Private equity firms that rolled up family-owned school bus companies are finding buyers well beyond the next sponsor, according to market participants.

The list now runs from public investors, for the very largest operators, to larger operators, infrastructure funds, and the firms’ own continuation funds.

First Student, the biggest US school bus operator, has lined up banks for a potential IPO, according to press reports. EQT Infrastructure acquired the company from FirstGroup in 2021. In September, Student Transportation of America (STA), the No. 2 operator by fleet, bought Illinois-based Sunrise Transportation, which specializes in transporting special-education students.

Both moves sit atop an ownership chain that has taken shape over the past decade. Family operators sell to platforms, and the PE firms that assemble them usually look to sell within four to six years, “many times to an infrastructure fund,” said Terence Hannafin, a partner at Carter Morse & Goodrich, an M&A advisory firm focused on founder- and family-owned businesses. Infrastructure funds often hold for 10 years or more, he added.

“In this industry, the line between strategic and financial buyers is blurry as nearly all of the large operators are owned by PE or infrastructure funds,” Hannafin said. Three of the top four by fleet are fund-backed: First Student by EQT Infrastructure, Summit School Services by I Squared Capital, and Beacon Mobility by Audax Private Equity.

Patient money moves in

School districts are required to get students to class, which keeps demand steady. “Simply put, children are entitled to an appropriate public education and school districts must ensure they are in the classroom to receive it,” said David A. Duke, chief development officer at student and specialty transportation operator Beacon Mobility. Contracts generally run three to five years, and retention is high, he noted.

That profile suits infrastructure investors. They typically hold longer and accept lower returns than PE firms, and their capital is often cheaper, which lets them support premium valuations for high-quality platforms, said Adam Gifford, a managing director at investment bank Lincoln International. Most traditional PE funds, by contrast, “struggle with the capital expenditure requirements of these businesses,” he said.

Sean Sands, head of M&A at accounting and advisory firm hfco, pointed to the fleets themselves. “School buses are long-lived assets that can provide collateral to support both acquisition financing and future growth,” he said. Electrification adds to the appeal, since converting fleets will take capital that most districts and smaller operators cannot, or may be unwilling to, fund on their own, Hannafin said.

Districts are also handing more routes to contractors as driver recruitment gets harder and fleet costs rise, sources said. Roughly 40% of the market is already outsourced, Duke estimated.

Special education is a particular draw, Hannafin said. The number of qualifying students keeps rising. Districts must provide transportation when it is written into a student’s individualized education program, and many prefer to contract it out.

Next stop for longtime owners

On the other side of those deals are thousands of family operators, many of which have served the same districts for decades, the sources said. “Many multi-generational owners simply don’t want to or can’t fund another fleet replacement cycle, creating opportunities for buyers to acquire businesses at attractive valuations,” Gifford said.

The pandemic and the driver retention problems that followed left many long-term owners more willing to sell, added Daniel Cohen, a partner at law firm Foley & Lardner. For buyers, “acquisitions present the fastest path to growth in the industry,” he said.

STA bought Tremblay’s Bus Company, a second-generation family business in New Bedford, Massachusetts, in June. Carter Morse & Goodrich advised Tremblay’s. In September, American Student Transportation Partners (ASTP), owned by infrastructure investor CVC DIF, added AJ Myers and Sons, a western Pennsylvania operator founded in 1950.

Buyers prize long renewal histories, newer fleets, and management that does not depend on the founding family, the sources said. Special-education routes tend to carry higher margins than general-education work, Hannafin said, and contracts “are usually awarded on service rather than low bid.”

For PE firms buying a first platform, proof that a company has already grown beyond its original location and opened multiple depots is one of the most important differentiators, Sands said. “They have already demonstrated an ability to scale, which reduces execution risk for a financial sponsor planning to grow through acquisitions.”

Multiples climb with scale

Smaller owner-operated companies generally trade at 4x–6x EBITDA, while larger regional operators might be valued at 6x–8x or more, Hannafin said. Duke put most deals of the past couple of years at 4x–6x, within a broader 3x–7x range, with some big platform-creation deals falling outside it.

The deals and sale processes hfco has seen have mostly ranged from about 7x to 9x adjusted EBITDA, Sands said. Smaller companies with thin management, low margins, or a fleet due for replacement may trade below that range, while larger platforms can fetch more. The best operators command upper-single-digit to low-double-digit multiples, Gifford said.

That spread drives the roll-up math. Buyers acquire smaller operators at discounted entry multiples, improve operations and contract terms, and fold them into a platform that “can ultimately command a significantly higher valuation,” Gifford said.

Because the sector is asset-heavy, buyers measure cash flow after the maintenance spending needed to keep buses on the road, so an aging fleet usually brings a lower multiple, Hannafin added.

UK-listed Mobico’s sale of its North American school bus unit to I Squared last year, for up to USD 608m, priced at about 5x expected adjusted EBITDA, according to the company. Gifford said the deal showed appetite for targets with “operational improvement and fleet reinvestment opportunities.”

Hannafin said valuations for quality operators have held up well, as the national operators have stayed active and more PE firms have tried to enter the sector.

Sands, though, sees valuations moderating somewhat from a peak a couple of years ago, reflecting “higher financing costs associated with increased interest rates, as well as operating cost pressures, including higher fuel costs during 2026.” Competition for the best assets remains strong, he noted.

Selling up the chain

Access Holdings launched ASTP in 2021 with the acquisition of Krise Transportation and grew it from 435 vehicles to more than 2,300, with revenue up about sevenfold, before agreeing last year to sell it to CVC DIF. “It was a highly competitive process with many groups trying to be the final owner of the business,” said Gifford, whose firm advised Access on the sale.

Atlantic Street Capital had owned Sunrise for about eight years before STA bought it. Smaller operators are likely to keep selling to strategic buyers, including institutionally backed platforms, while scaled regional and multistate ones are more likely to attract infrastructure funds new to the sector and larger strategics, Gifford said.

Hannafin also pointed to continuation funds, in which a PE firm sells a company from an older fund to a newer one it also manages. Existing investors get the option to cash out while the firm continues to own and grow the company, he said, “as Audax did with Beacon last year.”

An IPO is an option only for the very largest operators and would mark a return to the public markets for a sector that has no publicly traded operators today, Hannafin said. Student Transportation Inc., STA’s parent, was taken private in 2018.

Such an offering would be the first in many years, Cohen said. “I suspect others in the industry are watching that process carefully.”