NEW YORK — January 23, 2018 — Berkery Noyes, an independent mid-market investment bank, today released its full year 2017 mergers and acquisitions trend report for the Education Industry.
The report analyzes M&A activity in the sector during 2017 and compares it with data covering 2015 and 2016. This market includes information and technology companies servicing the Education Industry, including the Childcare Services, K-12, Post-Secondary, and Corporate & Professional Training segments.
Transaction volume remained almost constant on a year-to-year basis. Aggregate value more than tripled, from $5.07 billion to $16.79 billion. This followed a 73 percent decrease from 2015 to 2016. Of note, there were 24 deals in 2017 with disclosed values above $100 million, as opposed to seven deals in 2016 and 28 deals in 2015.
Financial sponsors were responsible for nine of the top ten highest value transactions in 2017. Private equity volume remained about the same over the past three years, representing 28 percent of the industry’s total deal activity. However, sponsored value accounted for 56 percent of the industry’s total value during this timeframe and 70 percent of total value in 2017.
The K-12 Media and Tech segment declined 16 percent over the past year, which was close to its 2015 level. It retained a slight lead over Professional Training Services as the industry’s most active sector in 2017.
Notable deals in the K-12 Media and Tech segment during the year included Thoma Bravo’s acquisition of Frontline Education, which offers cloud-based software solutions for recruiting, hiring, time and attendance, substitute management, and professional growth to school districts in the U.S.; Chegg’s acquisition of Cogeon, a provider of adaptive math technology and developer of the math app, Math 42; School Specialty’s acquisition of Triumph Learning, an educational content company and publisher of print and digital K-12 resources; Scholastic’s acquisition of Ooka Island, an adaptive, game-based learn to read program; and Sylvan Learning’s acquisition of Citelighter, which offers a browser-based tool that aims to increase students’ writing competency.
The segment with the largest increase in volume was K-12 Institutions with a 53 percent rise, from 30 to 46 deals. The highest value deal in the K-12 Institutions segment during the year was Canada Pension Plan Investment Board and Baring Private Equity Asia’s acquisition of Nord Anglia Education, which operates 43 private schools in 15 countries, for $2.05 billion.
M&A activity in the Higher-Ed Media and Tech segment was nearly constant on a yearly basis. The segment’s largest transaction in 2017 was Vista Equity Partners’ announced acquisition of The Advisory Board Company’s education business, which includes Royall & Company, for $1.55 billion. Other notable segment transactions during the year included Macmillan Learning’s acquisition of Intellus Learning, an educational platform as a service company that gathers information across institutions to help faculty and administrators evaluate digital content; Elsevier’s acquisition of bepress, which offers a hosted institutional repository service used by more than 400 universities, colleges, law schools, and research institutes; and eCampus.com’s acquisition of Rafter, a course materials management company.
Deal volume in the Professional Training Services segment increased 11 percent from 2016 to 2017. Notable transactions in the combined Professional Training Technology and Services segments over the past year included Blackstone Group and Canada Pension Plan Investment Board’s announced acquisition of Ascend Learning, which offers educational content and online tools for students, educational institutions and employers, with a particular focus on healthcare and other licensure-driven occupations, for $2 billion; CVC Capital Partners’ announced acquisition of QA, an IT education and skills business, for $886 million; and Baring Private Equity Asia And CITIC Capital’s announced acquisition of Wall Street English, a provider of English language training to adults, for $300 million.
“The focus on education access, data analytics, and outcomes-driven technology products and services continues to shape the industry,” stated Peter Yoon, Managing Director at Berkery Noyes. “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.”
“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,” said Mary Jo Zandy, Managing Director at Berkery Noyes. “In the context of strong gains in online testing and assessment, automatic scoring and grading of essays are likely to develop more rapidly. 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 FULL YEAR 2017 is available at the Berkery Noyes website.