August 11, 2014 EDUCATION INDUSTRY EXPERIENCES SIGNIFICANT INCREASE IN M&A VOLUME AND VALUE

Berkery Noyes’ most recent Education report showed that 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.

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.

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. 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.

“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.”

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. 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.