Senate Probes PE-Owned Child Care Giants

Probe Targets Two Child Care Giants Serving Over 365,000 Children

On March 24, 2026, U.S. Senator Jeff Merkley (D., Ore.) initiated an investigation into the private equity industry's impact on the child-care sector, targeting the two largest for-profit providers in the country. The inquiry demands extensive financial and safety documentation from KinderCare Learning Companies, which is backed by Swiss firm Partners Group, and Learning Care Group, controlled by New York-based American Securities. The probe aims to determine if the firms' focus on maximizing profits is detrimental to child safety, staff welfare, and the affordability of care for families.

The two companies represent a significant portion of the U.S. market. As of 2024, KinderCare operated approximately 1,500 facilities serving over 200,000 children and reported $2.7 billion in revenue for 2025. Learning Care Group, with over 1,150 schools in 40 states, served more than 165,000 children and reported $1.5 billion in revenue in 2023. The investigation highlights the growing consolidation of the industry, with eight of the ten largest U.S. child care firms now owned by private equity.

PE Playbook Under Fire for Cost-Cutting and Debt Loading

The investigation scrutinizes the core private equity strategy of using debt and cost controls to generate returns. Senator Merkley's letters cited concerns that the PE model can lead to higher tuition, constrained labor costs, and a focus on higher-income markets. The inquiry specifically called out the use of dividend recapitalizations, a transaction where a portfolio company borrows money to pay a large dividend to its private equity owner. Critics argue this practice loads companies with debt, undermining their long-term financial stability for short-term investor gain.

In response, the companies defended their operations. A KinderCare spokesperson stated its mission is to provide a "safe, nurturing, high-quality learning environment" and noted that the federal government provides less than $250 in funding per child annually. Learning Care Group CEO John Bork affirmed that the company's decisions are "grounded in providing safe, high-quality care" and that it welcomes the opportunity to work with policymakers.

Child Care Joins Housing and Healthcare in Broader PE Crackdown

This inquiry is not an isolated event but part of a wider political and regulatory backlash against private equity's expansion into essential American services. The child-care probe follows recent legislative actions targeting similar investment models in other sectors. Earlier this month, the Senate passed a bill aimed at preventing private equity firms and other large institutional investors from purchasing single-family homes. Furthermore, a separate bill introduced in Congress seeks to effectively ban private equity ownership of hospitals and nursing homes. This pattern suggests a coordinated effort by some lawmakers to rein in an industry they believe puts profits ahead of public welfare, creating significant political and regulatory risk for investors in these sectors.