NEW YORK — July 20, 2016 — Berkery Noyes, an independent mid-market investment bank, today released its half year 2016 mergers and acquisitions trend report for the Education Industry.

The report analyzes M&A activity during the first half of 2016 and compares it with the four previous six-month periods from 2014 to 2015. 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 decreased 18 percent on a half year basis but declined three percent relative to first half 2015. Strategic volume from second half 2015 to first half 2016 moved downward from 176 to 138 deals. Private equity volume remained consistent throughout this timeframe, with about 50 deals during each of the last three half year periods.

Aggregate industry value fell 65 percent over the past six months, from $11.88 billion to $4.16 billion. There was a more modest 38 percent decrease when compared year-over-year. The peak for volume and value over the previous five half year periods occurred in second half 2015.

The industry’s largest transaction year-to-date was Apollo Education Group’s announced acquisition by a consortium of investors, which includes the Vistria Group, for $1.1 billion. Apollo Education Group is perhaps best known as the parent company of the University of Phoenix. This deal, in which Apollo is being taken private, represented slightly more than one-quarter of the industry’s total value in first half 2016.

Deal volume in the K-12 Media and Tech segment increased 47 percent in first half 2016, making it the sector with the largest half year rise. This also marked a near return to its first half 2015 level. High profile acquirers year-to-date included Chegg with the acquisition of Imagine Easy Solutions, a provider of online writing tools that help students properly use citations, bibliographies, and other reference capabilities, for $42 million with additional payments of up to $18 million; K12, Inc. with the acquisition of LTS Education Systems, which offers an online gamified instructional service called Stride Academy, for $20 million; Apple with the acquisition of LearnSprout, an online data insight service used by K-12 educators to track student performance; and Microsoft with the acquisition of MinecraftEdu, a modified version of Minecraft that is used as a gamified learning tool in K-12 schools.

The number of transactions in the Professional Training Technology segment stayed about constant in first half 2016. This followed a 56 percent improvement in second half 2016. Meanwhile, deal volume in the Professional Training Services segment decreased 43 percent on a half year basis. This decline transpired after a 34 percent improvement in second half 2015, which was the Services’ segment’s highest point throughout the last two and a half years covered in the report.

High profile acquirers in the combined Professional Training sector during first half 2016 included UBM with the acquisition of Content Marketing Institute, global content marketing education and training organization used by enterprise brands, for $18 million; Capella Education Company with the acquisition of Hackbright Academy, non-degree software engineering school for women, for $18 million; Strayer Education with the acquisition of New York Code & Design Academy, a provider of non-degree web and mobile app development courses; DeVry Education Group with the acquisition of EduPristine, a training provider for international certifications in finance, accounting, and analytics, which it acquired in conjunction with private equity firm Kaizen; and Google with the acquisition of Synergyse Training, an interactive training system for Google Apps.

As for other industry markets, Higher Ed-Media and Tech volume fell 55 percent. This followed the segment almost doubling in first half 2015 and gaining 11 percent in second half 2015. Regarding notable Higher-Ed transactions in the tuition and fee payment space year-to-date, Blackboard announced its acquisition of Higher One Holdings for $260 million and also acquired Sequoia Retail Systems.

In terms of specific verticals within the Education Industry, notable acquisitions in the Healthcare market during the half year period included Relias Learning’s acquisition of Assessment and Intelligence Systems, a provider of online resident assessment education services; and Wolters Kluwer Health’s acquisition of PrepU, an adaptive learning technology and quizzing tool used for nursing education.

"M&A in the Education Industry is robust with transaction volume in the first half of 2016 at roughly the same level compared to the first half of 2015," said Peter Yoon, Managing Director at Berkery Noyes. "Activity continues to be driven by consolidation around certain niches within K-12 and Higher-Ed focused technology and administrative systems."

“System infrastructure spending in both K-12 and High Education has become a higher priority among states, school districts and high education institutions,” said Mary Jo Zandy, Managing Director at Berkery Noyes. “The product offerings available for these markets have become more compelling in terms of cost savings, learning impact measurability and interoperability with existing systems. The potential revenue has created a high stakes environment among existing providers and has encouraged many larger software companies to enter into the market.”

A copy of the EDUCATION INDUSTRY M&A REPORT FOR HALF YEAR 2016 is available at the Berkery Noyes website.