A strong focus on M&A within international schools, SEN schools and nurseries
Eclipse maintains a focus across three core areas of the education sector:
The schools market remains highly attractive to private equity and other investors for three key reasons:
High barriers to entry: a global and reputable brand takes years to build, combined with property issues and losses prior to maturity make the schools market difficult for new entrants without significant capital;
Recurring revenues and stable margins: fees paid in advance and relatively fixed overhead bases provide high visibility of earnings
Scarcity of assets: a shortage of high quality schools available for sale mean that prices upon exit are high.
Given these strong drivers, investors continue to back international schools groups undertaking aggressive acquisition strategies.
Special Educational Needs ("SEN") Schools
M&A activity within the SEN schools market remains robust, with a number of private equity backed players continuing to consolidate the market.
Barriers to entry are high, with significant costs behind physical infrastructure, and strong Local Authority relationships key to driving referrals. Specialist providers focused on educating children and young people with more complex needs are highly sought after by acquirers, due to the lack of quality provision in this area.
The market remains highly fragmented with the largest six players only accounting for c.25% of the market, meaning M&A activity is likely be their key focus in the coming years.
With demand drivers remaining positive, high barriers to entry and a
fragmented market which provides numerous acquisition opportunities,
the nurseries is highly attractive to investors.
M&A within the market continues to be dominated by a small number of
key consolidators, the majority of whom have private equity backing.
As these groups continue to consolidate the market, we expect to see
further private equity funds take interest in the sector in the coming
months and continued M&A activity as a result.