Bain Capital Offices

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Boston

John Hancock Tower
200 Clarendon Street, Boston, MA 02116 United States

P:+1 (617) 516-2000 F:+1 (617) 516-2010

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New York

A New York

590 Madison Avenue
42nd Floor, New York, NY 10022 United States

P:+1 (212) 326-9420 F:+1 (212) 421-2225

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B New York Bain Capital Ventures
Bain Capital Ventures

632 Broadway, New York, NY 10012 United States

P:+1 (212) 822-2900 F:+1 (646) 439-9100

London

London

Devonshire House
Mayfair Place, London, W1J 8AJ United Kingdom

P:+44 20 7514 5252 F:+44 20 7514 5250

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Munich

Munich
Bain Capital Beteiligungsberatung GmbH

Maximilianstrasse 11, 80539 Muenchen, Germany

P:+49-89244410700 F:+49-89244410731

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Mumbai

Mumbai
Bain Capital Advisors (India) Private Limited

2nd Floor, Free Press House
Nariman Point, , Mumbai 400 021 India

P:+91-2267528000 F:+91-2267528010

Hong Kong

Hong Kong
Bain Capital Asia, LLC

51/F Cheung Kong Center
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Shanghai

Shanghai
Bain Capital Advisors (China) Ltd.

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Tokyo

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Bain Capital Asia, LLC

5F, Palace Building
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Palo Alto

335 Bryant Street, Palo Alto, CA 94301 United States

P:+1 (650) 798-2500 F:+1 (650) 798-2501

Chicago

Chicago
Sankaty Advisors Illinois, LLC

1603 Orrington Avenue
Suite 815, Evanston, IL 60201 United States

P:+1 (847) 563-5330 F:+1 (847) 563-5331

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A Luxembourg
Bain Capital Luxembourg S.à.r.l.

4 rue Lou Hemmer, L-1748 Luxembourg, Luxembourg

P:+352-2678601 F:+352-26786060

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B Sankaty European Investments, S.á.r.l.
Sankaty European Holdings, S.á.r.l.

4 rue Lou Hemmer, L-1748 Luxembourg, Luxembourg

P:+352-267866 F:+352-26786651

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Melbourne
Sankaty Advisors (Australia), Pty. Ltd.

Level 20, 101 Collins Street, Melbourne, VIC 3000 Australia

P:+61 3 8102 8600 F:+61 3 9014 6930

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  • Bain Capital Private Equity
    • Bain Capital Private Equity

      Bain Capital Private Equity pioneered the value added investment approach. We partner with management teams to provide strategic resources that build and grow great companies. We have made over 260 investments generating industry leading returns for many leading endowments, foundations, pension funds and individuals.

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  • Brookside Capital
    • Brookside Capital

      Brookside Capital is the global long/short public equity affiliate of Bain Capital. We employ a fundamental investment approach with a team of industry-focused professionals to identify opportunities that offer capital appreciation over a multi-year time horizon.

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  • Sankaty Advisors
    • Sankaty Advisors

      Sankaty Advisors, the credit affiliate of Bain Capital, LLC, is one of the nation's leading managers of high-yield corporate credit obligations. With approximately $22.3 billion in committed capital, we invest in a wide variety of instruments, including leveraged loans, high-yield bonds, stressed debt, distressed debt, mezzanine debt, structured products and equity investments.

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  • Bain Capital Ventures
    • Bain Capital Ventures

      Bain Capital Ventures is the venture capital affiliate of Bain Capital. We focus on seed through late-stage growth investments in business services, software, digital media / mobile / ecommerce, and healthcare IT and services companies. Bain Capital Ventures has made over 100 investments since our launch in 2000.

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  • Absolute Return Capital
    • Absolute Return Capital

      Absolute Return Capital (ARC) is the absolute return affiliate of Bain Capital. The team manages assets in fixed income, equity, commodity and currency markets to produce attractive risk-adjusted returns while maintaining low correlation to traditional investments.

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Newsroom Bright Horizons Goes on a Day Care Buying Spree

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News
Date: 
Monday, July 22, 2013
Author: 
Justin Bachman

Parents don’t think of it this way, but children’s day care is an industry ripe for consolidation. And Bright Horizons Family Solutions (BFAM) has been on something of a tear this year.

The nation’s only publicly traded provider of employer-sponsored day care announced its second major acquisition in three months on Monday, spending $53 million for Children’s Choice Learning Centers, a Dallas-based rival that runs 49 centers for employers including MGM Resorts International (MGM), Wake Forest University, and the federal government. In April the company paid about $70 million for Kidsunlimited, which has 64 centers in England and Scotland. Last year, Bright Horizons, then closely held, bought London’s Casterbridge Nurseries, which operates 27 centers. Bright Horizons also has locations in Canada, Ireland, the Netherlands, and India, with more than 800 total

That’s a lot for a single day care provider, but peanuts compared with the market. There are more than 64,000 child-care centers in the U.S. alone, most of which are small businesses with a handful of locations at most. That may be changing, as the Affordable Care Act will compel some of these family-run day cares to provide health insurance for their workers. Bright Horizons hopes that, rather than absorb the higher costs, they will sell. To that end, the company has set up a dedicated e-mail address for day care owners to contact Bright Horizons about a sale. (Full disclosure: The company provides child-care services to Bloomberg LP, the parent company of Bloomberg Businessweek; I’m a dad.)

“It’s almost like fishing in an aquarium,” Jefferies analyst Dan Dolev says of potential acquisitions. “It’s very easy to find these smaller guys.” In its latest earnings report, Watertown (Mass.)-based Bright Horizons forecast revenue to increase 10 percent to 13 percent this year, driven heavily by acquisitions. Dolev predicts that roughly a third of the company’s 2013 sales growth will come from M&A. That seems to be working so far. Bright Horizons went public in January, four years after private equity firm Bain Capital took it private in a leveraged buyout. Shares have gained 25 percent since the IPO price of $22, to $35.

Even so, the business carries inherent risks—it’s highly dependent on the state of the economy and how many employers choose to fund such care; it’s seasonal and summer is slow; and it carries all the liability involved with watching someone’s child. Bright Horizons also struggles with enrollment, at around 70 percent capacity, below what it enjoyed before the 2008 financial crisis and recession. Moreover, if President Barack Obama succeeds in expanding federal funding of early childhood education, as he outlined in the 2013 State of the Union, that could both depress the rates Bright Horizons charges and give parents new, less-expensive alternatives. The company tends to benefit from a “seal of approval” effect. Large companies that contract with Bright Horizons serve as a certification of sorts for other employers seeking to add child-care benefits, according to Rachel Connelly, a Bowdoin economics professor who studies the economics of child care. Connelly spoke to investors on a Jefferies call earlier this month.

“This is a pretty sticky business model,” Dolev says. “Trust is important. This is where you really get to what the word ‘trust’ means—when you manage kids’ lives.” Investors, for their part, will be trusting that Bright Horizons can continue finding a steady stream of suitable day care centers to purchase.

Orignal Article:

http://www.businessweek.com/articles/2013-07-22/bright-horizons-goes-on-a-daycare-buying-spree