December 2, 2013 DEAL ACTIVITY IN THE CHILDCARE SERVICES AND PROFESSIONAL TRAINING SEGMENTS SHOWS SIGNS OF GROWTH

According to Berkery Noyes’ Education report for third quarter 2013, deal volume remained nearly constant from second to third quarter 2012. Transaction value fell 39 percent over the past three months, totaling $2.0 billion in third quarter 2013.

Although aggregate value decreased, third quarter 2013 was responsible for the highest median deal value on a quarterly basis throughout the past two years. The median revenue multiple from 2012 through the first three quarters of 2013 decreased from 1.7x to 1.5x, while the median EBITDA multiple declined from 13.5x to 10.6x.

Regarding some of the market segments covered in the report, M&A activity in the Childcare Services segment improved 50 percent on a quarter-to-quarter basis. One active acquirer in the space has been Bright Horizons Family Solutions, an early education provider that was taken private in 2008 by Bain Capital for $1.3 billion. Bright Horizons, which went public again earlier this year (NYSE: BFAM), acquired Children’s Choice Learning for $53 million in third quarter 2013. This transaction followed Bright Horizon’s acquisition of Kidsunlimited for $68 million in second quarter 2013, as well as the acquisition of Casterbridge Care & Education for $116 million in 2012.

Meanwhile, deal volume in the Professional Training Institutions segment year-to-date increased 23 percent relative to the corresponding timeframe in 2012. The segment’s highest value transaction in third quarter 2013 was Providence Equity Partners’ acquisition of Informa’s five corporate training businesses for $165 million.

Education M&A activity continues to rebound at a steady pace, as companies in the cyclical subsectors in education, childcare services and corporate training benefit from an improving economic environment and continue to be of interest to the larger strategic acquirers. 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. Additional niche areas that are of strong focus by potential acquirers include English language learning solutions and education market focused infrastructure software.