Built to Grow: The New Economics of Scaling an Early Learning and Childcare
Business in Ireland

For thirty years, growing a childcare business in Ireland meant much the same thing - open another room, take another cohort, fill the waiting list. The model was simple because the business was simple. Parents paid fees, owners managed costs, and value was a loose multiple of whatever the accounts happened to show.

That world is gone. Since the introduction of Core Funding in September 2022, the early learning and childcare (ELC) sector has changed more in three years than in the previous thirty. The State is now the largest single financial partner in most viable services. Fees are frozen and capped. Pay floors are set by Employment Regulation Order. And the question facing owners has quietly shifted from ‘should I grow?’ to a far more demanding one: ‘what kind of business am I actually building?’

The operators who answer that question well over the next few years stand to do very well. The ones who treat growth as more of the same will find that the ground has moved beneath them.

The runway is real, and rare
Start with the demand, because it is exceptional. Ireland has a structural, State underwritten shortage of childcare, and almost every indicator points in the same direction. The Government allocated c.€1.48 billion to early learning and childcare in Budget 2026, a 9% increase on the prior year, with Core Funding rising to a record €480 million for Year 5, up 23% in a single programme year.

Over 286,000 children are expected to benefit from the National Childcare Scheme, and the demand behind those numbers is far from satisfied. Pobal estimates that up to 40,000 children under the age of three are on waiting lists nationwide, and participation for under-threes is still well below the EU average.

Few sectors offer this combination of deep, unmet, demographically durable demand, sitting on top of a revenue base that the State has chosen to underwrite and grow year after year. For an operator with the right business that is a long runway.

Growth is no longer just about places
The single most important shift owners need to internalise is that the funding model has rewired the economics of the business. Core Funding, ECCE and the NCS now deliver a large and rising share of revenue as recurring, quasi government income. That makes a well-run service more predictable and, more valuable than the same service was five years ago.

But it comes with a trade-off. In return for that funding, fees are frozen and subject to maximum caps, the latest of which lowers the ceiling on a typical full day place again and requires around one in eight services to reduce at least one fee. You can no longer simply price your way to a better margin.

So where is growth actually won or lost? Almost entirely on two things - occupancy and staffing costs. With fees fixed, the difference between a service that compounds value and one that merely ticks over is the ability to fill places and to staff them sustainably. That is a more operational, more financially disciplined kind of growth than the sector is used to and it rewards a very different set of capabilities.

The three constraints that decide who actually grows
In our work with operators across the ELC sector, the businesses that scale successfully are the ones that have got to grips with three issues. The businesses that struggle have usually underestimated all three.

Workforce is the binding constraint not capital or demand
This is the uncomfortable truth of the sector. The Minister for Children, Disability & Equality has acknowledged that ELC facilities have licensed capacity for some 17,000 additional children but these places cannot be filled due to staff shortages.

National staff turnover is around 26% annually and, in some areas, it runs over 50%. You can have the demand, the premises and the funding lined up perfectly and still be unable to expand because you cannot staff the rooms.

The October ERO increase and ring-fenced State funding help but pay alone has not solved retention. Operators who are growing are the ones treating recruitment pipelines, qualification pathways, staff retention, and workforce culture as a strategic function, not an HR afterthought. Growth plans that don’t start with people are wishful thinking.

You have to understand your own funded revenue properly
This sounds basic but it is not. The most common and most expensive mistake we see is a business or its generalist adviser failing to treat Core Funding, ECCE and NCS as the recurring, sustainable revenue they are. Misread the funding model and you misread the earnings. Misread the earnings and you misjudge what the business can carry, what it can borrow, and what it is worth.

Whether you are seeking finance to expand, building a case to a landlord, or simply trying to understand your own true margin, the quality of your financial picture is now a function of how well you understand the funding architecture. This is precisely where commercial decisions are won or lost.

Your business has to be fundable
Growth requires capital, for fit-out, acquisition, or simply working through the J curve of a new site. Funders, whether banks or investors, increasingly want to see evidence of normalised earnings, defensible occupancy data, a handle on lease and regulatory risk, and a credible workforce plan. A business that can show all of this doesn’t just grow more quickly; it grows on far better terms.

The consolidation wave
There is a second dynamic that every ambitious owner should be aware of. Ireland’s ELC sector remains fragmented and owner-operated, and a significant cohort of those owners are at or approaching succession-planning age. At the same time, UK strategic buyers and private equity are actively looking for Irish platforms to build on, and the maturing funding model has made the sector’s recurring revenue attractive to institutional capital.

That sets up a consolidation wave that has already commenced. For an individual operator, it creates two very different opportunities and one real risk. The opportunity, if you intend to keep growing, is that you may be a natural consolidator in your own region, well-positioned to acquire smaller single-site operators whose owners are ready to step back. If you are nearer the end of your business journey, the opportunity is that there has rarely been a better capitalised pool of buyers.

The risk - the one we see most often - is going to market or being approached without being ready. In a sector this misunderstood by generalist advisers, the gap between ‘a price’ and ‘the right price’ is wide, and it is almost always determined long before a deal process starts.

What good growth looks like from here
Put the pieces together and a clear pattern emerges for operators who want to build value rather than just busyness. Treat your funded revenue as the strategic asset it is, and make sure your numbers reflect its sustainable quality. Make workforce your first growth conversation, not your last. Build the financial and operational evidence base that makes your business fundable and acquirable even if you never intend to sell. The same discipline that makes a business attractive to a buyer is what makes it resilient to a funder, a regulator and a downturn. And decide which side of the consolidation wave you want to be on rather than letting it decide for you.

None of this is about chasing scale for its own sake. It is about building a business that is defensible and whose value is evidenced and resilient to a policy environment that will keep evolving.

A closing thought
The fundamentals and economics of ELC are shaped by three forces: how the sector is funded, a deepening workforce crisis, and a regulatory regime that is hard to navigate. When these forces aren't properly understood, the consequences are predictable - businesses are undervalued, earnings are mispriced, funding opportunities are missed, and deals get done on the wrong terms.

At HLB Ireland, our Early Learning & Childcare advisory team works with owners and operators across the full lifecycle: understanding the true value of the business, planning growth and acquisitions, preparing for investment and, when the time is right, navigating a sale from a position of strength.

If you are thinking about what comes next for your business growth, investment, succession, or simply understanding what you have built, that is a conversation worth having early, and worth having with people who know the sector from the inside, like Eoghan Briody.
------------------------
*This article is based on publicly available information and HLB sector analysis as of June 2026. It is intended as general commentary and does not constitute investment, legal or financial advice.*