2013-01-17 Berkery Noyes Releases Education Industry M&A Report For Full Year 2012

NEW YORK — January 17, 2013 — Berkery Noyes, an independent mid-market investment bank, today released its full year 2012 mergers and acquisitions trend report for the Education Industry.

The report analyzes M&A activity in the sector during 2012 and compares it with data covering 2010 and 2011. 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.

Berkery Noyes’ research showed that transaction volume remained nearly constant on a year-to-year basis. However, aggregate transaction value fell 44 percent, from $11.93 billion in 2011 to $6.66 billion in 2012. The median revenue multiple between 2011 and 2012 stayed the same at 1.6x, while the median EBITDA multiple declined from 12.0x to 10.3x.

There was an uptick in private equity activity in the Education Industry over the past twelve months. Financial sponsors accounted for 30 percent of transaction volume and 63 percent of value in 2012, compared to 25 percent of volume and 51 percent of value in 2011. Providence Equity Partners was one of the most active private equity firms in 2012, completing three industry transactions.

The two highest value education deals in 2012 both occurred in the fourth quarter. This consisted of the announced sale of McGraw-Hill Education to Apollo Global Management for $2.62 billion and Pearson’s acquisition of Embanet Compass for $650 million. Higher-Ed Media and Tech was the segment with the most notable rise in transaction volume, improving 59 percent since 2011. One of the segment’s largest deals over the course of 2012 was John Wiley & Sons’ acquisition of Deltak.edu for $220 million, which was announced in the fourth quarter as well.

“As the migration to digital formats and delivery continue, the potential for transformation in the education industry that is succeeding at the post secondary level will continue to be substantial in all the education subsectors,” stated Peter Yoon, Managing Director at Berkery Noyes. “In particular, the digital subscription model that is becoming more prevalent across the entire education spectrum, from K12 to professional/corporate training, is especially attractive to acquirers due to the visibility and recurring nature of the revenues.”

Meanwhile, the number of transactions in the K-12 Media and Tech segment declined 15 percent in 2012, following a 28 percent rise from 2010 to 2011. Deal volume in the Professional Training Institutions segment experienced a 14 percent yearly increase, edging past both the K-12 and Higher-Ed Media and Tech segments as the industry’s most active market sector.

“Acquirers are increasingly interested in e-learning solutions that will both complement and build upon their existing products,” said Mary Jo Zandy, Managing Director at Berkery Noyes. “With the implementation of the common core state standards and the related digital infrastructure, the value of e-learning will be enhanced.”

A copy of the EDUCATION INDUSTRY M&A REPORT FOR FULL YEAR 2012 is available at the Berkery Noyes website.