Private Equity Buyers Are Busy In Education Sector
Private equity investors have shown strong interest in education-focused companies in the last few years, and not just in edtech companies. Several things are responsible for this renewed interest.
- For the last 10 years, digital transformations in the classroom has caused the ed-tech market to soar and has led to an increased interest in all types of education-related investments.
- The U.S. faces a significant skill shortage across the board as our population gets older and as our society emphasizes professional careers over skilled-based careers. This had led to severe shortages in healthcare, the trades, and transportation.
- Approximately 30% of for-profit career colleges or vocational schools went out of business between 2008 and 2016, removing excess capacity from the post-secondary landscape, which led to a resurgence of interest from private equity groups.
- For the last four years, both the Republican administration and the Democratic Congress supported private education, which resulted in an upsurge in funding by federal, state, and local governments.
On top of that, the education industry is very fragmented, with many early childhood centers, career colleges, and training companies still owned by individuals, leaving private equity firms a lot of room for roll-ups to consolidate the industry and realize significant economies of scale.
In addition, the K-12 market has become more complicated, with new technologies rapidly changing the game. So having the right people in charge who know how to design and implement digital learning platforms is increasingly important, representing a unique opportunity for private equity and other tech-savvy investors. As a result, buyers and investors are spending more and more time developing world-class management teams to ensure their portfolio companies can provide teachers and students with the digital platforms and technical support they need to succeed.
For the past decade or so, buyers have been hesitant to invest in post-secondary education companies — ever since the Great Recession and implementing the Gainful Employment Rule during the Obama administration. However, things have turned around completely in the last four years for several reasons, including…
- Over 200 poorly run for-profit career colleges closed their doors before the 2017-18 academic year — continuing a long downward trend. But happily, at the well-run schools that survived, enrollment and revenue are rising again.
- The regulatory environment is more favorable because the Gainful Employment Rule has been greatly scaled back – even though it remains on the books for now.
- Most for-profit career schools are demonstrating better results regarding educational outcomes like gainful employment, making them more appealing to investors no matter the level of regulatory oversight.
- The education sector tends to do well in a recession. In general, post-secondary education does well when the economy slows down and unemployed people go back to schools, so education-related companies are a good hedge against recession in any investor’s portfolio.
- Valuations of early childhood centers, K-12 schools, and career colleges remain reasonable compared to other education sub-sectors like edtech.
- It isn’t just investors who’re interested in this space – lenders have returned as well. For example, Renovus Capital financed the Rasmussen acquisition with SunTrust, CIBC, and Bank of Ireland. NCK Capital financed its purchase of Tricoci in partnership with Greyrock Capital Group and NBH Bank.
That’s all good news for owners of education-related companies. Here are just a few of the deals in the education sector over the last few years —
- The Learning Experience, was purchased by Golden Gate Capital Partners Group-backed KinderCare Education, acquired Troy, Michigan-based Rainbow Child Care Center from Quad-C Management.
- Rasmussen College, a healthcare-focused career college system with 10,000 students across 22 campuses, was acquired by Renovus Capital Partners.
- The University of St. Augustine was acquired by Toronto’s Altas Partners in a deal worth $400 million.
- Allied Business Schools, which offers online real estate certification classes, was acquired by Colibri Group and Quad-C Management.
- Chicago-based Tricoci University of Beauty Culture was acquired by Dallas’s NCK Capital.
- Texas County Technical College in Houston, Missouri, was acquired by Arizona College.
- The National Business Institute of Florida was acquired by a private investor.
If you own an early childhood center, a Title IV career college, or a corporate training program and are interested in potentially selling, contact us at 224-513-5142 for a free, confidential, no-obligation discussion about the current market and your options.
About the author: Rich Jackim, the managing partner of Jackim Woods & Co, is an experienced M&A attorney, investment banker, business broker who has sold over 100 businesses. He is also an education sector entrepreneur who founded and sold a professional training company, so he understands the industry and the sales process from both an owner and a buyer’s perspective. If you are thinking of selling your early childhood center, K-12 school, career college, or training program, he would be happy to speak with you. His direct dial number is 224-513-5142, and his email is rjackim@jackimwoods.com.
Jackim Woods & Co Advises School Health on Acquisition of Palos Sports
HANOVER PARK, IL – School Health Corporation announced today that it has acquired Palos Sports, Inc., based in Alsip, IL. For over 60 years Palos Sports has been a leading distributor of physical education supplies to school districts, park districts, and Special Olympics programs throughout the United States. Educators and recreational groups look to Palos Sports for innovative sports, recreation and physical fitness products and equipment, as well as for curricula and knowledge to make their programs more impactful and successful.
School Health is the leading national provider of health supplies, services and solutions, serving professionals in educational settings in the fields of Sports Medicine, Health Services, Special Education and Early Childhood. With over 20,000 physical education, recreation and athletic items in stock, Palos Sports’ products and customers complement School Health’s offerings.
“Together, School Health and Palos Sports will boast the nation’s largest offering of health and wellness products to the education market in the areas of Physical Education, Sports Medicine, Health Services, Special Education and Early Childhood,” said Rob Rogers, President, School Health Corporation. “We both seek to improve the health and well-being of students in schools across America. We are pleased that Palos Sports is now part of the School Health family.”
“Palos Sports is a perfect addition to our offerings given that physical education is playing an ever-important role in helping students maximize their learning potential,” said Scott Cormack, Executive Vice President of Business Development and Strategy, School Health Corporation.
School Health Corporation will maintain Palos Sports as a separate company which will continue to operate in Palos’ current facility, supported by Palos’ dedicated employees who will join the School Health organization. The company will operate under the name Palos Sports, a School Health company. Dan Dunne will continue as president of Palos Sports.
We are very excited to be a part of the School Health team,” said Dan Dunne, President, Palos Sports. “Our team is proud to be a part of School Health’s vison and commitment to the health, development and wellness of all students. Today we start an exciting journey together, combining our talents and knowledge with a great company.”
Rich Jackim, a managing partner at Jackim Woods & Company, advises School Health Corporation on its corporate development activities and arranged the transaction.
About School Health
Since its founding in 1957, School Health has been helping school-based health professionals keep students healthy both physically and mentally. As a national, full-service provider of health supplies and services it serves health professionals in educational settings from pre-school to college; collaborating with customers and advocating for the health of those entrusted in their care. School Health’s comprehensive offering includes health supplies, sports medicine equipment, early childhood products, and special needs aids. The company goes beyond merely supplying products by also providing product support, training, advisory services and exceptional customer care.
About Palos Sports
Palos Sports was founded in 1957. With 60 years of expertise in physical education, Palos Sports provides equipment and curriculum to schools nationwide. The company’s offerings are specifically designed to meet standards set by SHAPE America. The physical education and recreation equipment provider is known for its expert knowledge and individual attention provided to each physical educator, curriculum director, and sports director it serves.
About Jackim Woods & Company
Rich Jackim, Jackim Woods & Company, advises School Health Corporation on its corporate development activities and arranged the transaction. Jackim Woods & Company provides financial advisory services on mergers and acquisitions to clients nationwide.
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Jackim Woods & Co Advises on Acquisition of Computer Tutor Business & Technology Institute
Jackim Woods & Company is pleased to announce that it arranged the sale of Computer Tutor Business & Technology Institute to a private investor. Computer Tutor is a Title IV post-secondary institution that offers business and medical administration programs to students in Northern California.
Computer Tutor Business and Technical Institute is accredited by the Accrediting Commission of Career Schools and Colleges (ACCSC). It received the ACCSC School of Excellence Award. The buyer was a former school owner who had sold his very successful allied healthcare school in the Midwest to a private equity group in 2016.
Rich Jackim, a managing partner at Jackim Woods & Company represented both the seller and the buyer in arranging the transaction. Jackim Woods & Company represents buyers and sellers of Title IV post-secondary colleges and institutions nationwide.
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Nationally Accredited, Title IV, Allied Healthcare School – SOLD
THIS OPPORTUNITY IS NO LONGER AVAILABLE. CALL US TO LEARN ABOUT OTHER NURSING SCHOOLS WE HAVE FOR SALE
2016 Revenues (Est.): $2,400,000 2016 EBITDA (Est.): $343,000
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Investment Highlights:
Established Healthcare & Skilled Trades Programs – Medical Assistant–10 months, Licensed Practical Nurse (LPN)–12-14 months, Certified Nursing Assistant (CNA)–3 months, and HVAC Repair (HVAC)–12 months.
Major Metropolitan Market – The school has two campuses in a major metropolitan area in the Midwest.
High Placement Rates – 73% placement rate for its LPN program in 2015.
Fully Accredited, Title IV Institution – Currently accredited by ACICS and participates in Title IV program. Changing accrediting agencies to ACEN.
Excellent 90/10 Rate – The School’s 2015 90/10 rate was 60%.
Background:
Our client is a nationally accredited, Title IV allied healthcare career school established in 1997. The school offers allied healthcare and skilled trades programs. In 2016 the school has a total enrollment of over 300 students who attend the school’s two campuses located in a major metropolitan market in the Midwest. The school’s largest program is its licensed practical nurse (LPN) program with approximately 192 students which represents approximately 64% of school’s total tuition received.
Based on internal financial results through May 2016, management expects 2016 annualized revenues to be approximately $2.4 million and adjusted EBITDA to be $343,000. This is up 15% and 78% respectively from 2015.
The school is accredited by ACICS however management is in the process of changing accreditation to ACEN which they anticipate will be received before the sale is complete. The school’s founders have some minor health issues and are interested in retiring, however, they are willing and able to work with the buyer for a reasonable transition period or as consultants afterward.
Additional information is available to qualified principals upon receipt of a signed nondisclosure agreement attached. Download Client Profile and Nondisclosure Agreement.
Please contact Richard Jackim at (224) 513-5142 or rjackim@jackimwoods.com with any questions.
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Education Brands Acquires Diamond Mind
Education Brands, a leading software provider to the education industry and a portfolio company of Genstar Capital, has acquired Diamond Mind, the leader in campus-wide payment solutions for independent schools.
Founded in 2003, Diamond Mind is the nation’s leading provider of payment processing software and services for independent K-12 schools, serving over 1,200 schools, including approximately half of the largest 50 private K-12 schools in the country. The company’s suite of products allows school business officers to consolidate, streamline, and reconcile payments across the campus to reduce costs, minimize risk, and improve the payment experience for parents. Diamond Mind’s offerings include solutions for online tuition, online giving, admissions, bookstore, summer programs, and purchase cards.
Diamond Mind was sold by Serent Capital which invested in Diamond Mind in 2014 after several years of researching and looking at opportunities in the education and payment processing markets. Over the last two years, Diamond Mind has successfully built-out its software portfolio, enhanced its customer acquisition engine, and grown its senior executive team. As a result, Diamond Mind has increased revenue nearly 60%, while increasing its client base by over 400 schools since Serent Capital’s 2014 investment.
Read MoreCorporate Buyer Seeks Title IV Allied Healthcare School
We have been retained by a national operator of urgent care centers to help them acquire a nationally accredited, Title IV career college with an emphasis on allied healthcare programs, including, but not limited to, Diagnostic Medical Sonography (DMS); Health Information Technology (HIT); Magnetic Resonance Imaging (MRI) Technology; Noninvasive Cardiovascular Sonography (NICVS); Surgical Tech, Medical Assisting or Licensed Practical Nurse programs.
The ideal candidate will have revenues between $1 million and $3 million. Our client’s urgent care centers and community hospitals can provide excellent clinical sites and can help the school expand strategically into new markets.
If you own a school that fits this general description, please contact Rich Jackim at (224) 513-5142 or rjackim@jackimwoods.com to schedule a confidential, no-obligation call to learn more.
Read MoreStrategic Buyer Seeks Education Related Distribution Companies
Jackim Woods & Co. is representing a strategic buyer interested in acquiring retailers or distributors that specialize in:
- School Nurse & Medical Supplies
- Early Childhood and Early Intervention Supplies
- Health Education and Physical Education Supplies
- Special Education Products and Resources
- Speech Language Therapy Products
- Occupational Therapy Products
- Physical Therapy Products
- Autism Products and Solutions
To be of interest, companies should have revenues between $3MM and $20MM and gross margins over 30% or better.
Our client is a third generation family owned business with a healthy balance sheet, and is able to close transactions quickly using flexible transaction structures. The company has a history of making successful acquisitions and has a strong belief in keeping the current management team in place.
If you have a company that fits these criteria, please contact Rich Jackim at (224) 513-5142 or at rjackim@jackimwoods.com.
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Profitable, Well-Operated Nursing School – SOLD
THIS OPPORTUNITY IS NO LONGER AVAILABLE. CALL US TO LEARN ABOUT OTHER NURSING SCHOOLS WE HAVE FOR SALE.
Investment Highlights:
Established Healthcare Programs– Including Registered Nursing, Licensed Practical Nursing, and Medical Office Assistant
Certificate & Degree Programs – Awards Associates degrees in Registered Nursing and Medical Office Assistant programs and certificates in its Licensed Practical Nursing Program.
Outstanding Educational Outcomes: Graduates of the RN and LPN programs had an impressive 87% and 98% pass rate on the state’s Nursing Board Exams, respectively.
High Placement Rates – 100% placement rate for all programs in 2015.
Fully Accredited, Title IV Institution – Accredited by Accrediting Council for Independent Colleges and Schools (ACICS) and participates in Title IV funding.
Good 90/10 Rate – 2015 Title IV funds were 81% of total revenues.
No Gainful Employment Issues: With 100% placement rates and high starting salaries, there are no gainful employment issues.
In 2015 revenues were just over $879,000. Adjusted EBITDA in 2015 was $108,000. Management expects 2016 revenues and EBITDA to be $839,000 and $184,000. Management expects the Fall semester to be strong. The RN class is expected to be full with alternates waiting. The LPN class is currently half full and still getting applicants.
The School is owned by a non-profit entity that operates two nursing schools. While the School is technically a campus of a multi-location college, it has its own OPEID number and is designated as a Main Campus. With margins in excess of 20%, a strong 90/10 rate, strong placement rates and no gainful employment issues, this school could be operated as either a non-profit or a for-profit career college.
Download Executive Summary & Nondisclosure Agreement.
For additional information contact Rich Jackim at rjackim@sportsclubadvisors.net or at 224-513-5142.
Read MoreJackim Woods & Co. Advises on Sale of Midwestern Career College
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Midwestern Career College was acquired by MCC Holding Group, LLC. Midwestern Career College is one of the leading Title IV allied healthcare career colleges in the Midwest with certificate and degree programs in over a dozen programs. The school is best known for its Magnetic Resonance Imaging, Diagnostic Medical Sonography. Non-Invasive Cardiovascular Tech, Surgical Tech, and Dialysis Tech programs and is one of only a few schools in greater Chicago area to offer these programs.
Rich Jackim, a partner at Jackim Woods & Co., represented the Midwestern Career College and arranged the transaction.
[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section] Read MoreJackim Woods & Co. Advises on Sale of Success Schools, LLC
CHICAGO, IL, January 4, 2016 – Success Schools LLC, a leading Title IV career college for barbers, was acquired by Denmark Education.
Success Schools, with campuses in Merrillville, IN and Chicago, IL is the largest Title IV barber college in the Midwest. The principals of Denmark Education are experienced Title IV school owners and operators who plan to build on Success Schools’ solid reputation and strong educational outcomes.
Rich Jackim, a partner at Jackim Woods & Co., represented Success Schools, LLC and and arranged the transaction.
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