Affordability remains a pressing political issue, with lawmakers from both parties increasingly pointing fingers at large investors for acquiring essential services like housing and hospitals, driving up prices, and compromising quality. This debate has now extended to the childcare sector, where concerns about private equity involvement have sparked a federal inquiry and state-level legislation.
Earlier this year, Sen. Jeff Merkley (D-OR) launched a sweeping investigation into KinderCare Learning Companies and Learning Care Group, the two largest private-equity-owned childcare providers in the country. Merkley’s probe aims to uncover how these companies balance investor profits with the well-being of families and communities that rely on their services.
Private equity in childcare: a growing concern
Advocacy groups have long warned about the potential pitfalls of private equity involvement in childcare. In 2026, Elliot Haspel, a progressive childcare expert, argued that private-equity-owned chains prioritize investors over parents, citing their track record in nursing homes where quality declined post-acquisition. In 2026, a report by the Open Markets Institute, the National Women’s Law Center, and Community Change contended that private equity-owned centers could soak up public funding and stall reforms to capture market share.
In response to these concerns, lawmakers in Colorado, Connecticut, Massachusetts, New York, and Pennsylvania have introduced or passed bills targeting private equity-owned childcare providers. These measures aim to cap state grant allocations to large for-profit chains and attach strings to public dollars for these providers.
New research challenges assumptions
A forthcoming paper by Jessica Brown of the University of South Carolina and Chris Herbst of Arizona State University presents a more nuanced view of private equity’s role in childcare. Their research, the first systematic look at private equity’s spread through American childcare, found no smoking guns. Private equity’s share of the childcare workforce has hovered around 10 percent since 2010, and its centers are not uniformly distressed. In fact, these centers have been operating for an average of 18 years and added workers between 2026 and 2026 while non-private-equity providers cut staff.
“Given what we see,” Brown said, “private equity is not the reason that childcare is unaffordable.” Herbst agreed, joking that they might title their paper “Much Ado About Nothing.” However, the researchers acknowledge that their findings are not causal and cannot confirm what the chains pay their teachers or what benefits they offer.
Geographic patterns and quality of care
The researchers found that private equity-owned centers are not evenly distributed across the country. Three-quarters of these centers are clustered in just 5 percent of US counties, primarily around cities like Phoenix, Las Vegas, Denver, Atlanta, and northern Virginia. While these centers are less likely to take public subsidies than other large chains, they are more likely to hold their state’s top quality rating.
Herbst noted that private equity-owned centers may not be rendering low-quality care. Instead, they might be providing high-quality care that is inaccessible to many families due to their location. “They may be rendering very high-quality care, but inaccessible to a large number of families because of where they are doing business,” he said.
Why is private equity interested in childcare?
Herbst and Brown’s research raises the question of why private equity is interested in childcare, a low-margin business. Herbst suggested that private equity is not interested in childcare writ large but rather in select communities. The classic private-equity playbook involves buying a company, raising its value, and selling within three to seven years. However, some private equity firms have raised long-hold funds designed to keep companies for 15 years or more.
Brian Gutman, the senior vice president of public policy at Learning Care Group, argued that private equity provides scale and access to capital. He cited the company’s investment in livestreaming cameras for classrooms as an example of the kind of investment that smaller operators cannot afford. However, Merkley’s letter highlighted that Learning Care Group borrowed to pay its owners at least $636 million in 2018, leaving the company with a significant debt load.
The right target?
Gutman argued that the focus on private equity is a red herring and that ownership structure does not reliably predict behavior. He cited a venture-capital-backed Montessori chain in Colorado that closed its five locations abruptly. Haspel, however, emphasized that the focus on institutional investors will become more important as the conversation around universal childcare picks up momentum in the United States.
Brown and Herbst recommended more public information to generate targeted policy fixes. They argued that more states could collect prices at licensing and make wage and staff turnover data easier for researchers to find. “I think in some ways people are trying to look for an easy solution,” Brown said, “but the thing is there is no easy solution in childcare.”
