2017-07-21 Berkery Noyes Releases Education Industry M&A Report For Half Year 2017

NEW YORK — July 21, 2017 — Berkery Noyes, an independent mid-market investment bank, today released its half year 2017 mergers and acquisitions trend report for the Education Industry.

The report analyzes M&A activity during the first half of 2017 and compares it with the four previous six-month periods from 2015 to 2016. 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 decreased eight percent on a half year basis. Aggregate value increased about fivefold, from $1.54 billion to $7.74 billion. Of note, there was only one deal with a disclosed value above $100 million in second half 2016, compared to eleven such deals in first half 2017. There were also two transactions that reached the $2 billion threshold in first half 2017, as opposed to none for all of 2016. The peak for volume and value over the previous five half year periods occurred in second half 2015.

Deal volume in the K-12 Media and Tech segment remained nearly constant in first half 2017. High profile acquirers year-to-date included Educational Testing Service with the announced acquisition of Questar Assessment, a K-12 assessment solutions provider, for $128 million; Scholastic with the acquisition of Ooka Island, an adaptive, game-based learn to read program; Blackbaud with the acquisition of AcademicWorks, which provides a comprehensive scholarship management solution; National Research Center for College & University Admissions (NRCCUA) with the acquisition of Admitted.ly, an online college advisory tool for high school students, their parents, and guidance counselors; and Sylvan Learning’s acquisition of Citelighter, which offers a browser-based tool that aims to increase students’ writing competency.

The number of transactions in the Professional Training Technology segment increased 13 percent over the past six months. Meanwhile, M&A activity in the Professional Training Services segment decreased 15 percent on a half year basis, returning to its first half 2016 level. In terms of value, two of the industry’s top three highest value acquisitions year-to-date occurred in the Professional Training Services segment. The largest related deal during first half 2017 was Blackstone and Canada Pension Plan Investment Board’s (CPPIB) 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.

Additional high profile acquirers in the Processional Training segments included CVC Capital Partners with the announced acquisition of QA, an IT education and skills business, for $886 million; PSI Services’ with the acquisition of Performance Assessment Network, which offers talent assessment and measurement solutions for the corporate, government and education marketplace, for $271 million (note that PSI Services is backed by Waud Capital); 2U with the announced acquisition of GetSmarter, an online education company that collaborates with universities to offer premium online short courses to working professionals, for $103 million; and Kaplan with the acquisition of Genesis Institute, a provider of financial training solutions for the CFA examination and others.

Regarding other industry markets, Higher Ed-Media and Tech volume fell 28 percent in first half 2017, returning to its first half 2016 level. Notable segment deals in first half 2017 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 Plum Analytics, a research analytics company that gathers metrics from dozens of scholarly sources, media channels, and social media; and IDP Education’s acquisition of Hotcourses, a publisher of websites offering access to information about courses, colleges, and universities.

As for additional high profile transactions throughout the Education Industry during the half year period, Barnes & Noble Education acquired MBS Textbook Exchange, a contract operator of virtual bookstores, for $174 million in the K-20 Services segment; and Busy Bees Childcare announced its acquisition of Bright Path Early Learning, a Canadian childcare provider with 77 locations in major markets across the country, for $105 million in the Childcare Services segment.

“We expect strong levels of M&A activity to continue across the entire education spectrum,” stated Peter Yoon, Managing Director at Berkery Noyes. “Among many sectors, demand should remain strong for companies that provide solutions and services for professional education, English language training and childcare.” Yoon continued, “Moreover, the rapid adoption of e-learning technology and the growing training needs of the existing corporate workforce has led to a significant increase in corporate spending on outsourced training resources per employee.”

“In the K-12 sector, technology investments will likely continue to drive state and school district expenditures,” said Mary Jo Zandy, Managing Director at Berkery Noyes. “Other areas of interest include hybrid student information systems and digital content and tools, as well as learning platforms and data reporting and analytics.”

A copy of the EDUCATION INDUSTRY M&A REPORT FOR HALF YEAR 2017 is available at the Berkery Noyes website.