The report analyzes M&A activity during the first half of 2013 and compares it with the four previous six-month periods from 2011 to 2012. 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.
Deal volume improved five percent on a half-to-half year basis, from 128 to 135 transactions. Aggregate value fell 16 percent, from $4.57 billion in second half 2012 to $3.84 billion in first half 2013. Capita, a UK based provider of business process outsourcing (BPO) and professional support services, was the most active acquirer in first half 2013 with four deals in the Education Industry.
Pearson was also an active acquirer with three transactions in first half 2013. Two of these deals focused on assessment and testing software. Pearson's acquisition of Learning Catalytics was centered on cloud based learning analytics and assessment for Higher-Ed, whereas the acquisition of Exam Design focused on exam development software and hiring certification tools for businesses. Meanwhile, McGraw-Hill Education acquired ALEKS Corporation, which develops assessment software for both the K-12 and Higher-Ed markets.
In terms of notable new acquirers in the Education Industry during the past six months, Xerox acquired LearnSomething, an e-learning company that provides digital education solutions to retail companies in the food, drug, and healthcare sectors. Tablets are also beginning to play a more important role in the classroom, which is drawing the attention of some acquirers. For example, Renaissance Learning acquired Subtext, an e-reading platform that facilitates learning objectives in line with the Common Core standards. As for financial sponsors, private equity represented 24 percent of transaction volume in first half 2013. Vista Equity Partners was the most active private equity firm in the Education Industry, completing 12 transactions throughout the last two-and-a-half years covered in the report.
"The education sector is going through a period of transition," said Peter Yoon, Managing Director at Berkery Noyes. "This was ignited by the recession, which highlighted the high cost of education as well as student debt loads, poor academic outcomes, and unemployment after graduation. These factors have created an environment where many are questioning the value of the traditional education models."
Yoon continued, "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. 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 ground environment. 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."
A copy of the EDUCATION INDUSTRY M&A REPORT FOR HALF YEAR 2013 is available at the Berkery Noyes website.
About Berkery Noyes
Berkery Noyes is an independent investment banking advisory firm servicing the information industry. The firm specializes in mergers and acquisitions advisory, debt and equity financing, and financial consulting services for companies in the $10 million to $500 million range. Since its founding by Joseph W. Berkery in 1983, Berkery Noyes has worked with corporate clients to grow through acquisition, divest non-core assets, and maximize shareholder returns through strategic transactions and restructurings. For private owners, Berkery Noyes helps create liquidity and execute timely exit strategies that achieve their personal and professional objectives. The firm's research teams publish acquisition activity in the respective sectors they follow on MandAsoft.com.
Securities services are offered through Berkery Noyes Securities, LLC. For more information, visit www.berkerynoyes.com.
SOURCE Berkery Noyes