Berkery Noyes’ Education report for first half 2015 showed that 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 Lynda.com, 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.
“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.”