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Ask ten childcare owners what growth means to them and you will get ten different answers. For some it is a second setting. For others it is maximising occupancy in the one they already have. For others still it is building something they can eventually sell. Growth in childcare and early years is not one thing, it is a spectrum, and where you sit on it shapes everything from your financial priorities to your relationship with your bank.
What is clear is that the sector itself is evolving faster than at any point in the last decade. Groups are getting larger. Consolidation is accelerating. The top three childcare groups combined hold only around 7% of the market (based on number of places), meaning the vast majority of the sector is still made up of independent operators. But that is changing quickly. In 2025 alone, Kids Planet completed forty acquisitions and overtook Bright Horizons to become the second largest operator in the UK. The direction of travel is unmistakable.
At the same time, the financial environment for independent operators has never been harder. Three quarters of nurseries told an NDNA survey they operate at a loss or only just break even. Staffing absorbs around 75% of total expenditure, and wage costs are rising faster than funding rates. The average nursery now faces around £45,000 per annum in employer's national insurance contributions alone following the April 2025 changes.
For individual operators and smaller groups, this creates both pressure and opportunity. The pressure is real, competing against well-capitalised groups with professional management teams and economies of scale is harder than it used to be. But the opportunity is also real. The day-nursery market has grown more than 50% in value since 2017, from around £7 billion to £10.5 billion. Average sale prices rose 3.8% in 2025, a second consecutive annual rise. The most valuable asset many childcare owners hold is the business they are running day to day.
Growing in this environment requires clarity about what growth means for your business specifically, a realistic picture of your financial position and a plan that matches your ambition to your capacity. It also requires the right advisers around you, people who understand the sector, know the numbers and can help you make the right decisions at the right time.
What the growth conversation looks like in practice
- Operators with one to three settings thinking about whether and how to expand
- Growing groups looking at acquisition as a faster route to scale than organic growth
- Owners who are profitable but feel like they are working harder than the numbers justify
- Operators approaching the point where they need to think about exit and what that means for valuation
- Businesses where growth has happened quickly and the financial infrastructure has not kept pace
What Ballards sees
We work with childcare and early years owners across all of these situations. The ones who grow most successfully are not always the ones with the most ambition, they are the ones with the clearest picture of where they are and the most realistic plan for where they are going.
That starts with the right financial foundations: good management information, a realistic forecast and an adviser who understands the sector. If you are thinking about growth in 2026, that is the conversation worth having first.
I have worked with many nursery businesses from single-site operators to private equity-backed groups, and a consistent theme is the under-utilisation of data within their management systems - limiting informed decision-making and future growth opportunities.
(Robert Burns, Transaction Advisory Services Director, Ballards)
Join us at the Growth Clinic and the Nursery Management Show 2026, stand D58 at the NEC Birmingham, 26th June. Click here to register.
*Sources: NDNA Sustainability Survey 2025; Christie and Co Business Outlook 2026; Nursery World Groups Report 2026.
Disclaimer. This article has been prepared for information purposes only. Formal professional advice is strongly recommended before making decisions on the topics discussed in this release. No responsibility for any loss to any person acting, or not acting, as a result of this release can be accepted by us, or any person affiliated with us.
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