2010 l 3rd Qtr l Trends Report l Education

Wednesday, October 13, 2010

Third Quarter Key Highlights

• The most active acquirer through the Q3 2010 was Pearson plc, which acquired America’s Choice, Wall Street Institute, Inc., the learning systems business from Sistema Educacional Brasileiro and Cogmed.
• The largest transaction for Q3 2010 was Providence Equity Partners Inc.’s purchase of Study Group International Ltd., previously owned by Champ Private Equity and Petersen Investments, for $573 million.

Third Quarter Key Trends

• Total transaction volume in Q3 2010 increased by 42 percent from Q2 2010, from 36 to 51 transactions.
• Total transaction value in Q3 2010 increased by 302 percent over Q2 2010, from $537 million to $2.2 billion. This sharp increase is due, in some part, to four of the Top 10 largest deals YTD occuring within Q3 as shown in Fig. 3.

Multiples & Value Trends

• EBITDA multiples have decreased 11 percent from 2009 to the first nine months of 2010, from 10.5 to 9.3, yet median revenue multiples rose from 0.9 to 1.8, a 100 percent increase.
• The acquisiton of Sistema Educacional Brasileiro’s Learning Systems Business by Pearson plc for $499 million represents an EBITDA mulitple of 14.5.

Top Ten Deals Through Q3 2010

• The top ten deals by value have shifted since the half year report, with four new acquisitons in the Q3 2010. Providence Equity Partners, Inc.’s purchase of Study Group International Ltd., Pearson plc’s acquisition of the learning systems business of Sistema Educacional Brasileiro, SAI Global Inc.’s acquisiton of Integrity Interactive Corporation and Taleo Corporation’s acquisiton of Learn.com have all entered into top ten of deals by value of 2010.
• These four deals represent 61% of the total transaction value in Q3 2010 and 29% of the value of transactions in the 1st nine months of 2010.