NEW YORK — October 12, 2018 — Berkery Noyes, an independent mid-market investment bank, today released its third quarter 2018 mergers and acquisitions trend report for the Education Industry.

The report analyzes M&A activity for the sector during the first three quarters of 2018 and compares it with data covering 2017. 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.

Transaction volume year-to-date improved ten percent compared to the corresponding timeframe in 2017. After more than tripling in the first three quarters of 2017, aggregate deal value fell 34 percent, from $13.1 billion to $8.7 billion. In terms of year-over-year valuations, the median revenue multiple declined from 2.3x to 1.8x while the median EBITDA multiple shifted from 11.0x to 10.5x.

Regarding the combined Professional Training Technology and Services segments, volume declined 18 percent on a quarterly basis. This followed a 59 percent gain in the second quarter. The Professional Training segments were responsible for one-third of the overall industry’s volume throughout the last three months.

Notable Professional Training related deals in third quarter 2018 included Intertek Group’s acquisition of Alchemy Systems, a provider of food and workplace safety training for production workers, for $480 million; Bertelsmann’s announced acquisition of OnCourse Learning, which offers continuing education, pre-licensing and corporate training solutions; Oracle’s announced acquisition of Iridize, a creator of interactive product guides and walkthroughs for employee training; Moody’s acquisition of Omega Performance, which provides credit training services to financial organizations; and The Flatiron School’s acquisition of Designation, a User Interface (UI) and User Experience (UX) digital design program.

After rising 27 percent in the second quarter, M&A activity in the K-12 Media and Tech segment remained nearly constant. Notable deals in the third quarter included Alpine Investor’s announced acquisition of Riverside Clinical and Standardized Testing from Houghton Mifflin Harcourt for $140 million; ACT’s acquisition of Encoura, an enrollment management technology platform used by members of the National Research Center for College & University Admissions (NRCCUA); Follett’s acquisition of Fishtree, an adaptive learning platform; and Chegg’s acquisition of StudyBlue, a crowdsourced learning platform that provides intelligent learning tools such as flashcards, notes, and study guides.

As for other select markets, transaction activity in the Higher-Ed Media and Tech segment decreased 30 percent over the past quarter, from 20 to 14 deals, returning to its first quarter level. Notable segment transactions in third quarter 2018 included SAGE Publishing’s acquisitions of Lean Library, which provides a browser extension plugin for libraries; and Tails, which helps universities manage and deliver learning resources online; Atypon’s acquisition of Authorea, an online collaborative writing tool used by researchers to cite, collaborate, host data, and publish; Elsevier’s acquisition of Aries Systems, a provider of scientific publication workflow solutions; and LendingTree’s announced acquisition of Student Loan Hero, a personal finance website that helps student loan borrowers manage their student debt.

Deal flow in the Childcare Services segment remained about the same for the third consecutive quarter. Notable Childcare Services transactions in third quarter 2018 included KinderCare Education’s acquisition of Rainbow Child Care Center, the eighth largest child care provider in the United States; Onex Corporations’ announced acquisition of KidsFoundation, the largest childcare provider in the Netherlands; and Golden Gate Capital’s acquisition of The Learning Experience, which has more than 300 centers operating or under development.

“In the K-12 and postsecondary areas, certain niches that help improve student performance, teacher efficiency, retention and overall outcomes – such as adaptive/personalized learning platforms, data and assessment companies, and blended and online learning solutions – continue to have a meaningful impact,” said Peter Yoon, Managing Director at Berkery Noyes. “Additional niche areas that are of strong focus by potential acquirers include English language learning solutions and education market focused infrastructure software.”

“The education sector has been very active of late,” stated Mary Jo Zandy, Managing Director at Berkery Noyes. “In particular, companies that are online and digital are the most attractive acquisition candidates. Many companies are readily available to be acquired by private equity firms as well, which can borrow on attractive terms to purchase them.”

A copy of the EDUCATION INDUSTRY M&A REPORT FOR THIRD QUARTER 2018 is available at the Berkery Noyes website.