Bright Horizons Family Solutions, Inc. History

Address:
One Kendall Square
Building 200
Cambridge, Massachusetts 02139
U.S.A.

Telephone: (617) 577-8020
Fax: (617) 577-8967

Website:
Public Company
Incorporated: 1998
Employees: 9,350
Sales: $209.4 million (1998)
Stock Exchanges: NASDAQ
Ticker Symbol: BFAM
NAIC: 62441 Child Day Care Services

Company Perspectives:

The Bright Horizons Family Solutions mission is to provide innovative programs that help children, families, and employers work together to be their very best. We are committed to providing the highest quality child-care, early education, and work/life solutions in the nation. We strive to: nurture each child's unique qualities and potential; support families through strong partnerships; collaborate with employers to build family friendly workplaces; create a work environment that encourages professionalism, growth, and diversity; grow a financially strong organization. We aspire to do this so successfully that we make a difference in the lives of children and families and in the communities where we live and work.

Company History:

Bright Horizons Family Solutions, Inc. is the largest provider of corporate-sponsored child-care and early education in the United States. Working with some of the nation's largest employers, the company sets up and manages work-site child-care centers. In addition to regular daily child-care, the company provides before- and after-school care for older children, emergency back-up care, summer camps, and special-event care. Bright Horizons counts among its clients 68 Fortune 500 companies and 45 of Working Mother magazine's '100 Best Companies for Working Mothers,' including Citigroup, Time Warner, and Motorola. The company is expanding its services to include private and charter elementary schools and work/life consulting.

Company Origins

The origins of Bright Horizons Family Solutions date back a dozen years to the founding of two companies with remarkably similar goals and histories: Bright Horizons Inc. and Corporate Childcare Development, Inc. Both companies saw an opportunity in the growing trend of corporate-sponsored child-care. Throughout the 1980s, companies experimented with ways to attract and hold employees, particularly women. Along with an increased willingness to accommodate flexible scheduling of work hours, job sharing, and telecommuting, more and more companies were establishing work-site day care for the children of their employees. Setting up and running such a center, however, was quite outside the expertise of most companies, requiring them to learn labyrinthine government regulations and to hire and train caregivers.

Bright Horizons, Inc. was designed to provide the expertise needed to set up and manage these corporate day care centers. Founded in 1987, Bright Horizons was the brainchild of husband-and-wife team Linda Mason and Roger Brown. At the time, Brown worked as a management consultant for Bain & Company in Boston. Brown and Mason established the company in Cambridge, Massachusetts, and took advantage of the large urban hub of Boston to find clients. Its first major community service program, the Horizons Initiative, also served the greater Boston area. Beginning in 1988, it provided child-care and other services for homeless children.

Bright Horizons grew steadily, attracting Fortune 500 clients and expanding throughout the New England region. It worked with clients to create programs suited to each company's needs. Not only did it establish and manage onsite day care centers exclusively open to employees, it also set up corporate-sponsored centers out in communities. Enrollment at such centers was open to anyone, although employees of the sponsoring company were given enrollment priority and frequently paid lower fees. In that way, companies without enough employees to fill a center could still offer subsidized or work-site child-care. Bright Horizons also provided at certain centers emergency backup care supervised by registered nurses for parents with sick children or whose regular day care provider was ill. Bright Horizons added summer programs for older children, vacation care, and other special services designed to accommodate an employer's needs.

In 1994, six years after its founding, Bright Horizons was managing 74 day care centers for clients throughout New England and in North Carolina. Its next goal was to move outside the region and create a national presence. Within four years, it had doubled the number of its centers to 155 and was operating in 29 states and the District of Columbia. Its clients included AT & T, DuPont, IBM, Motorola, Time Warner, and Xerox, as well as 22 other Fortune 500 clients.

In 1997, Bright Horizons' revenues totaled $85 million, and its net income had reached $1.5 million. That year, the company went public, offering shares on the NASDAQ. The proceeds were used to further the company's expansion.

The history of Corporate Childcare Development, Inc. closely mirrored that of Bright Horizons, beginning with the company's founding in 1987, within six weeks of the founding of Bright Horizons. Corporate Childcare was conceived in the mid-1980s by Marguerite Sallee, the human services commissioner for Tennessee under Governor Lamar Alexander. Having worked in that position to encourage corporate involvement in employee child-care, Sallee saw an opportunity to build a business. When Alexander left office in 1986, Sallee sought his help in starting up a company that would manage work-site child-care centers for corporations. With funding from Alexander, Brad Martin (later chief executive officer of Saks Inc.), and Bob Keeshan (better known for his role as the television character 'Captain Kangaroo'), Sallee started Corporate Childcare Development in Nashville, Tennessee.

Corporate Childcare had a mission almost identical to that of Bright Horizons and developed very similar services, including establishment and management of work-site child-care centers, summer programs for older children, emergency child-care, and preschool and primary education. Not surprisingly, the company attracted similar clients. In 1989, Corporate Childcare began working with Marriott Management Services and was soon attracting Fortune 500 clients. By 1994, the company ran 38 child-care centers in 19 states. Although Corporate Childcare operated primarily in the South and Midwest, it was attempting to establish a national presence in the mid-1990s. Corporate Childcare reached that point in its expansion at the same time as Bright Horizons, resulting at that time in direct competition for national clients.

By 1997 Corporate Childcare had changed its name to CorporateFamily Solutions and was ready to go public. The initial public offering occurred just three months before Bright Horizons' IPO and generated $25 million. The company planned to use the money to finance acquisitions in flex-time consulting, corporate elementary schools, and elder care. By the end of 1997, CorporateFamily had generated revenues of $77.7 million and boasted 100 centers in 29 states and the District of Columbia. Its clients included Boeing, Citicorp, Campbell Soup, Johnson & Johnson, and Turner Broadcasting.

The 1998 Merger

After several years of battling each other for clients, Bright Horizons and CorporateFamily Solutions agreed to join forces. Their merger in 1998 created the leading provider of corporate child-care in the nation, with 250 corporate-sponsored centers and more than 8,600 employees. Given the fragmented nature of the child-care industry, the new company's nine percent share also made it one of the leading providers overall. The noncash merger was accomplished through a stock swap, in which Bright Horizons shareholders were given a very slight advantage. Linda Mason became chairman of the board, and Marguerite Sallee was named CEO. Roger Brown took over as president.

The main goal of the merger was to increase the company's national presence and name recognition. To that end, the new company was named Bright Horizons Family Solutions, Inc., making use of the solid reputations of both companies. In an industry that relies heavily on referrals, the merger combined the referral power of the companies' respective client bases. In addition, national companies have the advantage in wooing major corporations: Most large companies starting a corporate day care program want to test it with a national provider so that if they like the service, they can use the same provider to expand to other facilities around the nation.

Although many companies merged to reduce costs by eliminating overlapping employees or by making more efficient use of facilities, Bright Horizons saw few benefits on that front. The new company saw some savings, however, in combined insurance and accounting fees. More importantly, the merger meant that certain cities held clusters of company-run day care centers, an organization the company would pursue in any future expansion. Such clusters allowed Bright Horizons to conduct training for groups of centers instead of site by site and allowed centers to share substitute teacher pools.

Future Expansion in a Growing Market

Bright Horizons planned to expand primarily within the corporate market, both with its traditional services and with new services. As the benefits of work-site day care became increasingly apparent, more and more corporations moved to offer such services to their employees. In addition, companies running their own centers were frequently opting to outsource the management of their centers. Because child-care is a highly regulated enterprise, many companies found trying to master the complicated regulations for themselves an inefficient use of their time and resources. Bright Horizons saw such companies as a prime target for their services.

In addition to simply expanding their client base, Bright Horizons added new services. With 50 certified kindergartens in 1998, the company used this expertise as a springboard into elementary education. The company opened a private elementary school in Bellevue, Washington, in the fall of 1998. The elementary school grew out of a child-care center acquired by

1986:Bright Horizons Inc. is founded.

1987:Corporate Childcare Development, Inc. is founded.

1997:Both companies offer shares to the public.

1998:The two companies merge to form Bright Horizons Family Solutions.

Bright Horizons in 1997. With 46 children enrolled the first year in first through fourth grade, the school used multi-age classes and team teaching. The school planned to grow with the students, adding fifth and sixth grade over the next two years. Bright Horizons was also working with corporations that wanted to establish onsite elementary schools open to employees' children or charter schools open to the community. These programs all fit with Bright Horizons goal of using its strengths in hiring and training teachers and in generating parent loyalty to expand their programs to older children.

Bright Horizons was involved in another innovative program beginning in 1998, an intergenerational center in Norwalk, Connecticut. Under One Roof, Inc. had been running a low-income elderly housing center when they decided to add a child day care facility at the same site. Bright Horizons signed on to set up and manage the child-care center. The 49 elderly residents living there in 1998 were encouraged to visit in the wing that housed the new Marvin Children's Center, with the hope that the interaction would benefit both the children and the elderly residents.

By the end of 1998, the integration of the two companies appeared to have been smoothly accomplished, and the new company was experiencing record growth. Revenues for the year rose 21 percent to $209.4 million, reflecting the addition of 29 new centers. Several new centers opened by Bright Horizons in 1998 were additional sites for existing customers, including a second site for Boeing, the sixth site for longtime customer Citigroup, and the eighth site for Motorola. According to CEO Marguerite Sallee, 'The increasing number of clients opening multiple centers across the country is confirmation that employers see real value in offering child-care at the workplace.'

In 1999 Bright Horizons added a program to make corporate-sponsored child-care easier for companies that have employees spread over several sites. The National Access Program (NAP) gave the employees at participating corporations priority placement at any Bright Horizons center nationwide that took community enrollment. Of Bright Horizons' 284 centers, 125 gave NAP participants priority over general community enrollment. Citibank, Hewlett-Packard, and Universal Studios were among the companies that used the program.

In May 1999, Bright Horizons restructured its leadership positions, following a plan established at the 1998 merger. Roger Brown stepped up as CEO, while Marguerite Sallee joined Linda Mason as co-chair. Later that year, Sallee left Bright Horizons to head another company. By mid-year, revenues had risen 18 percent to $119.4 million for the previous six months. Perhaps more importantly, net income had risen 38 percent in that period, to $4 million. A significant factor in that increase was the closing of several daycare centers that did not meet the Bright Horizons' requirements for quality education or that did not meet the company's minimum level of economic returns.

The company was also adding centers for new and existing clients at a steady pace. Bright Horizons' strategy for attracting national corporations seemed to be paying off. New customers represented a broad range of industries, from the auto industry (Subaru/SIA) to restaurant chains (Pizza Hut) to governmental agencies (International Monetary Fund).

As Bright Horizons grew, it strove to maintain its high standards for education and care: As of 1999, the company held the best record of accreditation from the National Association for the Education of Young Children (NAEYC), which published standards of excellence for child-care centers. At the time, Bright Horizons operated nearly 300 family centers for more than 200 clients, including almost 70 of the Fortune 500.

Principal Competitors: Aramark Corporation; KinderCare Learning Centers, Inc.; La Petite Academy.

Further Reading:

  • Clary, Jamie, 'IPO Investing a Mixed Bag,' Nashville Business Journal, December 22, 1997.
  • Harrison, Joan, 'Child Care Providers Are Poised for Growth,' Mergers & Acquisitions, July/August 1998, pp. 51--52.
  • Johnson, Holly, 'Corporate Kids,' Boston Business Journal, May 19, 1997.
  • Rehak, Judith, 'Family Time,' Chief Executive, December 1997, p. 26.
  • 'Sallee Leaves Bright Horizons,' Nashville Business Journal, October 6, 1999.

Source: International Directory of Company Histories, Vol. 31. St. James Press, 2000.