Berkery Noyes, an independent mid-market investment bank, today released its half year 2014 mergers and acquisitions trend report for the Education Industry.
The report analyzes M&A activity during the first half of 2014 and compares it with the four previous six-month periods from 2012 to 2013. This market includes information and technology companies servicing the Education Industry, including the K-12, Post-Secondary, Childcare Services, and Corporate and Professional Training segments.
Total transaction volume improved nine percent on a half year basis. Aggregate value increased 45 percent, from $4.08 billion to $5.90 billion. There were two transactions in the Education market that reached the $1 billion threshold during first half 2014, both of which were backed by private equity firms. This consisted of Charterhouse Capital Partners’ $2.3 billion acquisition of SkillSoft, which provides cloud-based learning solutions for enterprises and governments; and Hellman & Friedman’s $1.1 billion acquisition of Renaissance Learning, a K-12 assessment and analytics company.
The most active acquirer year-to-date was Providence Equity Partners with five industry transactions. In terms of high profile strategic acquirers, McGraw-Hill completed two deals in first half 2014 with the acquisition of Area9, an adaptive learning company; and Engrade, a digital cloud-based platform that unifies student information and performance data in the K-12 marketplace.
“Data driven decision-making that is built into assessment capabilities will continue to redefine traditional publisher offerings,” said Mary Jo Zandy, Managing Director at Berkery Noyes. “For instance, online evaluation in math and science is poised to have an impact on the future of learning for middle and high school students. This has already happened at the college level, where exam results are sent automatically to grade books.” Zandy continued, “We expect acquirers across the education landscape to continue showing strong interest in adaptive learning solutions, as well as software that facilitates testing and measurement.”
As for other notable acquirers, Chegg and Wiley also completed transactions in the Education Industry during the half year period. Global publisher Wiley acquired CrossKnowledge, which offers digital learning solutions that focus on leadership and managerial skill development, for $175 million. Meanwhile, online textbook rental company Chegg acquired InstaEDU, an on-demand tutoring service, for $30 million. With this transaction, Chegg is looking to diversify its offerings in order to better compete with Amazon and others that are also in the school rental textbook market.
In terms of specific segments covered in the report, K-12 Media and Tech volume, which was the industry’s most active market, rose from 22 to 33 transactions. There was also an increase in the Professional Training Services segment, which was the industry’s second most active market, from 27 to 32 transactions. Regarding the Higher-Ed Media and Tech segment, deal volume remained nearly constant. Blackboard was a high profile acquirer in the space with the acquisition of MyEdu, which enables college students to plan their academic course schedules in a way that helps meet their professional career goals.
“There is a steady increase in M&A activity in the education and training market as the strategic players in the space seek to adapt to a shift in learning modality and financial sponsors become increasingly interested in the opportunity presented by a sector in transition,” said Peter Yoon, Managing Director at Berkery Noyes. “In many instances, we are seeing a shift from live, in-person instruction to more of a software-as-a-service (SaaS) model that emphasizes online or blended learning.”
A copy of the EDUCATION INDUSTRY M&A REPORT FOR HALF YEAR 2014 is available at the Berkery Noyes website.
About Berkery Noyes
Berkery Noyes is an independent investment banking advisory firm servicing the information industry. The firm specializes in mergers and acquisitions advisory, debt and equity financing, and financial consulting services for companies in the $10 million to $500 million range. Since its founding by Joseph W. Berkery in 1983, Berkery Noyes has worked with corporate clients to grow through acquisition, divest non-core assets, and maximize shareholder returns through strategic transactions and restructurings. For private owners, Berkery Noyes helps create liquidity and execute timely exit strategies that achieve their personal and professional objectives. The firm’s research teams publish acquisition activity in the respective sectors they follow on MandAsoft.com.
Securities services are offered through Berkery Noyes Securities, LLC. For more information, visit www.berkerynoyes.com.