Acquisitions in the Education and EdTech Sector in 2023

The following is a summary of mergers and acquisitions transactions in the education and edtech sectors in 2023.  We try to update this post every week as we close more deals and learn of other deals that have closed in the sector.

The education and edtech sectors have seen a marked slowdown in activity so far in 2023.  This is following a significant drop in valuations in 2022 as edtech companies no longer benefited from the COVID boost.  That said, valuations for small, medium, and large edtech companies are back to their normal pre-COVID levels and are still significantly higher than valuations for traditional businesses, with the average small and medium-sized edtech companies being valued at approximately 3X trailing twelve-months revenue.

Acquisitions in the education and edtech sectors in 2023 so far

Below is a summary of the mergers and acquisition transactions in the education and edtech sectors so far in 2023.  This list is updated every two weeks.

In November, Byju announced that it is in talks to sell Epic, its digital reading platform based in the U.S., for $400 million. The potential buyer was not disclosed.

Academic Partnerships has agreed to acquire Wiley’s online program management (OPM) division for approximately $110 million.

DaySmart, a business management company, acquired Sawyer, a business management company focused on the K-12 extracurricular activities market. The amount was not disclosed.

Flywire, a Boston-based software and payments company, acquired StudyLink, a student admissions company in Australia, for an undisclosed amount.

GMB Architecture and Engineering acquired Up and Up, a marketing firm focused on higher ed, for an undisclosed amount.

Enrollify, which offers professional development programs for higher ed marketing professionals, was acquired by Element451, a higher ed student engagement platform.

DaySmart, a business management software company, acquired Sawyer, which provides scheduling and payment solutions for K-12 extracurricular activities. The purchase price was not disclosed.

In October, Instructure,  the edtech company that developed Canvas, a web-based learning management system, and MasteryConnect, an assessment management system, agreed to acquire Parchment, a digital credential company, for $835 million.

Rise In, a Web3 education platform, acquired the Web3 edtech company BlockBeam.

BibliU, a London, UK-based EdTech company, acquired Texas Book Company, a Texas-based industry leader in delivering learning materials to higher education institutions across the U.S.

Accelerate Learning, which produces STEM curriculum, acquired Kide Science, an online library of play and story-based lesson plans and professional development materials for kindergarten through 3rd grade teachers.

Discovery Education, a K-12 digital curriculum and learning services provider backed by Clearlake Capital, acquired DreamBox Learning, a provider of online software for math and reading education, for an undisclosed amount.

The Malvern School, a chain of early childhood education centers, was acquired by Busy Bees, an international early childcare provider that’s expanding in North America.

Ellucian, a leading provider of school management solutions, announced that it will acquire Tribal Group plc, a UK-based services and software provider.

In September, Meazure Learning, a test developer, acquired Examity, a leading online exam proctoring service,  for an undisclosed amount.

A Chicago-based private equity firm, Golden Vision Capital Americas, acquired the educational software company Hawkes Learning for an undisclosed amount. Hawkes created the first adaptive learning educational software with embedded expert systems – the precursor to AI. Their comprehensive suite of innovative course materials encompasses a wide range of subjects, including Mathematics, English, Science, Statistics, Business, and Humanities.

Babbel, a language learning platform, acquired the browser extension Toucan to further expand its learning ecosystem with a browser extension. The amount was not disclosed.

FullBloom, a provider of special education instruction and interventions, acquired a counseling support company, EmpowerU, for an undisclosed amount.

QuantaSing, the Beijing-based learning and development provider, acquired Kelly’s Education, a Hong Kong-based online learning platform. The amount wasn’t disclosed.

In August, Presence, a K-12 teletherapy company, acquired RemoteHQ’s software platform for an undisclosed amount.

Clearlake Capital-backed Discovery Education, a K-12 digital curriculum and learning services provider, agreed to purchase Dreambox Learning, an edtech provider of online software for math and reading education.

SchoolStatus, a K-12 communications company, acquired the school engagement platform ClassTag. The amount wasn’t disclosed.

Noodle, a higher ed enrollment and infrastructure growth company, acquired Meteor, a higher ed-focused upskilling company, for an undisclosed amount.

Ascent, an outcomes-based leading and student success company, acquired the professional development platform Ampersand for an undisclosed amount.

Sallie Mae, the student lender, acquired “key assets” of Scholly, a scholarship search app, for an undisclosed amount.

Student data validation software provider Level Data acquired GlimpseK12, a curriculum measurement tool. The purchase price was not disclosed.

Kahoot, the publicly traded company that developed the popular online quiz tool was acquired by Goldman Sachs’ Private Equity for $1.2 billion in an all-cash deal.

In July, Edtech giant PowerSchool announced that it plans to acquire SchoolMessenger, which offers a range of voice, text, and online tools to help K-12 schools notify parents and students, for approximately $300 million.

Newsela, a K-12 content platform, acquired the instruction and assessment platform Formative for an undisclosed amount.

In June, Axcel Learning, an education acquisition business with financial backing from Alpine Investors, acquired ExitCertified, an online training company focused on upskilling and reskilling individuals, teams, and organizations.

In May, Learneo, the company that owns CliffNotes, Course Hero, and Quillbot, acquired Barnes & Noble Digital Student Solutions for $20 million.

The learning management system, Go1 acquired the book summarizing subscription service Blinkist.

The University of Idaho announced last week that it intends to acquire the giant for-profit University of Phoenix, with 85,000 students, for $550 million.

Specialized Education Services, a K-12 services provider, acquired Illinois-based special education school NewHope Academy for an undisclosed amount.

Five Arrows, the alternative assets arm of Rothschild & Co., purchased  n2y, a provider of comprehensive, technology-powered solutions for students with unique learning challenges, from The Riverside Company, a private investor.

In April, Raptor Technologies, a K-12 school safety software provider, acquired SchoolPass, a cloud-based solutions provider. The amount was not disclosed.

In March, Renaissance, a preK–12 education technology provider, acquired GL Education, a provider of formative assessments for schools.

Class Technologies Inc., a virtual software provider, acquired CoSo Cloud, a digital learning company, for an undisclosed amount.

Five Arrows, the alternative assets arm of Rothschild & Co, has acquired n2y, a provider of education technology solutions for students with learning challenges.

Docebo, a corporate training and learning platform with AI capabilities, has acquired PeerBoard, a knowledge-sharing platform.

Brightwheel, an all-in-one early education platform, has acquired Experience Early Learning, a research-based early education curriculum provider.

Excolere Equity Partners acquired a controlling interest in EPS School Specialty, a leading developer of curriculum products and services that enhance literacy and math skills for K-12th grade students, particularly those who are two-plus years behind grade level.

Parchment, based in the US, acquired the higher-ed platform Quottly for an undisclosed amount.

Voxy, based in Great Britain, acquired language-learning startup Fluentify for an undisclosed amount.

Carnegie, a leading provider of innovative marketing and enrollment solutions in higher education, has completed two acquisitions. In January of this year, Carnegie acquired the National Small College Enrollment Conference (NSCEC), the leading conference dedicated to serving the needs of small colleges. And secondly, in March, Carnegie acquired CLARUS Corporation, a leading provider of digital marketing solutions for community and technical colleges.

Teaching Channel, a provider of online teacher education, has merged with Learners Edge and Insight ADVANCE. The terms were not disclosed.

Highlights for Children, publisher of a magazine for kids and other media, acquired Tinkergarten, which provides play-based outdoor learning experiences to children six months to 8 years old.

UWorld, which provides learning tools to help students prepare for high-stakes tests, has acquired Wiley’s Efficient Learning test prep portfolio.

Vasil Jaiani, a data management company executive, has acquired two interactive educational websites, Visual Fractions and Worksheet Genius.

XL Learning, a provider of a learning resources platform for K-12 students, acquired Teachers Pay Teachers, a marketplace for teachers to sell lesson materials to each other.

Savvas Learning Company acquired Whooo’s Reading, a gamified reading platform driven by AI, for an undisclosed amount.

Atairos, an investment company, agreed to acquire LifeLabs Learning, an edtech platform that provides upskilling programs for managers.

Bain Capital Double Impact, LP acquired Meteor Education, LLC, from Saw Mill Capital Partners. Meteor is the leading provider for the design, delivery, and implementation of modern environments for K-12 schools, operating at the intersection of learning environments and learning experiences.

TPG’s Rise Fund picked up a controlling stake in the Malaysia-based Asia Pacific University of Technology and Innovation in a deal worth $300 million.

Perdoceo, which owns Colorado Technical University and American InterContinental University System, acquired the software engineering bootcamp Coding Dojo for $53 million.

Tutoring provider Paper acquired the college-readiness tool MajorClarity. The terms of the deal were not announced.

The Riverside Company, a global private investor focused on the smaller end of the middle market, has invested in Eduthings, a software solutions provider for Career and Technical Education (CTE) administrators, teachers, and students to track outcomes and monitor overall program effectiveness. Eduthings is an add-on investment to Riverside’s platform, iCEV, a leading developer of SaaS-based digital curriculum, instructional materials, and industry certifications for the CTE market.

Riverside Company acquired Human Element Solutions, LLC (Element H), a provider of live events, video, creative, and digital content solutions that optimize audience engagement within the pharmaceutical, biotech, and medical device/diagnostic industries.

U.S. News & World Report acquired CollegeAdvisor.com, a college admissions platform, from NCSA College Recruiting. The amount was not disclosed.

Study.com, an online learning platform, acquired the tutoring company Enhanced Prep for an undisclosed amount.

Accelerate Learning, a K-12 STEM curriculum provider was acquired by Providence Equity Partners. The terms were not disclosed.

Imagine Learning, one of the largest digital curriculum providers acquired Winsor Learning, whose staff will join Imagine Learning. The acquisition was announced as part of a new push into special education. The amount was not disclosed.

MSB School Services, a K-12 special education software provider, was acquired by Craftsman Capital, a private equity firm, for an undisclosed amount.

Thesis, a cloud-based administration software system for higher ed, was acquired by the private equity firm SilverTree. The amount wasn’t disclosed.

The student engagement platform Learning Explorer acquired Mosaic, the assessment system from ACT. The amount wasn’t disclosed.

ParentSquare, a K-12 engagement platform developer, acquired Gabbart Communications, a school communications tool. The amount wasn’t disclosed.

Online program management company Noodle acquired the South African-based Hubble Studios, a digital content developer, for an undisclosed amount.

Edustaff, a K-12 staffing company, announced it received a non-controlling investment from the private equity firm Public Pension Capital.

We will update this post every two weeks as we close more deals in the education and edtech sectors and learn about other transactions.

Read our previous article for information about mergers and acquisitions deals in the education and edtech sectors that closed in 2002.

About the Author and Jackim Woods & Co.

Rich Jackim is an education industry investment banker, educational industry entrepreneur, and former mergers and acquisitions attorney.

For the last 25 years, Rich has been providing boutique investment banking services to middle-market companies in the education sector.

Rich also founded a successful training and certification company called the Exit Planning Institute, which he sold to a private equity group in 2012.

Rich is also the author of the critically acclaimed book, The $10 Trillion Dollar Opportunity: Designing Successful Exit Strategies for Middle Market Businesses.

Jackim Woods & Co offers skilled mergers and acquisitions advisory services to privately owned schools, colleges, and EdTech companies in both sell-side and buy-side transactions. Jackim Woods & Co has arranged over 100 successful transactions, ranging from less than one million to more than eighty million dollars in value.

If you own an education-related business and are interested in exploring your options, I would welcome an opportunity to speak with you. Feel free to contact me at 224-513-5142 or rjackim@jackimwoods.com.

Kahoot Goes Private for $1.7 Billion in All Cash Deal

The popular education game developer Kahoot has gone private in a $1.7 billion all-cash deal.

At that valuation, the buyers of Kahoot, an Oslo-based developer that built and runs the popular quiz tool, paid a significant premium. But it’s still below the company’s COVID-era valuation, which valued the company at closer to $6 billion.

The Kahoot buyer group was led by Goldman Sachs’ private equity arm, with General Atlantic, KIRKBI Invest A/S (of LEGO Group), and Glitrafjord named as major investors.

Kahoot was listed on the Oslo Stock Exchange and went public in 2021. That same year, Kahoot acquired Clever, a platform developer that streamlined the edtech experience for schools, and according to their websites,  says it serves half of all K-12 students in the U.S.

The premium price paid for Kahoot is an exception to the rule these days, as edtech companies find themselves in a more conversation valuation climate than the valuations paid during the pandemic. The visions many investors had of unlimited edtech growth, which fueled crazy valuations like Byju’s, have fallen apart, says Rich Jackim of Jackim Woods & Company, and valuations have returned to the more normal valuations seen for other SaaS companies.

In Jackim’s estimation, the new owners are likely to draw Kahoot and Clever farther from their roots, which raises questions about what the future direction of the company will be and whether Kahoot will continue to offer the Clever platform to schools for free for much longer.

If you own an education, training or edtech company and would like to explore your options, please contact Rich Jackim at rjackim@jackimwoods.com or 224-513-5142.

Innovative Edu Lead Gen Program for Career Colleges

Increase Enrollment with Qualified Student Leads and Scholarships

Rich Jackim and Jackim Woods & Co are proud to partner with Educapital Foundation to create opportunities for underserved students to pursue career-focused higher education opportunities.  We do this by providing them with innovative scholarships and introducing them to schools and colleges that can help them break the poverty cycle by training them for high-paying, in-demand careers.

Overview of the Educapital Lead Generation Program

Who is Educapital Foundation?

Educapital Foundation is an innovative 501(c)3 nonprofit foundation(www.edu-capital.org). Educapital is the only national foundation to focus its efforts on trade school education for the country’s most underserved, impoverished students.

What Does Educapital Do?

Educapital Foundation partners with leading social media influencers nationwide to create scholarships for students and campaigns to promote career-focused higher education. In 2022, Educapital awarded 3,700 scholarships and grants to students who completed or were enrolled in Educapital’s partner school programs.

Why Does Educapital Do It?

Educapital’s mission is to eliminate poverty through education and access to capital.

How Does Educapital Generate Leads?

Educapital runs marketing campaigns with leading social media influencers that reach over 20 million social media followers each month.

Where Does Educapital Source its Leads?

Educapital sources its leads using innovative social media campaigns on Tiktok and Instagram, targeting low-income and underserved students ages 18-24.

Who Does Educapital Serve?

• Students seeking to improve their lives by:

– Increasing their awareness of and access to good-paying careers
– Providing them with scholarships to attend a career college
– Introducing them to colleges that fit their needs

• For-profit career and technical schools that:

– Provide on-ground, hybrid, and online programs
– Offer certificate or degree programs
– Provide students with access to other types of financial aid, including Title IV financial aid programs and state & county grant programs

The Innovative Educapital Lead Generation Program

Tailored Approach: Educapital tailors its influencer marketing campaigns to fit the enrollment needs of its partner schools, including the program, target demographics, and geographical area.

Huge Reach: Some of Educapital’s previous social media campaigns have generated over 20,000 verified leads.

Low Pricing: Educapital provides qualified leads to our partner schools at $40-$50 per lead.

Low Minimum Order: Start with a low minimum order of 500 leads.

Volume Pricing: The pricing per lead goes down as volume goes up.

Performance-based Scholarships: Educapital tracks each student’s performance and provides performance-based scholarships to students provided the student meets agreed-upon academic standards.  Learn more about performance-based scholarships here.

Educapital’s Unique Win-Win-Win Business Model

Educapital’s innovative business model is a unique example of creating a win-win-win scenario for everyone involved, from students to influencers and donors to career schools and colleges.

Students benefit from having a non-profit entity that is focused on helping them break the poverty cycle through a combination of scholarships, grants, mentoring, and introductions to careers colleges that fit their needs. All of the proceeds from selling leads are re-invested in Educapital’s student scholarship fund. Each student, on average, receives over $1,000 in scholarships from Educapital.

Influencers benefit by promoting a non-profit public-service message about the value and benefits of career education and being able to write off their typical fee as a donation to Educapital’s 501C3 foundation.

Corporate donors and employers benefit by promoting career education and funding scholarships for students in fields that directly benefit these donors.

Career colleges and schools benefit by getting a steady stream of qualified leads for their programs.  As an added benefit, when a lead generated by Educapital becomes a student and enrolls, they receive an Educapital-funded performance-based scholarship that helps the school or college’s 90/10 ratio.

Click Here to Read about Educapital Foundation in the News

To learn more and become a Partner School or Donor, contact

Rich Jackim
Jackim Woods & Co. rjackim@jackimwoods.com
Cell: 847-682-4997

Selecting the Right Expert Witness Can Win Your Case

Proven and Experienced Expert Witness Services

If you are representing a plaintiff or defendant in litigation, selecting the right expert witness can make or break your case. Knowing how to pick the right expert is key to obtaining a successful outcome.

The right expert witness in the mergers and acquisitions industry goes beyond just ensuring that the witness has the right education and training to calculate financial and economic damages. It is equally important that the expert understands the operations, finances, and practices in the business brokerage and M&A industry and is familiar with the issues that affect privately held businesses and professional practices.

Expert Witness Areas of Expertise

• Business valuations of privately owned businesses
• Franchisor and franchisee disputes
• Calculation of economic damages
• Purchase price allocation
• Valuation of personal goodwill in professional practices
• Earnout disputes
• Lender or creditor disputes
• Shareholder disputes
• Divorce settlements
• Bankruptcy
• Valuation of intangible assets like fitness center membership lists, brand value, or goodwill

Selecting the Right Expert to Help You Win Your Case

Expert witnesses are a dime a dozen, but when you need an expert with a very specific set of skills or experience, like expertise in business valuation and mergers and acquisitions issues related to buying and selling privately-held companies, clients and their law firms, select Jackim Woods & Company.

When selecting an expert witness in the mergers and acquisitions space, it is critical that you and your attorney know exactly what skills and experience your expert witness needs to have.  Richard Jackim, the founder and managing partner at Jackim Woods & Co, is an experienced investment banker and a retired mergers & acquisitions attorney.  He has been involved in over 100 mergers and acquisitions in over 20 different industries.  He has performed over 290 business valuations and served as an expert witness in dozens of litigation matters.

Rich Jackim has the credentials and experience you need to win your case.  Rich earned his law degree with honors from Cornell University Law School and his Master of Business Administration with honors from the Kellogg Graduate School of Management at Northwestern University.  Rich also founded the Exit Planning Institute, a training and certification company that is the thought leader in the field of exit planning.  He developed and taught the Certified Exit Planning Advisor program offered through the Booth School of Business at the University of Chicago. He is also the author of the critically acclaimed book, The $10 Trillion Opportunity: Designing Successful Exit Strategies for Middle Market Business Owners.

A copy of Rich Jackim’s expert witness curriculum vitae is available here.

Communication Skills Win Cases

In addition to the right credentials, an effective expert witness must be able to communicate in a clear, concise, and articulate manner.  Your expert witness must come across as knowledgeable, accessible, and self-assured without being pedantic. The ability to build rapport with the judge and jury is essential.  When both sides present strong, technically sound positions, a judge or jury often favors the side whose expert was able to communicate the issues more clearly or convincingly. Richard Jackim is a personable and knowledgeable expert and has a unique ability to present complicated issues in a clear and concise manner that connects with judges and juries.

We offer clients and their attorney’s a free, one-hour initial assessment of their case so they can determine if our approach and communication style meets their needs.

Credibility Wins Cases

An expert must also be polished and unflappable in the face of tough, sometimes seemingly stupid questions from opposing counsel. An expert witness must be able to answer questions about his background and experience to withstand a Daubert challenge. It’s critical for the attorney to have an upfront conversation with the expert to ensure they are of good character; have worked for both plaintiffs and defendants; learn about any positions they may have taken that are adverse to the position in this case, whether through testimony or through publications of an article; and whether they have ever failed a  Daubert challenge.

Richard Jackim’s top-tier academic credentials, plus his 30 years of business experience, including practicing mergers & acquisitions law and leadership positions at several national investment banking firms, provide him with unique qualifications as an expert witness.  His opinions are based on market realities and actual transactions, not just financial theories.  As a result, he can speak to industry best practices and what is “market.”

Practical Industry Experience Wins Cases

It’s also important that you select an expert witness who has industry-specific experience as well as experience testifying in depositions, hearings, and at trial.  This experience enables them to have a clear understanding of the business being evaluated, gives them an advantage by being able to understand how litigation and depositions work, allows them to anticipate the kinds of questions opposing counsel might ask, and helps you and your attorney understand the key weaknesses in the opposing expert’s presentation.

Rich Jackim has worked with hundreds of clients in over 20 different industries, including career and vocational education, sports & fitness, manufacturing, professional services, trucking and transportation, and the wholesale/distribution sectors.

He has consulted on over thirty-two different litigation matters, testified in six depositions, and provided expert witness testimony in two trials.  His experience as a valuation and economic damages expert witness has helped the parties settle over 80% of cases without going to trial. On the two matters that did go to trial, Jackim’s clients won both matters on the merits, with the judge stating in one case that Jackim’s testimony was clear and convincing and could not be refuted by the opposing expert witness.

Rich has worked with clients of all sizes, from individuals like business owners, doctors, and other professionals negotiating a divorce settlement to calculating economic damages for large organizations, like Rogers Sports & Media Group in Toronto and Applebee’s restaurants.

The Right Expert Witness Wins Cases

We encourage clients and their attorneys to contact us as early as possible. Early collaboration provides us with an opportunity to help you develop your litigation strategy. Ideally, we would be engaged early enough to assist in formulating requests for discovery. As a well-versed damages expert, Rich Jackim knows what information is needed to ensure a thorough and supportable analysis. In addition, engaging us early in the process allows time to help you think through the issues and help develop the most cost-effective strategy to present your case.

In the event we find we cannot support your position based on the information provided, knowing this early on can give you time to either revise your strategy or find a different expert. Remember, unlike attorneys who are advocates for their clients, the best expert witnesses should be a neutral third party whose professional opinion is objective and unbiased.  Jackim has built an impeccable reputation by providing clients and their attorneys with honest, objective advice based on the available facts and his years of investment banking, law practice, and business ownership experience.

A copy of Rich Jackim’s expert witness curriculum vitae is available here.

For a free initial consultation, please contact Richard Jackim at rjackim@jackimwoods.com or at 224-513-5142.

Coding Bootcamp Acquisitions: 2014 to 2022

This article provides an overview of the publicly announced tech and coding bootcamp acquisitions since 2014.

This article includes the following sections

• Introduction
• Understanding the Bootcamp Market
• Valuing Coding & Cybersecurity Bootcamps
• 2022 Bootcamp Acquisitions
• 2021 Bootcamp Acquisitions
• 2020 Bootcamp Acquisitions
• Summary of Tech Bootcamp Acquisitions
• Notable Coding & Cybersecurity Bootcamp Acquisitions

Introduction

Since the first coding bootcamp acquisition in June 2014, we’ve seen dozens of coding bootcamps get acquired by a wide range of companies, from for-profit education companies (like Capella Education) to co-working companies (like WeWork) and other coding bootcamps (like Thinkful + Bloc)!

With rapid market growth in the bootcamp industry, other types of for-profit education companies are taking note, including traditional vocational schools and 4-year colleges and universities.

Many of these coding bootcamp acquisitions should come as no surprise. Some have been very successful, with the programs going on to significantly increase the number of physical locations and online course offerings.

In addition, as coding bootcamps mature, we are beginning to see bootcamps get acquired by well-known companies for increasingly large sums.  For example, General Assembly was acquired for $413 million, and Trilogy Education for $750 million!

As education industry specialists, Jackim Woods & Co maintains a list of bootcamps acquisitions to track who’s buying whom and how bootcamps and how edtech companies are valued.  As we were compiling the 2022 transactions, it occurred to us that others might be interested in this information as well, so we thought we’d share it with you.  We plan to update this list each year with publicly announced deals involving coding and cybersecurity bootcamps.

Understanding the Coding Bootcamp Market

If you are interested in learning more about the $2.3 billion tech bootcamp sector, please see our article Understanding the Tech Bootcamp Market.

Valuing Tech & Coding Bootcamps

If you’re interested in understanding how bootcamps are valued, please see our article How to Value a Bootcamp – Example and Multiples.

You might also enjoy reading our related article, How to Value an EdTech Company – Multiples & Example.

2022 Coding Bootcamp Acquisitions

2022 was a big year for tech boot camp dealmaking.

• 2022 started off with a bang when Skillsoft, an online course provider, acquired Codecademy in January for $525M.
• Then, in February, Centage Group acquired InfoSec, the leading provider of tech-related certification prep courses, for $190 million.
• The year also ended with two notable transactions when Digital Intelligence Systems acquired Grand Circus for an undisclosed amount, and Simplilearn (a Blackstone Group-backed company) acquired Fullstack Academy.  Fullstack Academy was estimated to be valued at $55 million.

2021 Coding Bootcamp Acquisitions

• ThriveDX (HackerU) acquired Cybint for a reported $50 million.
• Brainstation acquired Wyncode in January 2021
• SNHU acquired Kenzie Academy in March 2021.

2020 Coding Bootcamp Acquisitions 

• K12, the publicly traded online K-12 school and education management provider, paid $165 million in cash to buy Denver-based coding bootcamp Galvanize. For K12, the deal means adding more coding curricula for students in its Destinations Career Academies, which offers high school and career training program hybrids. For Galvanize—which is also Hack Reactor—the deal provides additional funding to grow its corporate learning business, add more physical locations, and increase its services to the military.
• K-12 acquired Tech Elevator for $24M
• Carrick Partners acquired Flatiron School from WeWork for an undisclosed amount.

Summary of Coding Bootcamp Acquisitions

The following is a summary of the publicly announced acquisitions of tech-related bootcamps since 2014.  Keep in mind that only large transactions are typically announced to the public.  We estimate that 75% of the bootcamp transactions each year are small and are not announced to the public.

 Notable Coding Bootcamp Acquisitions

The first reported acquisition of a coding bootcamp was Kaplan Test Prep’s purchase of Dev Bootcamp in June 2014. Although this was the first acquisition in the coding bootcamp industry, it wasn’t Kaplan’s first foray into coding bootcamps.  Kaplan launched its data science bootcamp Metis in early 2014. In 2017 Kaplan integrated Dev Bootcamp into Metis and retired the Dev Bootcamp brand.

Galvanize acquired Zipfian Academy in November 2014. Zipfian Academy was one of the first coding and networking bootcamps in the US. After one year of success, it was acquired by the Denver-based education & coworking powerhouse Galvanize.

ReactorCore acquired MakerSquare in January 2015. After ReactorCore was acquired by MakerSquare, ReactorCore’s first major move was to acquire Chicago-based mobile bootcamp Mobile Makers in September 2015.

The Iron Yard acquired Apollo Education as a “strategic investor” in July 2015. As of October 13, 2017, The Iron Yard is no longer operating.

Strategic Education, Inc. (SEI), the publicly traded holding company for Strayer Education, Inc., acquired New York Code & Design Academy in January 2016. New York Code & Design Academy is no longer operated as a separate brand.

Capella Education acquired Hackbright Academy in April 2016 and shortly afterward acquired DevMountain. Capella Education was later acquired by SEI.

WeWork acquired Flatiron School in October 2017, then in May 2018, WeWork also acquired MissionU.

A few months later, Flatiron School (now a part of WeWork) acquired the UX design bootcamp, Designation, and the cybersecurity bootcamp, SecureSet Academy.

After growing too quickly and facing financial challenges, WeWork sold off most of its assets, including selling Flatiron School to Carrick Partners in June 2020.

In a classic roll-up strategy, Thinkful began acquiring several of its smaller competitors to boost its value.  Starting in 2017, Thinkful acquired Viking Code School and The Odin Project. Then, in April 2018, they acquired Bloc.  When Thinkful reached its desired valuation, it sold to Chegg for $100 million.

Adecco, the large tech staffing company, acquired General Assembly in April 2018 for $413 million. According to Axios, General Assembly had been valued at $440 million. Between 2011-2015, General Assembly raised approximately $120 million in VC funding and earned $100 million in revenue in 2017.  That was the largest bootcamp deal at that time.

However, two years later, 2U acquired Trilogy Education in April 2019 for a record-breaking $750 million!

In early 2022, Centage Group acquired InfoSec, the leading provider of tech-related certification prep courses, for $179 million.

Toward the end of 2022, IT staffing provider Digital Intelligence Systems LLC (Disys) acquired Grand Circus, a virtual coding bootcamp provider that also connects talent to employers.

Outlook for Coding Bootcamp Acquisitions

Many industry analysts are pessimistic about the future of coding bootcamps because of the rapid advances in artificial intelligence and the ability of AI to write relatively sophisticated code.  We do not share that pessimism.  AI will still need talented coders to break projects down into the components that an AI can handle, then direct and instruct the AI about the project parameters, and finally review the AI’s work product and make necessary tweaks and adjustments.  So rather than reducing the demand for programmers, we expect the nature of the course to change and evolve as the technology sector changes and evolves.

About the Author and Jackim Woods & Co.

Rich Jackim is an education industry investment banker, educational industry entrepreneur, and former mergers and acquisitions attorney.

For the last 25 years, Rich has been providing boutique investment banking services to middle-market companies in the education sector.

Rich also founded a successful training and certification company called the Exit Planning Institute which he sold to a private equity group in 2012.

Rich is also the author of the critically acclaimed book, The $10 Trillion Dollar Opportunity: Designing Successful Exit Strategies for Middle Market Businesses.

Jackim Woods & Co offers skilled mergers and acquisitions advisory services to privately owned schools, colleges, and EdTech companies in both sell-side and buy-side transactions. Jackim Woods & Co has arranged over 100 successful transactions, ranging in value from less than one million to more than eighty million dollars.

If you own a tech boot camp or another education-related business and would like to explore your options, I would welcome an opportunity to speak with you. Feel free to contact me at 224-513-5142 or rjackim@jackimwoods.com.

Mergers and Acquisitions in the Education Industry in 2022

This post provides an overview of mergers and acquisitions activity in the education and edtech sectors in 2022

The education sector took some significant twists and turns when the COVID-19 pandemic changed the world. We saw a surge of new users, and new tools, around online learning; but we also saw people and organizations in 2020 and 2021 rethinking how to get the best out of learning environments overall. Now that COVID is largely behind us, 2022 is a year to take stock of how different education related companies evolved and grown.

McGraw Hill acquired Boards & Beyond, a provider of on-demand video libraries and comprehensive online resources for medical students, for an undisclosed amount.

Global University Systems acquired FutureLearn for an undisclosed amount.

GoStudent acquired Studienkreis for an undisclosed amount. This is GoStudent’s 4th acquisition.

The Riverside Company, a private equity group, acquired Applied Educational Systems (AES), a provider of digital career and technical education content for K-12 schools and career centers. AES is an add-on to Riverside’s iCEV platform, a leading developer of SaaS-based digital curriculum, instructional materials and industry certifications.

Universal Technical Institute, a provider of vocational education and  skilled trades programs, acquired healthcare-related higher ed provider, Concorde Career Colleges, Inc., for $50 million.  Concorde Career Colleges has 16 brick and mortar campuses and roughly 11,200 enrolled students in its allied-healthcare programs.

Solutions provider Follett School Solutions acquired the library management system Access-It Software Ltd.

Apogee, a company that offers technology services for higher ed, acquired Cumulus Technology Services, a cloud services consultancy.

The education communications and analytics provider SchoolStatus acquired Smore, a Tel Aviv-based K-12 email newsletter provider that’s widely used in the U.S.

Publisher McGraw Hill acquired the on-demand video library for medical students, Ryan Medical Education, LLC d/b/a Boards and Beyond. The amount was not disclosed.

As mentioned above, London-based FutureLearn was acquired by Global University Systems, a global for-profit higher ed provider based in the Netherlands.

California-based Mattel, one of the biggest toy sellers in the world, acquired Caribu, a digital reading app for families, for an undisclosed amount.

Higher education solutions provider Top Hat acquired STEM learning platform Aktiv Learning.

University Headquarters acquired Discover Early Childhood EDU, an informational guide about degree offerings.

BiC, one of the world’s biggest pen sellers, acquired Advanced Magnetic Interaction, a company that’s focused on “augmented” human-computer interaction.

Learnsoft, a learning management system provider, raised $16.7 million in Series A funding led by Elsewhere Partners.

Discovery Education, a digital edtech platform provider, acquired Pivot Interactive, which has a library of interactive educational science videos. Discovery has private equity backing from Clearlake Capital, and it also acquired DoodleLearning earlier in the month.

EarlyDay, an early childcare education career marketplace, raised $3.25 million.

The children’s publisher Scholastic acquired Learning Ovations, which runs a literary assessment and instructional system.

Edlio, a K-12 communications technology company, acquired SchoolInfo, a mobile app creator for schools.

LumiQ, a Canada-based company that runs a podcast for training chartered professional accountants, raised $5 million for expansion in the U.S.

Roper Technologies, Inc., announced it has reached an agreement to acquire the school administration software provider Frontline Education in a transaction valued at $3.725 billion.

Akili Interactive, which is developing a video game treatment for pediatric ADHD, raised $163 million in a merger with the special purpose acquisition company (SPAC) Social Capital Suvretta Holdings Corp.

Upkid, an on-demand marketplace for childcare centers and teachers, raised $1.7 million in a pre-seed round.

Outcome Group, Inc., an education financing company, announced it has received new debt facility from Variant Investments, LLC, to expand its education portfolio.

Alchemy, a Web3 developer, acquired ChainShot, a coding bootcamp company, for an undisclosed amount.

Renaissance Learning, an educational software services company, acquired Illuminate Education for an undisclosed amount, according to an email sent to Illuminate customers.

Discovery Education, a digital learning platform, acquired the UK-based math and language arts product provider DoodleLearning for an undisclosed amount.

Vsauce’s Curiosity Box subscription service was acquired by science subscription provider MEL Science. It reportedly closed for $12 million.

The future-of-learning private equity firm Achieve Partners acquired Helios Consulting, a certified Workday advisory partner, to build out its apprenticeship programs.

Cybrary, a cybersecurity and IT career development company, raised $25 million in Series B funding.

Territorium, a skill acquisition edtech company, closed $4.4 million in seed funding.

Creative Galileo, an early learning platform, raised $7.5 million in Series A funding.

Pearl, leading research backed, all-in-one tutor management platform, announced its seed fundraising has passed $4 million.

Arist, a microlearning platform, raised $12 million in Series A funding.

APDS, a public-benefit corporation whose advanced career readiness platform offers career training to incarcerated people, raised $7 million in Series C funding.

Class Technologies announced it has closed its acquisition of Blackboard Collaborate.

Kangarootime, an early childhood education software management company based in Buffalo, NY, closed $26 million in Series B funding.

Coding Dojo, a coding boot camp company, raised $10 million. The Bellevue, Washington-based organization trains software engineers both in-person and online and has experienced more than 100% year-over-year growth over the last two years.

upGrad, a Mumbai-based “unicorn” and test-prep company, doubled its valuation after a $225 million funding round. It’s now valued around $2.25 billion. The nonprofit Educational Testing Service was involved in the funding round.

Elevate K-12, the leading provider of high-quality live-streaming instruction for US K-12 classrooms, raised a Series C $40M round of funding led by venture capital firm General Catalyst.

Velocity Career Labs, a startup that wants to create a blockchain-based platform to manage employee’s credentials, raised $6.5 million in funding.

Multiverse, an apprenticeship facilitator, founded in London and now co-headquartered also in New York — has closed a Series D of $220 million, with its post-money valuation coming in at $1.7 billion. StepStone Group (not to be confused with recruiting platform StepStone) and previous backers Lightspeed Venture Partners and General Catalyst all co-led this round, with Founders Circle Capital and past backers Audacious Ventures, BOND, D1 Capital Partners, GV and Index Ventures also participating.

Cambly, a language learning app, raised $60 million in Series B funding, which is encouraging because language learning apps are a rarity in the VC-backed consumer tech space because they have struggled to make money.

Prenda, a K-8 micro-school company, announced a $20 million Series B funding round. The Series B is being led by Seven Seven Six (776), Alexis Ohanian’s firm, with strong participation from edtech-focused VC Learn Capital, Modern Venture Partners, Peak State Ventures, and the companies original angel investors also participating.

Achieve Partners acquired a majority stake in Boclips, a company that curates educational videos.  Boclips works with publishers and education providers worldwide to enrich learning with the world’s best educational videos and podcasts. Boclips is the trusted destination for rich media that are vetted for quality, sourced from leading creators, and curated specifically for education.  Achieve Partners is engineering the future of learning and earning by investing in cutting edge technologies and novel business models to bolster skill development and secure the future of work for millions of Americans.

IXL Learning, a learning platform company, acquired Curiosity Media, which develops language learning services.

BibliU, a learning platform, announced it has raised $15 million in funding. All existing institutional Series A investors – Stonehage Fleming, Oxford Science Enterprises, Guinness Ventures, and Nesta Impact Investments – participated in the round.

Beable Education, an online literacy recovery platform, acquired Readorium, a leading provider of educational software that teaches reading comprehension skills through science text differentiated to students’ reading levels.

Go1, a hub of on-demand corporate training resources, announced that it raised more than $100 million in a new round of funding, bringing its total market valuation to over $2 billion.  The funding was co-led by AirTree Ventures and Five Sigma, with SoftBank Vision Fund 2, Salesforce Ventures, Blue Cloud Ventures, Larsen Ventures, Scott Shleifer and John Curtius from Tiger Global, TEN13, M12 (Microsoft’s venture fund), Madrona Venture Group, SEEK and Y Combinator also participating.

Riverside Insights, a leading developer of research-based assessments and analytics, today announced its acquisition of Aperture Education, the leading provider of research-based social and emotional learning (SEL) assessments for K-12 schools. With more than 65 years of combined research and SEL experience, Aperture sets the standard for research-based SEL assessment solutions.

Elsevier, a global leader in research publishing and information analytics and part of RELX, has closed the acquisition of Interfolio, a provider of advanced faculty information solutions for higher education, headquartered in Washington DC, US. For over 20 years, Interfolio has supported academics, researchers, higher education institutions and funders. Interfolio’s portfolio includes Faculty Information System (FIS), Dossier, and Researchfish.

India-based startup PW, or PhysicsWallah, has raised $100 million in its Series A funding, the profitable startup said Tuesday. Westbridge and GSV Ventures financed the startup’s first institutional round, which values the two-year-old firm at $1.1 billion (post-money). The company offers low-cost education classes. According to the company’s CEO, “The firm has been profitable since inception with positive cash flow and reserves.”

Guild Education, which provides and manages education-as-a-benefit programs for employers, raised $175 million in a Series F funding round. The round was led by Wellington Management, with participation from Oprah Winfrey, Bon Secours Mercy Health, Citi Impact Fund, and existing investors. The latest funding brings the Denver-based company’s total valuation to $4.4 billion.

About the Author and Jackim Woods & Co.

Rich Jackim is an education industry investment banker, educational industry entrepreneur, and former mergers and acquisitions attorney.

For the last 25 years, Rich has been providing boutique investment banking services to middle-market companies in the education sector.

Rich also founded a successful training and certification company called the Exit Planning Institute which he sold to a private equity group in 2012.

Rich is also the author of the critically acclaimed book, The $10 Trillion Dollar Opportunity: Designing Successful Exit Strategies for Middle Market Businesses.

Jackim Woods & Co offers skilled mergers and acquisitions advisory services to privately owned schools, colleges, and EdTech companies in both sell-side and buy-side transactions. Jackim Woods & Co has arranged over 100 successful transactions, ranging from less than one million to more than eighty million dollars in value.

If you own an education-related business and are interested in exploring your options, I would welcome an opportunity to speak with you. Feel free to contact me at 224-513-5142 or rjackim@jackimwoods.com.

Calculating the Pre-Money Value of an EdTech Company

What Is a Pre-Money Valuation?

One of the first questions I get from potential clients is how do you calculate the pre-money value of an EdTech company.

A pre-money valuation refers to the value of a company before it receives any external funding from investors. Put another way; a pre-money valuation is how much a company is worth before you start your capital raise. Angel investors and venture capital firms use a company’s pre-money value to determine what their investment in the company is worth.

Key Points

• A pre-money valuation is the value of an EdTech company before it receives an investment from an external investor.
• Potential investors use a company’s pre-money value to determine its worth before investing in it.
• Post-money valuations are different from pre-money valuations. A post-money valuation estimates a company’s value after it receives funding.
• This article was written for founders and managers of EdTech companies, but the same concepts apply to any business seeking angel investors or venture capital funding.

Understanding Pre-Money Valuation

Pre-money is the valuation of a company before a round of financing and gives investors a picture of the company’s current value. Pre-money values are determined before each round of funding a company receives. You can and should re-evaluate your pre-money valuation each time you seek seed, angel, Series A, B, or C round of venture funding.

How To Calculate a Pre-Money Valuation

The management team of the company seeking funding typically proposes a pre-money valuation to potential investors. However, “value is in the eye of the investor,” so each potential investor will have their own idea of the company’s pre-money valuation.

Calculating the pre-money valuation for a company is pretty straightforward. Here’s the basic formula:

Pre-Money Valuation = Post-Money Valuation – Investment Amount

So, if an EdTech company’s post-money valuation is $30 million after receiving a $10 million investment has a pre-money valuation of $20 million.

As you can see, a company’s pre-money valuation is heavily dependent on the company’s post-money valuation, so I encourage you to read my article “How to Value an EdTech Company: Multiples & Example.” In that article, I describe in-depth how to calculate a company’s post-money valuation and provide real-world multiples and an example.

Remember that the pre-money valuation is the basis for determining the amount of funding that investors are willing to provide and how much of the company’s equity they want in return. The company’s management team might propose one value and talk to dozens of potential investors before finding an investor who agrees with the company’s estimate of value. In most cases, the actual pre-money valuation used is heavily negotiated between the investors and management.

Things to Consider

First, remember that an EdTech company’s pre-money valuation is not a static number. That means it can and does change day by day. That’s because a company’s post-money valuation, and hence its pre-money valuation, are affected by general market demand, the public stock market, interest rates, investor appetites, and the company’s performance.

Next, remember that a pre-money valuation is done before each round of funding a company seeks. The pre-money value of an EdTech business will change based on the financing round (i.e, risk level), performance of the company, and market conditions. If a company is growing nicely and hitting its targets, its pre-money value should increase with each financing round, despite the increased investment required.

Third, remember that a pre-money valuation is still possible on early-stage EdTech companies that are pre-revenue, meaning the company has not generated any sales yet. In a pre-revenue company, investors will base its pre-money valuation on a combination of other value factors, including valuations of comparable businesses, projections, growth rates of similar companies, etc. Investors often use insider knowledge of the revenue and market potential of other more established, mature companies in the same sector or that have a similar business model to predict how successful a company will be.

Fourth, even if your EdTech company claims it has created a new industry with new unique solutions, and a new business model, investors will still calculate its value based on the businesses they already know.

Fifth, investors often say, “we invest in people, not companies,” and that’s true. The pre-money valuation of your EdTech company will be greatly affected by the experience and track record of its founders and management team and the likelihood that they will deliver on their promises.

Post-Money vs. Pre-Money Valuations

As its name implies, a post-money valuation differs from a pre-money value because it indicates how much a company is worth after receiving an investment.

To calculate the post-money valuation, please see my article “How to Value an EdTech Company: Multiples & Example.” In that article, I show you how to calculate the post-money value of your EdTech company, so you can figure out how much money you can potentially raise from investors.

Example of Pre-Money Valuation

In that article, I used an example of an EdTech company that determined it had a post-money value of $2.3 million. I also assumed that management projected it needed $1 million in seed money from investors to hit its revenue goals and achieve its exit value.

So, if we assume that the post-money valuation is $2.3 million and the company needs $1 million in seed money, that implies the founders and management team will potentially need to give up 44% of their equity to raise $1 million in growth capital.

That also implies the company’s pre-money value is $1.3 million, because, as we learned above, the pre-money value of your business is calculated as follows:

Pre-Money Value = Post-money value – Investment Amount

$1,300,000 = $2,300,000 – $1,000,000

Understanding the relationship between pre-money and post-money values is important because it allows founders, management teams, and investors to calculate how much equity needs to be given up to incentivize an investor to invest.

About the Author and Jackim Woods & Co.

Rich Jackim is an education industry investment banker and educational industry entrepreneur, and former mergers and acquisitions attorney.

For the last 25 years, Rich has been providing boutique investment banking services to middle-market companies in the education sector.

Rich also founded a successful training and certification company called the Exit Planning Institute which he sold to a private equity group in 2012.

Rich is also the author of the critically acclaimed book, The $10 Trillion Dollar Opportunity: Designing Successful Exit Strategies for Middle Market Businesses.

Jackim Woods & Co offers skilled mergers and acquisitions advisory services to privately owned schools, colleges, and EdTech companies in both sell-side and buy-side transactions. Jackim Woods & Co has arranged over 100 successful transactions, ranging from less than one million to more than eighty million dollars in value.

If you own an education-related business and are interested in exploring your options, I would welcome an opportunity to speak with you. Feel free to contact me at 224-513-5142 or rjackim@jackimwoods.com.

How to Value an EdTech Company: Multiples & Example

One of the hardest things to do when building an EdTech business is determining its value. Whether you are seeking growth capital or looking to exit, you need to have a basic idea of what your business is worth.  If you value your business too high, investors won’t be willing to speak with you.  If you value it too low, you leave money on the table or end up giving away too much equity to raise the growth capital you need. So, how do you calculate a reasonable value for your EdTech company?

Well, the valuation methodology outlined below applies to all EdTech companies, regardless of when you are pre-revenue, established, or looking to exit.

How to Value an Edtech Company: Multiples & Example

The global Edtech industry is expected to reach a market value of over $340 billion by 2025. Because of strong underlying market trends, the Edtech sector has received some of the highest tech valuations, with publicly traded EdTech companies trading at 5.0x to 18x  next twelve months’ revenue (NTM)!  These valuations dropped significantly in late 2021 and early 2022, but are expected to rebound.  See our article on EdTech multiples.

If you are the founder of an EdTech company and are thinking of raising a round of growth capital, you’re at the right place. In this article, I’ll provide a step-by-step guide on valuing any Edtech company.

First and foremost, it’s important to understand that EdTech companies are not valued like traditional businesses. Valuations of conventional businesses are based on the company’s free cash flow. With EdTech companies, the most common valuation method is what’s referred to as the Venture Capital approach, which values companies based on a multiple of revenues.

In this article, we’ll use publicly-traded companies in the Edtech industry for comps so you can follow along and use them to value your EdTech business.

Note: If you need help preparing a pitch book for investors, contact us to learn how we can help you prepare a solid Edtech pitch book that will significantly increase the odds of a successful capital raise.

Venture Capital Edtech Valuation Method

There are several startup and early-stage valuation methodologies. While none of them is perfect, they all try to estimate a valuation for a business based on several qualitative and quantitative factors. The Venture Capital Valuation Method is the most common method investors use to value Edtech companies.

The VC method considers business fundaments, market demand, and investor return on investment factors.

Why Do Investors Use the Venture Capital Method to Value an EdTech Company?

The VC method is a relatively simple and straightforward way to value an early-stage EdTech company because it is driven by several factors that can be grouped into 4 categories.

1. Market Demand

Your EdTech company will be more valuable if you demonstrate that it is part of a large, highly fragmented market that is growing at double or triple digits.

2. Market Fit & Adoption

Your EdTech company will be more valuable to investors if you prove that the business has early adopters or users (market-fit) and that people are willing to pay for your service (adoption.)

3. Management Team & Track Record

Your Edtech company will be more valuable to investors if you demonstrate that your management team has relevant sector experience and a successful track record of growing similar businesses.

4. Investor’s Expectations & Founder’s Negotiating Power

Last but not least, keep in mind that investors are willing to back EdTech startups and early-stage companies because they can earn a substantial return on their investment. If a startup is deemed too expensive, it reduces an investor’s return on investment, and they won’t invest.

At the same time, the more investors you can pitch to and the more term sheets you receive, the better your negotiating position and the higher the valuation.

The Three Value Drivers When Valuing an EdTech Company

The VC method allows founders and investors to estimate an EdTech company’s value by inputting three main variables:

1. Projected Revenues

Projected revenues are usually based on an integrated financial model that includes projected revenue for the next five years. Keep in mind that unless your financial model, and the assumptions that drive it, are supported by facts and hard data, investors will take them with a grain of salt. So it’s important to work with an independent, objective financial advisor who can help you develop a rock-solid set of projections.

2. Comparable Industry Valuation Multiples

Investors rely heavily on valuation multiples from comparable companies within the same industry and sector. The most common multiple used is EV/Revenue, which stands for Enterprise Value as a multiple of Revenue. See below for 2022 public Edtech company valuation multiples.

These multiples change daily and are sensitive to many variables, including interest rates, stock market performance, IPO results, M&A activity, market demand, etc.

3. Investors’ Required IRR

The other important variable is the rate of return investors are looking for. An investor’s required IRR (“Internal Rate of Return”) depends on the type of investor, the EdTech company’s stage, and the investment’s perceived risk. The higher the perceived risk, the higher the required IRR. For example, an investor would need a higher IRR for a seed money investment in an EdTech startup than for an investment in an early-stage EdTech company looking for a Series A or Series B round of financing.

Edtech Valuation Example

Now that we’ve covered how the Venture Capital valuation method works let’s see how to use it to value an early-stage Edtech company looking to do a Series A capital raise.

Prove Market Fit & Adoption

The first thing to do is create a detailed, integrated financial model that includes historical financial data and operating metrics. This is important because your historical performance will prove market fit & adoption and support the assumptions you use to create your projections.

Expected Revenues

The next step is to create detailed revenue and expense projections for five years. While the valuation is based on a multiple of revenues, it’s also important to know your operating and growth assumptions to determine how much capital you need to raise to hit your revenue targets.

Need help building an integrated financial model and projections? Contact us for a free, no-obligation consultation.

So, for this example, let’s assume your EdTech company is in the K12 reading sector. You’ve been in business for three years and have been funded by personal funds and friends and family investors. Your business now has 450 subscribers and is generating $250,000 in revenue, and your subscriber base grew by 100% last year. You built an integrated financial model with historical results and projected revenue for the next 5 years. The projections show that next year you expect revenues to be $625K and grow to $4.1 million in Year 5.

Below is a very basic example of projected revenues for the next five years.

Public EdTech Valuation Multiples

The next step is determining the right multiple to use to value your business.

Investors track over a dozen publicly traded Edtech companies to gauge the market’s appetite for EdTech investments.

While the multiples vary a lot from company to company, each is based on investors’ assessments of the company’s market demand, business model, management team, growth rate, and profitability.

Below is a sample of some of the public EdTech companies we track.  Be sure to read this excellent article from the venture capital group, GSV Ventures regarding the valuation of publicly traded EdTech companies.

In our example of the VC valuation method, we will use the Sector Average EV/Revenue multiple of 4.0.

Keep in mind that when preparing a valuation of your EdTech company, it’s important to select the comparable companies that are the most like the company you are trying to value. That won’t always be possible, but to support your valuation, you’ll need to explain to investors why you selected the comparable companies you picked rather than others.

Adjusting the Multiple for a Private EdTech Company

Because we started with valuation multiples from public companies, we need to adjust that multiple to reflect that your EdTech company is privately owned. Privately owned companies are less valuable than publicly traded companies because they are much more difficult, time-consuming, and expensive to sell. As a result, investors apply an Illiquidity Discount, also referred to as a Discount for Lack of Marketability, of between 20% and 30%.

Let’s use a 25% discount, which results in an adjusted EV/Revenue multiple of 3.0x.

Determining Your Exit Value

The next step in the VC Method is to calculate your EdTech company’s value when your investors exit. In this example, we assumed the exit would be after five years. This is called the Exit Value.

Exit Value = EV/Revenue x Revenue at exit (Year 5)

Year 5 Revenue = $4.1 million

EV/Revenue Multiple = 3.0x

Exit Value = 3.0x x $4.1 million

Exit Value = $12.3 million

Investors’ Required Rate of Return (IRR)

The next step is determining the return on investment your investors will seek. The internal rate of return (IRR) required by investors will vary depending on the investor, the stage of the EdTech company they’re investing in (early-stage deals require higher returns than later-stage deals), and the industry trends.

Based on our experience, VCs typically look for a 40-60% IRR on the companies they invest in. Over the last few years, venture capital firms, on average, have generated a 19.8% IRR. Keep in mind that this is an average, so it includes their failed deals (the ones that went wrong) as well as their success stories. They look for a 40%-60% IRR because providing venture capital is a high-risk business, and an estimated 80% of the deals they invest in are unsuccessful or don’t live up to expectations.

In this example, I’ll use 40%IRR as a low-end and 60% IRR at the high-end expected rate of return.

Keep in mind that as your EdTech venture becomes more proven and successful, the perceived risk of the investment goes down, so investors will be willing to accept a lower IRR.

Calculating Your Post-Money Valuation

The next step is to calculate your Post-Money value. Let’s assume you are looking to do a Series A capital raise, so we will also assume investors will require a 40-60% IRR over the next five years.

Using these IRR assumptions, we discount the Exit Value back to its present-day value to estimate the post-money valuation of your business. The post-money valuation is your EdTech company’s value after receiving the infusion of capital. In contrast, a pre-money valuation is the value of your EdTech company as it is today, without the injection of capital.

Post-money valuation = Exit Value / (1 + IRR)^5

Post-Money Value = $12.3 million/(1 + 40%)^5 = $2,287,865

This is the high end of the post-money valuation range, based on the lowest expected rate of return.

To calculate the low end of the post-money valuation range, use the highest expected rate of return.

Post-Money Value = $12.3 million/(1 + 60%)^5 = $1,173,466

This means the post money value of your early-stage EdTech company is between $2.3 million to $1.2 million.

It’s interesting to note that while we calculated the Exit Value using a 4.6x multiple (from the publicly traded EdTech companies), the EV/Revenue multiple for your early-stage EdTech company is much higher and between 4.7 and 9.2 times your current revenues of $250,000.

Getting the Best Terms

Finally, remember that the post-money valuation arrived at above is for 100% of your business. When doing a capital raise, it’s important to raise as much capital as possible while giving up as little equity as possible in exchange.

To get the best terms from potential investors without giving up all your equity, your integrated financial model must include an accurate estimate of your operating expenses so you can figure out exactly how much capital you need.

If your projections show that you need $1 million in growth capital, you may be able to raise the capital you need and only give up 44% of the equity in your company ($1M/$2.3M=44%) in exchange.

The other important this you can do to limit the amount of equity you give to investors is to work with an experienced investment banker. An investment banker who knows the education space can help you build a compelling investment deck, create an integrated financial model backed by solid assumptions, and introduce you to more investors. The more investors you speak with and the more term sheets you receive, the better terms you’ll get.

 About the Author and Jackim Woods & Co.

Rich Jackim is an education industry investment banker and educational industry entrepreneur, and former mergers and acquisitions attorney.

For the last 25 years, Rich has been providing boutique investment banking services to middle-market companies in the education sector.

Rich also founded a successful training and certification company called the Exit Planning Institute which he sold to a private equity group in 2012.

Rich is also the author of the critically acclaimed book, The $10 Trillion Dollar Opportunity: Designing Successful Exit Strategies for Middle Market Businesses.

Jackim Woods & Co offers skilled mergers and acquisitions advisory services to privately owned schools, colleges, and EdTech companies in both sell-side and buy-side transactions. Jackim Woods & Co has arranged over 100 successful transactions, ranging from less than one million to more than eighty million dollars in value.

If you own an education-related business and are interested in exploring your options, I would welcome an opportunity to speak with you. Feel free to contact me at 224-513-5142 or rjackim@jackimwoods.com.

2022 EdTech Valuation Multiples

2021 was a tough year for EdTech companies. Despite 2021 being another record year for investment in the EdTech sector, including high-profile IPOs for Duolingo, Udemy, Coursera, and Instructure, companies in the EdTech sector saw the value of their companies drop by as much as 40% in some cases.

In 2021 investors learned to take a more conservative approach to value EdTech companies after Udemy’s IPOs demonstrated that the public markets will not support crazy valuations. Udemy went public at a $4.0 billion valuation, but as of the start of 2022, its market capitalization was only $1.8 billion. Investors lost $2.2 billion by overvaluing Udemy. As a result, other EdTech companies like Coursera and Duolingo reduced their IPO valuations in 2021.

The sell-off of EdTech stocks in the second half of 2021, was largely fueled by concerns over lofty valuations, inflation, and rising interest rates. These same concerns also caused a sell-off that impacted all technology, software, and growth stocks.

2022 Public EdTech Valuation Multiples

Despite the sell-off, EdTech companies are still trading at generous valuations.  The table below shows the valuation multiples for a representative sample of publicly-traded EdTech stocks that we track.

As the data above indicates, the valuation of EdTech stocks varies depending on who the end-user is (K12 & Higher Ed vs B2C & Corporate). B2C and Corporate EdTech stocks sell for a higher multiple than Higher Ed and K12 companies.

As of March 2022, the median multiple of revenues for public Higher Ed & K12 EdTech companies was 2.2x and the average was 3.3, while the median multiple for public B2C & Corporate EdTech companies was 5.7 and the average was 6.6x.

Overall, the median revenue multiple for the entire publicly traded EdTech sector was 2.4x and the average was 3.9x.

2022 Private EdTech Multiples

The selloff in the public markets also affected private EdTech multiples. The following table shows the 2022 private EdTech transactions Jackim Woods & Co tracks and the associated valuation data.

The following table shows similar data from 2021 when EdTech stocks experienced a COVID-related boost to their valuations.

A comparison of the data in the tables above shows that the median revenue multiple for private EdTech companies dropped from 9.7x in 2021 to 3.6x in 2022. Similarly, the average multiple of revenue for private EdTech companies dropped from 8.2x in 2021 to 3.6 in 2022.

2022 EdTech Private Company Valuation Multiples

Revenue multiples for private EdTech companies in early 2022 range between 2.0x and 5.0x, with a median of approximately 3.6x revenue.

Despite the macro conditions mentioned above, we expect the EdTech sector to continue to do very well in response to a growing global demand for new and better ways to deliver educational content from K12 to higher ed, to corporate training and lifelong learning.

As a result, we expect valuation multiples to remain strong for privately owned EdTech companies that are looking to raise growth capital or have a liquidity event. In addition, we expect that multiples for publicly traded EdTech companies will increase once inflation is under control.

About the Author and Jackim Woods & Co.

Rich Jackim is a mergers & acquisitions attorney, investment banker, and educational industry entrepreneur. In 2016 he founded the Exit Planning Institute, a very successful corporate training and certification company that he sold to a private equity group in 2012.

For the last 25 years, Rich has been providing boutique investment banking services to middle-market companies in the education sector.

Jackim Woods & Co offers skilled mergers and acquisitions advisory services to privately owned schools, colleges, and EdTech companies in both sell-side and buy-side transactions. Jackim Woods & Co has arranged over 100 successful transactions, ranging from less than one million to more than eighty million dollars in value.

If you are interested in exploring your options, I would welcome an opportunity to speak with you. Feel free to contact me at 224-513-5142 or at rjackim@jackimwoods.com.

The Advantages of Selling Your Injection Molding Company to a Strategic Buyer

A strategic buyer is a corporate buyer that is already operating in the plastic molding industry. Often, the best strategic buyers for your business are the competitors, suppliers, or clients of your injection molding company.

Types of Strategic Buyers

The main goal of a strategic buyer is to acquire an injection molder whose equipment, capabilities, and customers align with the buyer’s operations to accomplish one or more strategic objectives.

Horizontal Acquisition Strategy

In the case of a “horizontal acquisition strategy,” these strategic objectives include buying an injection molder to add capacity, unique press sizes, or unique capabilities. A horizontal acquisition strategy can also include purchasing a molding operation to expand geographically if being close to a significant client or industry hub is important to the buyer. Finally, a horizontal acquisition strategy can include purchasing molds and presses needed to manufacture a proprietary line of products, rather than just making products for your customers.

Vertical Acquisition Strategy

In the case of a “vertical acquisition strategy,” the strategic buyer is looking to integrate steps in the manufacturing chain. This could include acquiring a distributor of raw materials or a company that does secondary operations like plastic fabrication, assembly, or finishing of products. For example, several large suppliers of plastics sheets, rods, and profiles have begun buying plastic molders because the margins are better in manufacturing than in distribution. Another example includes a recent transaction we closed, in which an injection molder acquired a custom mold-maker so they could be a one-stop-shop for their customers.  As a final example, we sold a small injection molder to a small medical device manufacturer because the buyer wanted to manufacture their own products in-house and not rely on outsourced production.

Pros and Cons of Strategic Buyers

Unlike financial buyers who buy companies for the financial returns, strategic buyers purchase a business to operate it on a long-term basis. That typically means integrating it into their existing operations, which allows them to capture synergies and economies of scale. This usually means that a company’s margins will increase under the ownership of a strategic buyer, which is why strategic buyers are generally able to outbid a financial buyer to buy an injection molder.

Advantages of Selling to a Strategic Buyer

Most of the injection molders we’ve sold over the years have preferred to sell to a strategic buyer rather than a financial buyer. This is especially true if your injection molding operation has less than $1 million in EBITDA. Below are a few reasons why selling your injection molding business to a strategic buyer might make sense for you:

1. Higher Selling Price

The adage, “value is the eye of the buyer,” holds true when selling your business. Your business will be worth more to some buyers than others. As mentioned earlier, a strategic buyer purchases a business in the same industry in which it operates. They either plan to combine the two businesses or operate them side-by-side. Either way, this allows the buyer to realize significant synergies and economies of scale from combining the two companies. These synergies lead to higher profitability, which increases the value of your business to the buyer. Therefore, strategic buyers are willing to pay more for your business than a financial buyer would.

2. Faster Due Diligence

Because a strategic buyer operates in the plastic molding space, it has a solid understanding of the industry, customer requirements, and the kind of business they want to acquire. This means the sales process is faster and more efficient, and they can complete their due diligence with very few glitches. This doesn’t mean strategic buyers don’t do their due diligence. But it just means they ask better questions, understand your answers better, and don’t make mountains out of molehills. As a result, strategic buyers typically complete their due diligence much faster than a buyer unfamiliar with your industry would.

3. Higher Certainty of Closing

The best offer in the world is worthless if the buyer can’t follow through and close the deal. Strategic buyers have a higher certainty of closing a deal for three reasons.

First, deals typically don’t fall apart during due diligence because the buyer understands your business. Second, strategic buyers have existing relationships with banks and lenders, so securing financing isn’t an issue. Third, strategic buyers typically have a compelling, strategic reason to make the acquisition, so in addition to a financial return, making the acquisition solves other problems for them. Combining these three reasons means there’s a very high probability of the deal going through.

4. Better Opportunities for Your Management Team

Like most sellers, you want to make sure the deal is good for you, but you also want to make sure it is good for your management team and your plant workers. When you sell to a strategic buyer, they are looking to grow, which creates new opportunities for everyone on your team. This often means additional responsibilities (and raises) for your management team or extra hours or benefits for your hourly workers.

5. More Stability

When you sell your injection molder to a strategic buyer, you have the comfort of knowing that they intend to own and operate it for the long haul. Unlike a private equity group that typically buys several businesses, combines them, and then sells them in 5-7 years, a strategic buyer may never sell your business. That gives you, your management team, and your workers greater assurance that your business will be in good hands long into the future.

6. Better Operators

In most cases, a financial buyer makes decisions by focusing on what’s good for the buyer’s investors. That typically means doing whatever is possible to increase profits. By comparison, a strategic buyer typically makes decisions based on what is best for the key constituents of the business. That means what is best for the customers, employees, and shareholders. As a result, strategic buyers typically make decisions with a long-term perspective, not to meet quarterly or annual financial targets.

Disadvantages of Selling to a Strategic Buyer

There are only two potential disadvantages to selling your injection molding business to a strategic buyer.

1. Many sellers fear that by approaching strategic buyers and allowing them to learn about your business, you may give away your competitive advantage and lose clients or key employees. The reality is that 99% of strategic buyers will respect the nondisclosure agreements they sign and will not use any information they learn about your business to compete directly against you or to poach your employees. If there are specific competitors who you don’t trust or don’t respect, tell your M&A advisor in advance so he can exclude them from the sales process.
2. Many strategic buyers will be reluctant to pay you for all of the synergies and economies of scale they can generate by acquiring your injection molding operation. That makes sense, but if a strategic buyer is willing to pay you for even a portion of those synergies, it represents a premium over what a financial buyer would pay.

Conclusion

Based on the above, it is clearly in your best interest to approach strategic buyers when it comes time to sell your injection molding business. The advantages outweigh the disadvantages.

The secret to success when selling your injection molding operation is to work with a mergers & acquisitions advisor who has experience in your industry and has a database of pre-qualified strategic buyers who are interested in a business like yours.

If you’d like some help valuing your injection molding business, or would like to explore your options, I would welcome an opportunity to talk with you.

By Rich Jackim, Managing Partner at Jackim Woods & Co.

Jackim Woods & Co. is a leading mergers & acquisitions advisor focused on providing senior-level attention and flawless execution to clients in the injection molding industry.

Rich Jackim is an experienced mergers and acquisitions advisor and a retired mergers and acquisitions attorney.  Rich has over 20 years of experience advising owners of middle-market companies and their boards of directors on mergers, acquisitions, and divestitures.  During his career, Rich has been involved in over 70 mergers or acquisitions of middle-market companies worth over $2 billion.  Rich is also the author of the critically acclaimed book, The $10 Trillion Opportunity: Designing Successful Exit Strategies for Middle Market Business Owners.

More Injection Molding Resources

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How to Maximize the Value of Your Injection Molding Business