Despite ongoing challenges, 2025 proved the resilience of the UK education sector and reaffirmed its strong appeal to investors. The following article explores analysis of 2025 and thoughts to the year ahead from our education investment sector experts.

Published: 21 January 2026
Author: Claire Checketts

Market trends from 2025

Independent schools

As anticipated, the introduction of 20% VAT on private school fees has reshaped the sector, creating both challenges and opportunities. Whilst some schools, in areas where supply exceeds demand, have unfortunately been forced to close, the shift has also prompted a wave of opportunities for strategic expansion and consolidation. We are seeing an increase in the number of independent schools that are joining larger groups, often supported by private equity, to strengthen their resilience and reach. At the same time, we have seen increased diversification within existing groups and a growing focus on exploring opportunities beyond the UK.

Nurseries

In 2025, the Government’s expansion of early year’s funding acted as a clear catalyst for activity across the early years sector. The policy has driven a marked increase in demand, creating acquisition opportunities for operators able to scale quickly and meet evolving parental needs.

Despite this momentum, the nursery market remains structurally fragmented, shaped by the large number of owner‑managed settings. As a result, there is a continued appetite in the sector for those with buy and build strategies.

At the same time, workforce pressures have intensified sector‑wide focus on recruitment, retention and incentivisation, with providers increasingly adopting apprenticeships and enhanced training pathways to strengthen capability and improve staff engagement.

SEND

Social demand for high‑quality SEND provision has never been greater and this momentum is driving exciting progress across the sector. We are seeing support models broaden beyond traditional frameworks, unlocking more innovative and flexible ways to meet children’s needs. The private sector is increasingly well‑placed to partner with local authorities, offering enhanced support for children who sit outside mainstream provision, whether through personalised in‑home programmes or dynamic remote‑learning solutions. Together, these developments signal a more responsive, inclusive and ambitious future for SEN provision and one which we hope is only further supported with the awaited SEND white paper from the UK government.

EdTech

Leaders are navigating tighter budgets, rising cybersecurity threats, and a demand for bespoke learning solutions and, as a result, we are seeing that EdTech is now being viewed as a necessity and not a luxury.

AI, data analytics and new classroom technologies are transforming both student learning and the way educators teach, measure progress, and support each learner. Solutions to improve back-office efficiencies are also being sort by educational establishments.

This in turn means that investment into the UK’s EdTech sector continues to accelerate, driven by the dual forces of private equity appetite and strategic buyers seeking digital capability, scale, and defensible recurring revenue.

The sector is viewed as being resilient to AI and has been open to digital transformation and to adopt hybrid teaching models, which often rely on bespoke technology. Investors are increasingly selective favouring platforms with proprietary IP, measurable outcomes, and scalable SaaS models but remain committed to EdTech as a structural growth category.

Strategic buyers, both UK‑based and international are also accelerating M&A activity as they seek to strengthen their digital capabilities. Recent EdTech acquisitions include digital content, early literacy tools, assessment platforms, and virtual tutoring providers, illustrating an appetite for assets that complement existing education ecosystems.

Both PE and strategics are pursuing UK EdTech investments for similar reasons such as scalability and the opportunity for rapid cross‑border growth.

A sector under pressure - but still attractive to investors

Universities, independent schools, early years providers and EdTech companies are entering 2026 facing affordability challenges, workforce shortages, and increased scrutiny around learning impact. Yet these same pressures have triggered strategic investment, consolidation and portfolio reshaping, making the sector more agile and investable.

PE activity remains strong, driven by the UK’s status as one of Europe’s largest education investment markets. Investors are focusing on segments aligned with:

• digital transformation and hybrid learning
• outcome‑based education models
• scalable platforms with stable cash flow

Large-scale deals, such as Nord Anglia’s continued expansion, underscore the appetite for premium K–12 platforms, while PE funds with specialist education mandates (such as Providence, Apax and Eurazeo) are increasingly focused on UK assets as part of global strategies.

Investment in the UK education sector in 2026

Education in the UK is changing quickly because technology, global trade and the needs of employers are altering the way pupils study and get ready to work. Employers are placing an ever increasing focus on learning that produces demonstrable skill and now look for people who communicate well, solve problems, adapt fast and handle digital tools – paper qualifications alone are no longer enough.

Investment in the UK education sector in 2026 is being shaped by a mix of financial pressure, structural reform, digital transformation, and continued private capital interest. Despite constrained budgets across institutions, the sector remains highly investable, with both private equity and strategic players pursuing opportunities that align with long‑term demand for skills, technology, and resilient educational models.

K12 continues to stand out as the most attractive area for investment, and we expect to continue to see continued consolidation of smaller groups in this space. In addition, in the nursery market where fragmentation persists, we expect continuing opportunities for operators pursuing buy‑and‑build strategies.

At the same time, investor interest is widening, with growing momentum behind diversified education businesses, specialist SEN providers and emerging EdTech platforms. EdTech and AI, in particular, remain high‑potential growth areas which, when approached with clear focus and scalable models, offer exciting prospects for 2026 and beyond.