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      MERGERS AND ACQUISITIONS UPDATES FROM BERKERY NOYES

    Entries in Peter Yoon (15)

    Tuesday
    Mar012016

    HIGHER-ED MEDIA AND TECH DEAL ACTIVITY DRIVES INCREASE IN EDUCATION VOLUME

    Berkery Noyes’ Education report for full year 2015 revealed that transaction volume improved 26 percent on a year-to-year basis. Aggregate value rose 52 percent, from $11.68 billion to $17.75 billion. The industry’s most active strategic acquirer in 2015, either directly or through an affiliated business, was Bertelsmann with four transactions.

    Bertelsmann acquired Redilearning, an online learning company that serves the senior care sector; Academy Medical, a provider of continuing education content for various healthcare providers; YoBoHo, a digital media company that specializes in creating original content for children; and Alliant International University, a network of five California-based professional schools.

    The Higher-Ed Media and Tech segment experienced a 68 percent increase in volume, making it the sector with the largest yearly gain. Notable acquirers in the segment included Cengage Learning with the acquisition of Pathbrite, a web-based portfolio tool that allows students to store their completed coursework; The Gordian Group with the acquisition of Sightlines, a provider of facilities benchmarking data and expertise; and Leeds Equity Partners with the acquisition of Campus Labs; a software platform for colleges and universities to make data driven decisions ranging from accreditation to student retention to effective operations.

    “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,” said Peter Yoon, Managing Director at Berkery Noyes. “The largest area of activity in 2015 was in the corporate and professional education space as the need for continuing education and workforce development continues to expand while technology has improved the delivery and efficacy of instruction.”

    “The increased deal value derived importantly from the significant participation of strategic acquirers in 2015 deal activity,” said Mary Jo Zandy, Managing Director at Berkery Noyes. “A combination of content with technology yielded the highest transaction value premiums. Despite the recent turbulence in the capital markets, we expect the growing usage of technology in education and training to secure high transaction values in 2016.”

    Friday
    Nov062015

    EDUCATION DEAL VOLUME AND VALUE SURGES IN THIRD QUARTER 2015

    According to Berkery Noyes’ Education report for third quarter 2015, the number of deals increased 34 percent, from 91 to 122 transactions. Aggregate value rose 45 percent, totaling 6.8 billion in the third quarter. In terms of valuations, the median revenue multiple decreased from 2.4x to 2.0x, while the median EBITDA multiple declined from 11.5x to 10.3x.

    The industry’s largest strategic transaction in third quarter 2015 and year-to-date was TPG Capital and Leonard Green Capital Partners’ announced acquisition of Ellucian, which provides higher education software, services and analytics, for $3.5 billion. Ellucian also made an acquisition earlier in the year with Helix Education’s learning management system (LMS) in the second quarter. Providing some more historical background, Hellman & Friedman acquired SunGard Higher Education from SunGard Data Systems for $1.8 billion in 2011. This resulted in a merger under a new holding company with Datatel, which was rebranded as Ellucian.

    As for the combined Professional Training Technology and Services segment, volume increased 48 percent on a quarterly basis, from 29 to 43 transactions. In terms of high profile third quarter deals relating to the continuing medical education (CME) sector, Premier acquired CECity.com for $400 million; Wolters Kluwer Health acquired Learner’s Digest International for $150 million; and Relias Learning acquired Academy Medical

    “Close to 90% of K-12 education spending in the U.S. is funded by state and local governments,” said Peter Yoon, Managing Director at Berkery Noyes. “Partially spurred on by the recession, and as the state and local budgets continue to recover, administrators are becoming more open to utilizing technology based solutions to effect outcomes in a cost-effective manner. Investors, in turn, have realized the secular change transforming the sector and have dramatically increased investment in the space.”

    “The education sector has been very active of late,” stated Mary Jo Zandy, Managing Director at Berkery Noyes. “In particular, companies that are online and digital are the most attractive acquisition candidates. Many companies are readily available to be acquired by private equity firms as well, which can borrow on attractive terms to purchase them.” Zandy continued, “It’s also worth noting that the education market seems to be bifurcated. Anything that has growth is selling for a nice multiple. But trying to sell a publisher that is print only is challenging and although print is still widely used in the classroom, the long-term trends favor digital content, data analytics, and assessment tools.”

    Monday
    Aug172015

    EDUCATION DEAL ACTIVITY EXPERIENCES STRONG GROWTH IN K-12 MEDIA AND TECH

    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.”

    Wednesday
    Feb182015

    EDUCATION VOLUME, VALUE, AND VALUATIONS SHOW A ROBUST INCREASE IN 2014

    According to Berkery Noyes’ Education report for full year 2014, transaction volume improved nine percent on a year-to-year basis. Aggregate value rose 25 percent, from $9.12 billion to $11.40 billion. The median revenue multiple increased from 1.5x to 2.4x, while the median EBITDA multiple remained nearly constant at 11.1x. There was also a 34 percent rise in the number of Education deals backed by financial sponsors, from 67 to 90 transactions.

    The most active market segment in 2014 was Professional Training Services with 70 deals. Moreover, volume in the combined Professional Training Services and Technology segments increased 19 percent from 2013 to 2014.

    One notable transaction in the Professional Training segments in 2014 was media company Bertelsmann’s acquisition of Relias Learning, a Software-as-a-Service (SaaS) e-learning solutions and course content provider that serves the healthcare and senior care market, for a reported $540 million. Bertelsmann acquired Relias Learning from Vista Equity Partners, which formed Relias Learning in 2012 after combining Silverchair Learning Systems and Essential Learning.

    As for additional market segments in the report, the industry’s largest strategic transaction in 2014 occurred in the Higher Ed-Media and Tech segment. This consisted of The Advisory Board Company’s acquisition of Royall & Company, a provider of student engagement and enrollment management solutions, for $850 million. In terms of volume, Higher-Ed Media and Tech deal activity declined ten percent, returning to its 2012 level. 

    “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.”

    “In an environment of intense discourse on K-12 students’ learning, the online testing landscape varies enormously by state,” said Mary Jo Zandy, Managing Director at Berkery Noyes. “However, tests and assessments have strong momentum at the individual state level. This is the case whether the state has incorporated the SBAC or PARCC consortium tests, purchased tests and assessments from Pearson, AIR or CTB, or developed its own state test through another test company. Very few states have deferred any action.” 

    Monday
    Nov172014

    HIGH PROFILE ED-TECH DEALS ABOUND IN THE K-12 AND PROFESSIONAL TRAINING MARKETS

    Berkery Noyes’ third quarter 2014 Education report showed that the number of deals year-to-date saw a slight three percent decline compared to the corresponding timeframe in 2013. The largest quarterly increase occurred between fourth quarter 2013 and first quarter 2014, from 73 to 84 deals. Transaction value gained 35 percent on a year-over-year basis, totaling 8.04 billion thus far in 2014. In terms of valuations, the median revenue multiple increased from 1.6x to 2.5x, while the median EBITDA multiple remained nearly constant at 11.1x.

    The highest value transaction across the industry’s tech-based segments in third quarter 2014 was Heartland Payment Systems’ acquisition of TouchNet Information Systems. The provider of payments and integrated commerce solutions to the Higher-Ed market was acquired for $360 million. In addition, Heartland Payments Systems completed another industry deal in second quarter 2014 with the acquisition of MCS Software, a foodservice point-of-sale and online payment solutions company that serves K-12 schools.

    As for the Professional Training Technology segment, one high profile acquirer in third quarter 2014 was SkillSoft, which acquired SumTotal Systems, a provider of cloud-based human resources services. This followed Skillsoft’s acquisition by Charterhouse Capital Partners for $2.3 billion in first quarter 2014, which was the overall industry's largest transaction year-to-date. 

    “A confluence of factors continue to help shape the evolving education sector,” said Peter Yoon, Managing Director at Berkery Noyes. “This includes rising local and state tax revenues, the adoption of innovative pedagogical and blended learning tools, continued investment in early stage edtech companies, and an increasingly receptive buyer universe, consisting of the larger strategic players who are now able to focus a bit more externally and a surging number of financial sponsors who have interest in the space.”

    “In the K-12 sector, technology investments will continue to drive state and school district expenditures,” said 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,” continued Zandy. “In the Higher-Ed market, operational solutions that help institutions reduce infrastructure by combining various functions and also outsourcing solutions are in demand by acquirers as well.”