Children’s Services Market Review
Children’s Services has been one of the more resilient areas within UK care over the last 2 years, and also one of the most active for M&A. Our recent webinar looked at how businesses in the sector have faced the challenges posed by the COVID-19 outbreak, how conditions might look as the lock-down eases, and the longer term prospects for the sector. We were joined by Kamran Abassi, Managing Director at Care 4 Children, Jo August, CEO at Polaris Community and Richard Cooke, Group Commercial Director at Outcomes First Group – you can watch it back here.
The starting point in any discussion around the children’s services sector should be the children and the young people themselves, and anyone considering an investment in children’s services should begin by fully understanding the reasons why this care is required in the first place. Of course these reasons differ markedly between the various segments of children’s services, and depending on acuity: the needs of a child with an autistic spectrum condition, for example, will be very different from those of a neurotypical child with a background of abuse. Across the board, however, the bottom line for any operator is how much they can improve the prospects of the children in their care.
Whether one looks at fostering, residential care or special educational needs (SEN) schooling, a common theme has been that for the children themselves, lockdown has often been especially difficult, loading extra layers of anxiety and instability on a group of people who need the exact opposite. As recent press coverage has shown, young people have faced heightened risks, over and above the challenges faced by the population at large, and it was great to hear from our panellists how their teams and the service users themselves tackled these difficulties.
Market Size and Shape:
In terms of the size and structure, Children’s Services is a large market, and in England alone, the total spend between SEN and looked after children (LAC) is around £10 billion. That spend comes from various pockets but overwhelmingly from state spending rather than from families themselves, and within this, fostering and residential settings are all in themselves very substantial £1 billion plus areas of care.
Attractive market dynamics:
The drivers of this market have been positive for several years now, and irrespective of setting, operators have been able to show consistently growing numbers requiring care, consistently solid funding even as other areas were being cut, and a consistent gap between the demand for care and the capacity available. Add to that the scope to expand through converting or building new capacity, and the scope for M&A in what remains a fragmented sector, and you have one of the strongest markets within care in the UK.
Market value growth comparison:
With that in mind, it is perhaps no surprise that pre-COVID, the expected growth in children’s services bench-marked well against other areas within care, and that there had been high levels of M&A activity too. With the help of our panel, we explored whether that highly attractive investment case could remain intact beyond 2020.
If you would like to discuss the next stage of your company’s development – please do get in touch