NEW YORK — July 20, 2015 — Berkery Noyes, an independent mid-market investment bank, today released its half year 2015 mergers and acquisitions trend report for the Education Industry.

The report analyzes M&A activity during the first half of 2015 and compares it with the four previous six-month periods from 2013 to 2014. 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.

Total transaction volume improved nine percent on a half year basis. In addition, private equity volume rose 38 percent, with a total of 51 transactions in first half 2015. Aggregate value increased 29 percent, from $4.75 billion to $6.11 billion. The peak for volume over the previous five half year periods occurred in first half 2015 whereas value reached its zenith in first half 2014.

As for overall value, nine of the top ten deals thus far in 2015 were completed by strategic acquirers. The industry’s largest transaction year-to-date was LinkedIn Corporation’s acquisition of, an online learning company that provides video tutorials and courses covering business, software, creative, and other areas, for $1.5 billion. This deal represented slightly more than one-fifth of the industry’s total value in first half 2015. 

Deal volume in the K-12 Media and Tech segment increased 39 percent in first half 2015. Notable transactions included Houghton Mifflin’s acquisition of Scholastic Corporation’s Education and Technology Services business for $575 million; Pearson’s sale of Powerschool, a web-based K-12 student information system, to Vista Equity Partners for $350 million; Pearson’s sale of Family Education Network, a global leader in the consumer informal learning space, which owns one of the largest integrated digital audiences of kids, parents, and teachers in the world, to Sandbox Partners; Data Recognition Corporation’s acquisition of McGraw-Hill Education’s CTB assessment assets; and Blackboard’s acquisition of Schoolwires, an educational website, hosting, and content management provider to K-12 schools.

In terms of Blackboard’s recent deals, the Schoolwires transaction follows its previous acquisition of ParentLink, a provider of K-12 communications tools that help connect teachers with parents, in second half 2014. Blackboard also completed a transaction in the open source space in first half 2015 with the acquisition of Remote-Learner UK. This was Blackboard’s first open source related deal since its acquisition of Moodlerooms and NetSpot in first half 2012.

Meanwhile, the number of transactions in the combined Professional Training Technology and Services segments declined eight percent, from 65 to 60 deals. One high profile Professional Training acquirer year-to-date was Pluralsight with the acquisition of Code School, which offers online courses for developers, for $36 million. Also of note, Pluralsight acquired Smarterer, an online skills assessment platform, for $75 million and Digital-Tutors, an online training resource for creative professionals, for $45 million in 2014.

Regarding the Higher-Ed Media and Tech segment, volume increased 81 percent, from 21 to 38 deals. This was the highest point for Higher-Ed Media and Tech volume during the past two-and-a-half years when examined on a half year basis. Moreover, Higher-Ed Media and Tech was responsible for the industry’s largest rise in volume over the past six months.

“The large strategic players in the sector are the diversified education companies who are steadily moving away from print and becoming more heavily focused on digital and services,” said Peter Yoon, Managing Director at Berkery Noyes. “Companies like Houghton Mifflin continue to acquire as evidenced by their recent purchase of Scholastic’s Edtech division, and McGraw-Hill and Pearson continue to do the same in order to become less dependent on print revenues.” 

Yoon continued, “Private equity firms are increasingly being drawn to the education and training sector, given the sheer scale of the market, the favorable lending environment, and the increasing number of companies that are growing with subscription based revenue models in the space. Part of the role that PE firms play in the sector is to create and grow companies of scale, which the strategic players often see as attractive acquisition opportunities due to the larger size. The influx of PE capital creates an environment which actually allows acquisitions by strategics to be more prevalent and impactful to the organization.”

“In the context of strong gains in online testing and assessment, automatic scoring and grading of essays are likely to develop more rapidly,” stated Mary Jo Zandy, Managing Director at Berkery Noyes. “One of the main challenges to overcome before this technology is more widely adopted is to improve the training in its use and overall understanding of its reliability and cost effectiveness.” Zandy continued, “At the post-secondary level, online homework grading in subjects such as math, chemistry, and other quantitative disciplines has made some headway. Considerable investment in companies with new assessment products will eventually lead to robust M&A activity with acquirers seeking to participate in this high growth and high profit area.”

A copy of the EDUCATION INDUSTRY M&A REPORT FOR HALF YEAR 2015 is available at the Berkery Noyes website.