This is an extract from the January Care Home Market Report.
To explore the full analysis and insights behind these findings, read the January 2026 Care Home Market Report, which examines the key trends shaping the sector.
Scale Driving Market Preference
The preference for larger, more operationally efficient settings continues to accelerate. This trend is driven by the need to manage rising operational costs and accommodate the increasing volume of government-funded hours for older children.
The largest settings (80+ places) have steadily increased their market share, rising from 16.6% in 2021 to just over 19% in 2025. This trend is complemented by the growth in the 60-79 places category, highlighting a clear industry focus on scale. Conversely, the market share of the smallest settings (19 or less) is marginal at 3.1% – dropping from nearly 4% in 2021 – underlining the difficulty for small-scale operators to compete.
This trend signals opportunities for investors focused on long-term returns in larger, strategically located operations that can maximise utility through staffing models and multi-age provisions.
Convergence Creates Optimal Exit
The childcare sector enters 2026 with strong fundamentals: retiring owners, corporate consolidation, and high-quality assets. The growth of 15+ groups and decline of single-site operators confirms that large scale is still crucial for efficiency.
For owners considering exits, strong buyer interest from consolidating groups creates favorable conditions. With over 80% of settings still held by sub-15 groups, substantial acquisition opportunities remain for mid-sized and larger operators.
Redwoods Dowling Kerr’s childcare team helps business owners navigate this landscape and secure successful outcomes.
*This data is a result of a blended analysis of data published by Ofsted, SCI, WCI and Companies House, which has been developed for MI by Altius BI.
For further insight into consolidation trends, ownership demographics and investment drivers, access the full January 2026 Care Home Market Report.
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