Education is widely regarded as a resilient, high-impact sector. But like any investment class, it comes with risk and those risks are often misunderstood or underestimated by new investors.
At Global Services in Education (GSE) and GSE Capital Advisory Group, we’ve reviewed dozens of education projects across emerging and established markets. Many look exciting on paper. But not all are investor-ready. In fact, some carry hidden liabilities that can severely damage outcomes, financially and reputationally.
If you’re considering investing in a school, university, or education-related platform, here’s what you need to watch for.
8 Red Flags for Education Investment Projects
🚩 1. Unrealistic Enrolment Projections
One of the most common pitfalls in school investment models is aggressive enrolment forecasts that don’t align with real market demand.
Red Flags:
- Flat assumptions that enrolment grows linearly year after year
- Overestimating demand without supporting market research
- Ignoring seasonality, economic fluctuations, or local preferences
✅ Look for models that factor in ramp-up curves, waiting lists, and retention rates.
🚩 2. Weak or Inexperienced Leadership
Education is a people-driven business. No matter how strong the infrastructure or curriculum, a weak school leader can collapse the entire operation.
Red Flags:
- No founding principal appointed during development
- Key staff are not education specialists
- Over-reliance on a single founder or visionary
✅ Invest in projects with clear governance and a qualified academic and operational team.
🚩 3. Regulatory and Licensing Risk
Each country has its own licensing laws, curriculum approvals, and foreign ownership rules. Overlooking these can delay or even derail the project.
Red Flags:
- “Pending” approvals with no clear timeline
- Curriculum not yet authorised by local authorities
- Real estate not zoned for education use
✅ Ensure all regulatory documents are in order before capital is deployed.
🚩 4. No Clear Differentiation
In many cities, the market is crowded with “international schools.” What sets your investment apart?
Red Flags:
- Generic offering (“British curriculum school” with no unique value proposition)
- Overlapping with established competitors without a compelling niche
- No clear brand identity, signature programs, or community reputation
✅ Strong projects define their educational model early—and build around it.
🚩 5. Blurred Ownership or Structure
The legal structure of the investment is just as important as the educational mission. Poor structuring can create disputes, tax problems, or poor exits.
Red Flags:
- No SPV or ring-fenced entity for the asset
- Unclear shareholder agreements
- Lack of planning for future exit or revenue distribution
✅ Use regulated investment structures and professional legal counsel from day one.
🚩 6. Weak Financial Controls
Even in impact-driven projects, financial hygiene is essential. Schools with great pedagogy but no cost control are a major risk.
Red Flags:
- No itemised budget or financial forecast
- Misalignment between projected tuition and local affordability
- High fixed costs with no contingency for slow ramp-up
✅ Require conservative budgeting and regular reporting.
🚩 7. Overdependence on a Single Revenue Stream
Many school models rely entirely on tuition. That’s stable, but risky if enrolment stalls or discounts increase.
Red Flags:
- No plan for diversified revenue (e.g., summer camps, facility rental, online courses)
- Fee structure out of reach for the target population
- No buffer or scholarship plan for downturns
✅ Seek projects with additional income strategies and built-in flexibility.
🚩 8. Lack of Exit Planning
All investments need an exit strategy and education is no exception. Too often, this is an afterthought.
Red Flags:
- No clear buyer profile (school group, PE firm, REIT, etc.)
- No trackable EBITDA or valuation benchmarks
- No IP, brand equity, or real estate asset for valuation uplift
✅ Begin with the end in mind. Structure for profitability and saleability.
Be Impact-Driven, Not Naïve
Education is a mission-aligned sector. But it’s still an investment.
Strong returns require strong fundamentals, from leadership and licensing to finance and exit planning.
By identifying these red flags early, you can protect capital, improve outcomes, and build education assets that last.
About the Author
Greg Parry is CEO of Global Services in Education (GSE) and co-founder of GSE Capital Advisory Group. He advises investors, family offices, and institutions on how to assess, structure, and invest in education assets across global markets.
Want help evaluating a school or education investment?
Let’s connect via www.gsineducation.com or message me on LinkedIn
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