s Eagle Merchant Partners. For Andrew Frame of Grant Thornton, who advised Reach, the business will “sit well alongside Guidewell’s extracurricular offerings”.
Founded by Jon McGoh in 2005, Reach ultimately chose to pursue the sale of the business to enable further expansion of its offering, both domestically and internationally. US private equity showed interest during the competitive auction, emphasising the value that is attached to ‘name’ elements of UK education and the opportunity that exists for them to expand their international footprints. “Education is one of the UK’s biggest success stories and brand exports,” says Frame.
Cradle to exit
BGF Partner Pinesh Mehta has followed a similar plan with Cheshire-based nursery group Kids Planet, which opened 65 new sites during BGF’s five years of investment, before a partial exit to Fremman Capital in 2021.
Mehta also led BGF’s 2022 investment in apprenticeship provider Apprentify. “It’s a government-led initiative with private providers that’s ultimately about quality of provision,” he says. “If you have a quality provider within that sector that means good outcomes for the individuals and good outcomes for the actual employers – and that’s an attractive space for someone like BGF to invest in, because the fundamentals of the market are strong.”
‘The beauty of nursery businesses, for investors, is that they tend to be resilient’
At the other end of the timescale, he says, from nursery to primary school, the fundamentals are linked to employment and working parents – and “there are government-led initiatives and incentives to enable parents to do that.”
These policies bring security. “The beauty of these businesses, from an investor perspective, is that, for example, in the children’s nursery sector, once you have a child in your nursery, that child would typically stay till the age of five,” says Mehta. “So, these businesses tend to be quite resilient in the sense that you’ve got forward visibility on what your cohort of children looks like, and you can forward plan for costs and receipts.”
The nursery market is still fragmented, says Mehta, with “lots of ones, twos and threes” and with older proprietors looking towards retirement. “There is potential for organic growth, where you’re developing greenfield sites, but still a large part of it is buy-and-build.” It’s a trick BGF are looking to repeat with Tigers Childcare in Ireland.
Not everything is rosy in the sector, however. “With VAT coming in, the birth rate declining and affordability issues, there is a market imbalance in UK K-12 [from kindergarten to year 12] independent schools at the moment, where supply outweighs demand,” says Frame. This is keeping consultants busy, with a significant increase in charitable mergers, as well as for-profit activity with global schools groups carving out strategically non-core schools.
Frame also identifies a “massive rising need” for SEND provision beyond state-sector capabilities, with a forthcoming government white paper likely to provide more clarity for that sub-sector.
“Another interesting thing coming out of the VAT impacts,” says Frame, “is the rise in more affordable parent-funded models, such as virtual or hybrid school provisions.” The online education providers that make this possible have, to date, been more popular in the US than in the UK.
That said, the EdTech market as a whole is clearly growing – both through potential “retail” offerings and through B2B provisions – including in the apprenticeships and university spaces. “We’re going to see increased focus on education compliance, particularly regarding academic integrity and robust assessment governance,” says Spencer.
State of independents
If doom-mongers are correct about the impact of VAT and the pressure on middle to upper-middle income households, restructuring services are sure to be called upon for the private school subsector, be they refinancings or turnarounds.
Meanwhile, the higher education and university sub-sector is under its own pressures. “They can’t increase their revenues and margins are getting squeezed,” says Frame. “The sector has been supported by overseas students for a long time, and the changes to visa regulations make things harder.” More mergers and acquisitions, along the lines of the recent – slightly distressed – marriage of the University of Greenwich and the University of Kent, seem likely. The latter was rumoured to be on the brink of insolvency just prior to the deal.
Whatever the sub-sector, Mehta believes local expertise and insight are important. “Exits of UK education investments are better understood by UK PE and trade. Deals still tend to be quite UK-focused and I can’t see that changing fundamentally over the next two to three years. The exit strategy tends to be to trade or to one of the four or five larger players that are backed by private equity and run their own buy-and-builds.”
Despite the general drive for consolidation amongst nursery providers, Frame says there’s been a “bit of a hiatus” on nursery platform deals due to people waiting for the new government funding regime to come in. But he believes activity will soon pick up: “I expect to see a number of deals over the course of the next year.”
With technology, internationalisation, and specialist education providing new avenues for change, the sector seems as active as it’s ever been.
