Mark Anderegg·September 18, 2025

So Much Fun: The Buyer of Choice in a Fragmented Industry | Mark Anderegg Interview

Mark Anderegg is a traditional searcher who acquired Little Sprouts, a 16-location childcare business in the Boston area, in 2012 for roughly $17m in revenue and nearly $2m EBITDA — a business he had previously diligenced while working in private equity. His thesis was conservative: the supply-demand imbalance in childcare was so favorable he believed de novo openings and acquisitions would work even without bold new strategies. The early years were painful — de novo build costs ran 4x underwriting ($1m+ vs $250k projected), the founding leader departed and poached key staff, and staffing shortages proved chronic and ultimately unsolvable at scale. The real engine of value creation came from becoming the buyer of choice: inbound acquisition flow from mom-and-pop operators at 2-3x, fully debt-financed, preserving brands where they had local loyalty (house of brands), and a CMO hire who drove enrollment even in Bright Horizons' backyard. Mark sold to PE in 2015 and then grew further, selling a second time in 2018 to a French multinational at an eye-watering unsolicited offer. In hindsight he believes he sold too early both times, leaving enormous compounding value on the table. He now teaches ETA at Dartmouth Tuck and is building Newbury Franklin, a long-hold platform in dog daycare and an industrial end market, explicitly to avoid repeating the mistake of selling early.

Deal facts

sde ebitda: EBITDA approaching $2m at time of acquisition
revenue: $17m at acquisition (2012); grew to ~$20m+ range during ownership
financing structure: Search fund (traditional); used debt financing for add-on acquisitions; no equity infused for growth over ~7 years
notes: Acquired Little Sprouts in 2012 from Pete's education conglomerate. Business had 16 locations, ~10-12% EBITDA margin. Sold first to Wix Group (PE) in 2015, then continued growing; sold second time in 2018 to a French childcare company operating in 12 countries. New locations underwrote at $250k build cost but actually cost over $1m each.

Why this business

Mark had previously done diligence on Little Sprouts while working as an analyst at a private equity firm that acquired it in 2007, so he knew the business deeply — the risks, the hair on it, and that it had performed well over the ensuing years. He didn't need to believe much: if the company just kept doing what it had been doing — opening a couple of locations per year — that was going to be adequate to achieve his aspiration, which was simply to post a win and prove to himself he could run one of these things. He was also drawn to the structural supply-demand imbalance in childcare: vastly more demand than supply, meaning he could grow either inorganically or via de novo with high confidence locations would fill.

What's working

Becoming the strategic buyer of choice in New England childcare: inbound deal flow from mom-and-pop operators, acquired at 2-3x, fully debt-financed, no equity required for growth over seven years
Hiring a high-caliber CMO (Sarah Clabby) from a consumer brand background who dramatically upgraded marketing and drove enrollment even against Bright Horizons on its home turf
House-of-brands acquisition strategy: preserving acquired brands where they had strong local reputations rather than forcing a Little Sprouts rebrand, reducing customer and employee attrition
Quantitative market stack-ranking to identify geographically underserved markets with the worst supply-demand imbalance, enabling confident de novo and acquisition entry
Hiring Kevin (a PE professional from the acquiring firm) as business development lead post-first-exit, which dramatically accelerated inorganic growth and de novo execution
Capital-efficient compounding: grew the business for ~7 years without a dollar of growth equity, maximizing returns on original investor capital

What's hard

Chronic, unsolvable staffing crisis: strict student-to-teacher ratios with licensing consequences up to revocation; teacher wages were very low and the job was a stepping stone to public school jobs with double the pay and benefits; even a $1m incremental wage increase moved the needle not at all
De novo cost overruns: underwritten at $250k per location, actual cost exceeded $1m per location, triggering fears of no personal economic return
Losing key institutional knowledge when the founder (hired away by competitor) took the person responsible for opening new locations, forcing Mark to become the real estate guy himself
Failed chief people officer hire: invested in an expensive senior people leader who was a poor culture fit despite being personally capable, a setback at a critical moment
Sold too early (2015 first exit): with hindsight, the board member who resisted the sale was right — the long-term compounding value left on the table was very significant, driven partly by Mark's own financial scarcity and desire to post a win for investors
Cultural mismatch after the second exit to French conglomerate: being a country manager for a large international company was constitutionally incompatible with being an entrepreneur; Mark and Kevin departed quickly

Notable quotes

I can't think of anything more fun as an entrepreneurial CEO than when you're not having to make the outreach but rather you know the inbound is coming to you outside of a process to buy super capital efficiently in your core market.

I bought a very good business and I got lucky. It was a great culture with a lot of very experienced people. I mean I had people on the team that had been with the organization 20, 25 plus years.

Gosh, you know, Mark, there are easy ways to make money and hard ways to make money, and I think you may have found a hard way to make money.

I was so desperate to post a win for my shareholders that I sold too early, which at Newbury Franklin is like a key tenant to what we're doing — I just don't ever want to make that mistake again.