The PE Land Grab: Who's Buying Preschool

The PE Land Grab: Who's Buying Preschool

Harvest Partners closed its majority acquisition of The Learning Experience on July 1, 2025. The Deerfield Beach, Florida franchisor operates more than 430 centers across the U.S. and U.K., serving 52,000 children from six weeks to six years old. Harvest, a middle-market firm, had hunted in the sector for years. "We have pursued early childhood education as a priority sector for several years and believe TLE is a premier platform," said Nicholas Romano, a partner at Harvest. The seller, Golden Gate Capital, had owned TLE since 2018; under its stewardship the chain more than tripled systemwide sales and pushed into digital content with its proprietary "Bubbles and Friends" brand. Michael DeFlorio, Harvest's CEO, framed the deal as a growth play: "We look forward to providing additional financial and strategic resources to support TLE's growth initiatives."

Three deals in twelve months. Three different structures: majority buyout, roll-up platform, structured debt. But the same logic threads through each. The early education market is fragmented, with thousands of independent centers, regional chains, and franchisors, and public funding is expanding. Universal pre-K initiatives in states like New Jersey, California, and Colorado are creating new revenue streams tied to enrollment. PE firms are positioning to capture that flow before the labor bottleneck chokes it off.

Two months before the Harvest deal, Trivest Partners took a controlling stake in LeafSpring Schools, a Henrico, Virginia-born chain. The transaction launched a new platform, Lunchline Youth Brands, co-founded with Lunchline Partners to "scale early childhood education and youth enrichment franchisors." Trivest isn't buying a single operator; it's building a roll-up vehicle. The LeafSpring acquisition is the first bolt-on, but the structure makes the intent clear: consolidate a fragmented franchise sector under one capital umbrella.

Then there's Brookfield Asset Management. In mid-2025 the Canadian giant agreed to a non-control structured debt investment in Spring Education Group, a national operator of private schools spanning infant care through high school plus an online division. Bloomberg later reported Brookfield was in talks to push the commitment higher. Managing directors Frank Yu and Erson Olivan, co-heads of the firm's Special Investments strategy, described the thesis plainly: "thematic tailwinds and opportunities to consolidate a fragmented market." Spring Education's footprint, spanning early childhood through K-12, gives Brookfield exposure to the full pipeline, not just the preschool entry point.

The Learning Experience alone has 240 additional locations in development. LeafSpring becomes the seed asset for a multi-brand platform. Spring Education gives Brookfield a national footprint from infancy to graduation. None of these buyers are philanthropists. They are betting that the next decade of early education will be defined by scale, standardization, and the ability to staff classrooms at a price the model can bear. The teacher shortage isn't a side note to this thesis. It's the variable that determines whether the math works.

Why Teachers Won't Come

The wage floor for early-childhood educators has not moved in real terms for years. In New Jersey, preschool teachers earn a median annual wage — about half what K–12 teachers make; typical pay ranges annually. Hourly rates run depending on experience and employer. National employment is projected to grow just 4 percent through 2035 (the average for all occupations), but the pipeline feeding it is shrinking.

The Heldrich Center for Workforce Development at Rutgers found that New Jersey's overall teacher workforce has held steady at about 117,500 full-time equivalents, with year-over-year changes of only ±1 percent. But the composition is shifting: math and science teachers dropped 9 percent while resource-program teachers rose nearly 20 percent. Exits have accelerated, particularly after the pandemic, led by retirements and resignations. In 2016–17, roughly 2,800 teachers left the profession; by 2022–23 that number peaked near 6,000. The ratio of newly certified teachers to permanent exits has fallen from more than 20:1 in the late 2010s to 5:1 in 2022–23 before rebounding slightly to 9:1.

National enrollment in educator preparation programs fell by more than a third from 2010 to 2021, dropping from 880,000 to 591,000 enrollees. The National Commission on Teaching and America's Future found nearly half of teachers leave within their first five years; New Jersey data tracking the first two years shows a similar trend: fewer than half of those certified remain employed two years post-completion across the four most recent years available. A 2021 RAND study found nearly a quarter of teachers planned to leave at the end of the 2020–21 school year, up from a prior average of one in six. Brookings identified three pandemic-era drivers: veteran teachers taking early retirement, the strain of shifting instructional modes, and COVID health concerns.

About 16 to 18 percent of New Jersey teachers take on outside work, often short-term and low-paying; those who do earn roughly 6 percent less in teaching salary than peers who don't, though outside earnings typically offset the gap. The median teaching salary for those with outside employment was in 2023–24 versus for those without, a differential that has narrowed from 9 percent in 2013–14 to 6 percent in 2023–24. The average extra wages from supplemental jobs roughly matches the teaching-salary gap, suggesting teachers moonlight to close the difference.

The credential gate is the Child Development Associate (CDA). But the pipeline is narrow, and the gate is getting tighter.

A Law That Feeds Itself

Governor Phil Murphy signed the New Jersey Universal Preschool and Kindergarten Act into law on July 9, 2025. Three weeks later, the state's Child Care Assistance Program closed its doors to new applicants. The collision was not accidental — it was baked into the budget.

The legislation, known as P.L. 2025, c.100 (S-3910/A-5717) and its companion P.L. 2025, c.101 (S-4476), codifies a preschool funding formula that Murphy has built since taking office. Over seven years, the administration added 229 districts to state-funded preschool. More than half of New Jersey's elementary-serving districts now offer free, high-quality preschool. Total spending hit $1.2 billion, up nearly $600 million from the starting line. The law also mandates free, full-day kindergarten statewide by the 2029-2030 school year and authorizes three-year contracts for private providers in the mixed-delivery system, a stability measure the New Jersey School Boards Association backed.

At the same moment, the Department of Human Services acknowledged a $30 million hole in the Child Care Assistance Program. CCAP had received an $80 million increase in the fiscal 2026 budget, but advocates and the department said that fell $30 million short of maintaining open enrollment. On August 1, 2025, the program stopped accepting new applications. Children already enrolled kept their subsidies; everyone else joined a waitlist. Advocates for Children of New Jersey called the consequences "devastating" for families and providers alike. The New Jersey Monitor reported thousands of families locked out.

The squeeze hits the provider market from both sides. Public preschool expansion pulls four-year-olds into district-run or contracted classrooms, often at higher per-child rates than private centers can match. Meanwhile, the subsidy freeze cuts off the revenue stream that kept infants and toddlers in those same centers. Providers lose the younger children who cross-subsidize the preschool rooms. They lose the tuition predictability that three-year contracts were meant to secure. And they face a staffing market where public schools pay more, offer pensions, and now hire at scale.

New Jersey lost 250 childcare centers during the pandemic. Childcare costs rose 32 percent since 2019. Bergen County families pay more than $17,460 a year on average ($442 a week). Infant care tops $19,500. A minimum-wage earner spends over half their salary on care. Parents already cut hours or left the workforce to the tune of $378 million in lost earnings annually, per Representative Josh Gottheimer's office. The subsidy freeze deepens that hole.

The state tried to soften the blow. In November 2025, officials announced a limited re-opening of CCAP applications. A Universal Preschool Implementation Steering Committee, organized by October 9, 2025, is tasked with evaluating the three-year cost-sharing pilot, recommending a statewide funding methodology, and identifying strategies to strengthen the preschool workforce. The Department of Education plans to amend N.J.A.C. 6A:13A to reflect the new statutes. But the structural contradiction remains: the state is building a universal pre-K floor while pulling the subsidy rug out from under the infant-and-toddler market that props it up.

Those providers now compete for teachers against districts that offer tenure-track salaries, state pensions, and summer breaks, while their own revenue per child drops. The teacher bottleneck, already tight, just got tighter.

What Disappears When a Center Closes

California's transitional kindergarten rollout offers the clearest warning. During the first four years of the program, 167 community-based preschools in Los Angeles County shut down, unable to financially survive amid enrollment decreases as families shifted to free public TK. The closures represent what researchers call "painful and unintended consequences" of an ambitious public expansion that competed with — and in many cases replaced — local preschools, said UC Berkeley's Center for the Study of Child Care Employment. Areas that experienced the largest growth in TK enrollment were also the most likely to suffer preschool closures.

New Jersey is running a parallel experiment with higher stakes. The mixed-delivery system funnels state-funded pre-K through districts and private providers. But the same budget that expanded universal pre-K froze the Child Care Assistance Program — the subsidy lifeline for low-income families — after lawmakers declined to fund its full cost.

Independent centers sit in the vise. They lack the capital reserves of PE-backed chains like those now anchored by Harvest, Trivest, and Brookfield. The current market rewards scale: corporate chains offer predictable curriculum, employer-discounted partnerships, and easy transfers between locations, advantages an owner-operator cannot match.

The state's response has been targeted but thin. The NJ Economic Development Authority's Child Care Facilities Improvement Program Phase 2, opened in September 2024, provides grants of up to $20,000 to registered Family Child Care homes for furniture, fixtures, and equipment. Phase 1 had awarded over $120 million to 600 child care centers. By August 2025, Phase 2 had approved dozens of family child care homes for over $1 million in total funding, a meaningful help for a home-based provider but a rounding error against the capital needs of a full-scale center competing with a PE-backed regional chain.

What disappears when an independent center closes is not just a slot. The best independent preschools are run by a founder, often a trained educator, who knows every child's name and answers to parents directly, not to a royalty statement. They offer stronger teacher-child relationships, more flexible policies, and owner-operator accountability: the very features that daycare directories cite as reasons to choose independent over corporate. In many areas, licensed group child care homes make up a majority of listings, creating a fragile ecosystem where each closure removes a disproportionate share of local capacity.

The subsidy freeze compounds the pressure. Providers who once could count on CCAP reimbursements for low-income families now face empty seats they cannot afford to hold. Chains with deeper pockets can absorb the vacancy; independents cannot. The result is a quiet consolidation: families in lower-income neighborhoods lose the nearby, owner-run option first, left with either a distant corporate center or no licensed care at all.

The hiring bind is simple: private-equity-backed chains are adding classrooms, that expansion is adding thousands of seats, and the state's licensing rules still require a Child Development Associate credential or equivalent for every lead teacher. The pipeline cannot keep up.

The Credential Wall

The CDA is the gatekeeper. The Council for Professional Recognition has issued more than 700,000 CDAs nationally as of 2024. In New Jersey, a lead teacher in a licensed preschool room needs at minimum a CDA credential (or equivalent) plus one year of experience, or a two- or four-year degree in a related field. Earning the credential means 120 hours of coursework, 480 documented hours of direct-care experience — not administrative work — and a portfolio that takes most candidates six to eight weeks of steady part-time effort to assemble. The 480-hour experience requirement catches people off guard. The portfolio takes longer than expected. A lapsed CDA creates a licensing compliance issue the moment it expires.

Pay does not match the barrier. The median wage remains at that level. In New Jersey, hourly rates typically span that range. A 2016 Early Childhood Workforce Index found 65 percent of center-based lead teachers earned less than $15 an hour. Compensating the roughly two million early educators at a livable wage would cost an estimated $60 billion annually. The math does not work for independent centers. It barely works for chains.

PE-backed operators have structural advantages. Capital can absorb signing bonuses, tuition reimbursement, and CDA application fees ($425 each) as a business expense tied to Grow NJ Kids quality ratings that unlock higher subsidy reimbursement. Independent centers cannot match that. They also cannot match public-school salaries. New Jersey's universal pre-K expansion pulls certified teachers into district classrooms with pensions and starting pay that private providers cannot touch.

The result is a two-tier hiring market. Chains recruit aggressively, sometimes covering T.E.A.C.H. scholarship costs (tuition, books, travel) for staff pursuing CDAs and degrees. They pay CDA fees to nudge their quality ratings up a level. Independents lose staff to both chains and public schools. Turnover becomes a quality issue: frequent changes disrupt children's relationships and erode the consistency that high-quality programs depend on.

Some providers are sidestepping the credential wall. Head Start and Early Head Start partnerships now assign teachers without formal preparation as interim lead teachers based on demonstrated competencies, pairing them with instructional coaches, weekly communities of practice, and individual professional-development plans that include degree timelines. The T.E.A.C.H. Early Childhood New Jersey scholarship and the NJ Workforce Registry, a free statewide system for tracking credentials and training, are the clearest existing paths to a low-cost CDA. Sixteen county-based CCR&R agencies offer free or low-cost prep workshops and portfolio lending libraries.

But workarounds are not a pipeline. The pipeline cannot keep up.

Harvest Partners' bet on The Learning Experience — 430 centers, 52,000 children, 240 more in development — rests on the same wager as the Murphy administration's universal pre-K law: that classrooms will fill, and teachers will appear. The credential wall is real, the pay floor is real, and the pipeline is not stretching. When the next center opens its doors, the question isn't whether the capital arrived. It's whether a qualified teacher will be there to unlock them.

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