LPA Holding Corporation
LPA Holding Corporation
Founded: 1968 as La Petite Academy, Inc.
Operating Revenues: $404.2 million (2005)
NAIC: 624410 Child Day Care Services; 611110 Elementary and Secondary Schools
LPA Holding Corporation, based in Chicago, Illinois, is the parent company of La Petite Academy, Inc., and Montessori Unlimited. La Petite Academy, Inc., founded in Overland Park, Kansas, has been around close to four decades, offering working parents quality, reasonably priced day care services. La Petite Academy offers 590 freestanding locations in most major U.S. cities and also operates 30 onsite centers for a number of Fortune 500 companies. The La Petite Academy centers are located in 36 states and Washington, D.C. Montessori Unlimited provides an internationally recognized preschool curriculum at 29 locations in the United States.
SMALL BEGINNINGS: 1968–1988
In the 1960s as American women joined the full-time workforce in record numbers, there was an urgent need for child care. Local entrepreneur Robert Brozman recognized this need and created a company to provide day care services at reasonable prices. After buying seven day care centers in Overland Park, Kansas, near Kansas City, Brozman formed La Petite Academy, Inc., in 1968. At the time of its founding, La Petite Academy had few competitors and operated as a private company, owned by another of Brozman's firms, CenCor Inc.
Over the next decade La Petite Academy expanded its services, offering parents both quality child care as well as some educational instruction. By the end of the 1970s there were La Petite locations throughout the Kansas City metropolitan area and Brozman began opening centers in other midwestern states.
In 1983 La Petite Academy, a wholly owned subsidiary of CenCor, went public under the ticker symbol LPAI (OTC), primarily to raise funds for nationwide expansion. Brozman, as chairman and chief executive, retained a healthy chunk of the company and brought his son Jack into the fold. LPA, as a public entity, made strides in the burgeoning child care industry, branching out from the Midwest into the eastern, southern, and western states. Operating revenues for 1984 reached $66.7 million with net income of $3.7 million; the following year revenues had risen to an impressive $82.7 million with net income of $5.4 million.
In 1986 La Petite Academy began a long-term collaboration with the Gaylord Hotels chain, opening a child care center in the Opryland Hotel in Nashville. Called the Gaylord Child Development Center, the on-site facility provided care for the Opryland's many employees, featuring state-of-the-art educational tools, plenty of space, and thousands of toys. The collaboration marked an important milestone for La Petite Academy: its segue into providing onsite care services for large corporate clients. La Petite and Gaylord went on to open several additional onsite facilities, and La Petite did the same for other corporate clients in Florida and Alabama within the year. Revenues for 1986 leapt to $104.6 million and net income rose to $7.5 million.
By the late 1980s competition in child care had grown fierce. La Petite Academy's primary rival was Kinder Care Learning Centers, the nation's largest child care provider. Kinder Care, based in Montgomery, Alabama, had more than 1,000 child care centers and was adding up to 120 new locations per year, while La Petite Academy had 625 and opened between 75 and 90 annually. Other competitors included Children's World Learning Centers, which operated more than 400 centers nationwide, and the newest kid on the block, the Water-town, Massachusetts-based Bright Horizons Family Solutions, Inc., formed in 1986, which was opening new locations at a brisk pace.
La Petite Academy's revenues reached $130.1 million in 1987, with net income of slightly more than $10 million and stock prices topping $17 per share. In 1988 La Petite experienced further ups and downs; the company opened 88 new schools but closed down ten underperforming locations. There were about 665 La Petite Academys and 11 new Montessori-styled school centers nationwide, in 29 states. La Petite had an estimated 70,000 children enrolled in its day care and educational centers, and strived to become the premier preschool and care provider in the United States. Stock prices vacillated during the year from a low of just less than $8 to a high of nearly $20, with revenues climbing to $152.1 million.
PUBLIC TO PRIVATE IN THE FINAL DECADE OF THE 20TH CENTURY
By 1991 there were 750 La Petite Academy and Mont-essori locations in 33 states and the company had grand plans to conquer the remaining 17 states, despite recessionary stresses on the U.S. economy. Instead, the company came under a cloud of scrutiny after the sudden death of Chairman and founder Robert Brozman in June. It was soon disclosed that the elder Brozman had arranged for more than $22 million in loans supposedly for La Petite Academy and Brozman's other companies, which were instead used by Brozman himself.
Jack Brozman, who had been elevated to chief executive and chairman shortly before his father's death, was forced to sell the senior Brozman's majority interest in LPA to pay off numerous banks and creditors. This fire sale led to a leveraged buyout of La Petite Academy, Inc. for $170 million by Vestar Capital Partners, Inc., a New York-based private investment firm. A minority stake of 15 percent went to Fukutake Publishing Company, Ltd., with whom La Petite Academy had an agreement to market educational materials. Revenues for 1993 increased from 1992's $245 million to $260 million.
After the acquisition of the company, LPA was once again private and Jack Brozman resigned. He was replaced as president and CEO by La Petite's vice-president and chief operating officer, Robert Rodriguez. In 1994 La Petite and Fukutake teamed up to open two day care centers in Tokyo, Japan. By the end of 1994 La Petite had slowed its new openings to less than two dozen per year and focused on raising the profitability of its 800-plus centers and 90,000 enrolled participants.
La Petite Academy is committed to serving children and parents by providing high quality care and education in a professional, effective, and caring manner. We exceed our customers' needs now and in the future by maintaining an environment in which the satisfaction of our people is the key to the satisfaction of our families. Innovation, fairness, teamwork, and excellence are the hallmarks by which we are known.
In mid-1998 La Petite underwent another change in ownership, this time when Chase Capital Partners (later renamed JPMorgan Partners) and investor Robert King bought 81 percent of the company from Vestar for a reported $117.5 million. La Petite Academy, Inc., became a wholly owned subsidiary of the new LPA Holding Corporation, headquartered in Chicago, Illinois. Revenues for 1998 reached $314.9 million, a slight increase over the previous year's $302.8 million. La Petite recorded losses of $1.2 million for 1997 and $13.3 million for 1998. By the end of the decade, La Petite Academy continued to struggle, hoping to reposition itself in the new century. Revenues had fallen to $281.1 million, though losses were trimmed to $800,000 through restructuring, layoffs, and closure of underper-forming locations.
REGAINING A SOLID POSITION AT THE DAWN OF THE NEW CENTURY
In the new millennium La Petite Academy set its sights high and looked for innovative ways to attract working parents and boost enrollment. One step in this direction was the appointment of a new president and chief executive, Judith Rogala, in January. One such program was to offer traveling executives short-term or one-time-only enrollment at La Petite Academy centers nationwide, beginning in 2001. Offered at its 740 locations nationwide, the only caveat was available space at the time of placement. Travelers with children enrolled in a La Petite Academy could drop off their children at another location free, reserving a space for their targeted dates in advance.
Despite new programs and strides in educational services, La Petite could not stop the flow of red ink. Revenues were stronger at $384.8 million, but the company still recorded a loss of $6.3 million in 2001, the same year in which it opened a new regional office in Charlotte, North Carolina, as part of its ongoing restructuring. In 2002 Gary Graves, formerly executive vice-president of Boston Market, Inc., was appointed chief operating officer of La Petite. Within months Graves added the responsibilities of president and CEO, serving both La Petite Academy and its parent company, LPA Holding Corporation.
After several years of closing more child care centers than opening new ones, La Petite began to stabilize, due in large part to the guidance and no-nonsense approach of chief executive Graves. Graves also spearheaded an effort to team up with the Make-A-Wish Foundation, raising funds and awareness for the service organization, which granted wishes to terminally ill children. By late 2004, more than a year after its initial partnership, La Petite had raised more than $1 million for the Make-A-Wish Foundation. In a company press release (October 14, 2004), Graves commented, "We are a company dedicated to children, so it is only natural for us to support the Make-A-Wish Foundation, a group that does so much good for deserving kids."
By 2005 La Petite's turnaround was almost complete; not only had revenues continued to climb (up to $404.2 million) but net income was approaching black ink. La Petite provided working parents with a wide range of child care options, including before- and after-school care, and all-day curriculums at its 590 La Petite Academy centers in 36 states and Washington, D.C., 30 day care and learning facilities located within corporate centers, 29 Montessori Unlimited schools in seven states, and 80 private kindergarten learning centers across the country. La Petite served children aged six weeks to 12 years, with programs designed and supported by leading educational companies like Scholastic Inc. and the AIMS Science Program.
The day care competition of the late 2000s found LPA trailing the industry's largest player, Knowledge Learning Corporation, which had acquired Kinder Care in 2005. The Portland, Oregon-based behemoth had more than 2,500 locations worldwide, beating both La Petite Academy and Bright Horizons hands down. Although both Knowledge Learning Corp. and Bright Horizons had expanded outside the United States, international growth certainly was not out of the question for La Petite Academy. After years of struggling, La Petite Academy was again on solid ground and ready to compete for dominance in the child care industry of the 21st century.
La Petite Academy, Inc.; Montessori Unlimited.
Bright Horizons Family Solutions, Inc.; Learning Care Group, Inc.; Knowledge Learning Corporation; Noble Learning Communities.
- La Petite Academy is formed with the purchase of seven day care centers.
- La Petite Academy goes public.
- The Gaylord Child Development Center opens in Nashville, Tennessee.
- LPA is bought by Vestar Capital Partners of New York City.
- The company opens two day care centers in Tokyo, Japan, in a joint venture.
- LPA Holdings reorganizes and JPMorgan Partners buys a majority stake.
- The company partners with Gaylord Hotels to create La Petite Kids Station.
- LPA begins a partnership with the Make-A-Wish Foundation.
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Ingrassia, Lawrence, "Day-Care Business Lures Entrepreneurs," Wall Street Journal, June 3, 1988, p. 1.
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"La Petite Academy, Inc.," Kansas City Business Journal, May 22, 1989, p. 22.
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