February 18, 2015 EDUCATION VOLUME, VALUE, AND VALUATIONS SHOW A ROBUST INCREASE IN 2014

According to Berkery Noyes’ Education report for full year 2014, transaction volume improved nine percent on a year-to-year basis. Aggregate value rose 25 percent, from $9.12 billion to $11.40 billion. The median revenue multiple increased from 1.5x to 2.4x, while the median EBITDA multiple remained nearly constant at 11.1x. There was also a 34 percent rise in the number of Education deals backed by financial sponsors, from 67 to 90 transactions.

The most active market segment in 2014 was Professional Training Services with 70 deals. Moreover, volume in the combined Professional Training Services and Technology segments increased 19 percent from 2013 to 2014.

One notable transaction in the Professional Training segments in 2014 was media company Bertelsmann’s acquisition of Relias Learning, a Software-as-a-Service (SaaS) e-learning solutions and course content provider that serves the healthcare and senior care market, for a reported $540 million. Bertelsmann acquired Relias Learning from Vista Equity Partners, which formed Relias Learning in 2012 after combining Silverchair Learning Systems and Essential Learning.

As for additional market segments in the report, the industry’s largest strategic transaction in 2014 occurred in the Higher Ed-Media and Tech segment. This consisted of The Advisory Board Company’s acquisition of Royall & Company, a provider of student engagement and enrollment management solutions, for $850 million. In terms of volume, Higher-Ed Media and Tech deal activity declined ten percent, returning to its 2012 level.

The focus on education access, data analytics, and outcomes-driven technology products and services continues to shape the industry. The strategic players are making acquisitions in order to meet market demands in these areas across the entire education and training spectrum, from PreK-12 to Corporate Training. Moreover, the continued strong investment levels for early stage education companies will provide a fertile ground for future partnerships and M&A activity.

“In an environment of intense discourse on K-12 students’ learning, the online testing landscape varies enormously by state,” said Mary Jo Zandy, Managing Director at Berkery Noyes. “However, tests and assessments have strong momentum at the individual state level. This is the case whether the state has incorporated the SBAC or PARCC consortium tests, purchased tests and assessments from Pearson, AIR or CTB, or developed its own state test through another test company. Very few states have deferred any action.”