2017-10-17 Berkery Noyes Releases Education Industry M&A Report For Third Quarter 2017

NEW YORK — October 17, 2017 — Berkery Noyes, an independent mid-market investment bank, today released its third quarter 2017 mergers and acquisitions trend report for the Education Industry.

The report analyzes M&A activity for the sector during the first three quarters of 2017 and compares it with data covering 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.

According to Berkery Noyes’ research, the number of deals stayed about constant on a quarterly basis. This followed a 15 percent increase in the first quarter. Total value declined 33 percent, from $5.7 to $3.8 billion. However, aggregate value year-to-date more than tripled compared to the first three quarters of 2016 and has already surpassed total value for all of 2016.

Regarding the combined Professional Training Technology and Services segment, volume stayed nearly the same during the quarter with a total of 26 transactions. The Professional Training segments were responsible for about one-quarter of the overall industry’s volume throughout the last three months.

After rising ten percent in the second quarter, M&A activity in the K-12 Media and Tech segment decreased 39 percent, from 23 to 14 transactions. Notable acquirers in the third quarter included Thoma Bravo with the 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.; Frontline Education with the acquisition of School Improvement Network, a professional learning provider for educators; and School Specialty with the announced acquisition of Triumph Learning, an educational content company and publisher of print and digital K-12 resources.

As for other select markets, transaction activity in the Higher-Ed Media and Tech segment increased 63 percent over the past quarter, from eight to 13 deals. Notable segment deals in third quarter 2017 included Vista Equity Partners’ announced acquisition of The Advisory Board Company’s education business for $1.6 billion; and Elsevier’s acquisition of bepress, which offers a hosted institutional repository service used by more than 400 universities, colleges, law schools, and research institutes.

Meanwhile, one notable deal that spanned both the K-12 and Higher Ed markets during the quarter was Barnes & Noble Education’s acquisition of Student Brands, a direct-to-student subscription-based writing skills services business, for $59 million. Barnes & Noble Education completed another high profile transaction earlier this year quarter with the acquisition of MBS Textbook Exchange, a contract operator of virtual bookstores, for $174 million.

“There is currently an opportunity for acquirers to take advantage of the digital adoption in education and the potential to create new pathways for instruction and credentialing,” said Peter Yoon, Managing Director at Berkery Noyes. We expect to see the rise and use of newer learning management systems, adaptive/personalized learning and other platforms that facilitate instruction in both an online and in-person environment.” Yoon continued, “In addition, the proliferation of tablets has accelerated the pace at which students are utilizing digital tools and content, allowing the introduction of new entrants into the space and compelling incumbent education providers to evaluate new technologies and models. All of this bodes well for future M&A activity.”

“In the K-12 sector, technology investments will continue to drive state and school district expenditures,” stated Mary Jo Zandy, Managing Director at Berkery Noyes. “Ed sector M&A will be strong and with particular interest in learning platforms and data reporting and analytics. Other areas of interest include hybrid student information systems and of course digital content and tools.”

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