Number of Acquisitions in Education Sector Soars in 2021
The total value of mergers and acquisitions in the education sector increased by more than 50% from the second half of 2020 to the second half of 2021, as companies across the industry rushed to add education-related companies to their portfolios, according to a report by mergers and acquisitions advisory firm, Jackim Woods & Co.
Jackim Woods & Co. is a mergers and acquisitions firm that provides advice and financial consulting to middle-market companies in the education sector.
The overall number of individual M&A transactions also rebounded to pre-pandemic levels.
Buyers of education companies closed 210 mergers in the first half of 2020, and 240 acquisitions during the first six months of 2021.
The total value of acquisitions in the education sector between January and June was $19.4 billion, largely driven by Platinum Equity’s $6.4-billion acquisition of McGraw Hill, the report noted.
The market value of deals closed during the first half of 2021 had almost as much market value as all the deals closed during all of 2020.
Private equity-sponsored transactions accounted for 40% of deals during the first six months of 2021. That’s 8% higher than the average number of private equity-backed deals for the last three years.
According to Jackim Woods & Co, 97 of the 240 deals during this time frame were sponsored or financed by financial investors like private equity, venture capital, or other investment firms. That’s the highest number in three years and a 130% increase over the first half of 2020.
Twelve deals during the first half of 2020 had purchase prices of more than $100 million, and at least seven of those involved the K-12 sector. About 33% of the deals had purchase prices of between $4.5 million and $54.6 million.
The K-12 EdTeh segment surpassed the professional training services sector as the education industry’s most active market segment in the first half of 2021.
Approximately 50 deals involved the acquisition of professional training companies in the second half of 2019 and about 45 deals covered professional training services in the first half of 2021. There were approximately 40 deals in the K-12 EdTech segment in the second half of 2020, while nearly 60 deals closed in that segment in the first half of 2021.
For other segments of the education sector, the analysis showed a mixed picture of market activity for the first six months of this year compared to the second half of 2020.
The number of deals in the childcare services and higher-education EdTech segments increased during this period, but the number of deals in professional training technology, higher-ed institutions (including Title IV vocational schools), and K-20 services decreased. Deals involving for-profit K-12 schools remained stable.
According to Rich Jackim, Managing Partner of Jackim Woods & Co, “we are seeing strong demand for Title IV vocational schools that prepare students for careers in the healthcare professions. We’re also seeing strong demand for non-Title IV schools, like commercial driving schools and cybersecurity and programming schools. Valuations for these schools have increased significantly over the last 24 months.”
In addition to the McGraw Hill acquisition, the most interesting education sector deals in the first half of 2021 included
- Byju’s $900 million acquisition of Indian tutoring company Aakash Educational Services
- Renaissance’s $650 million acquisition of Nearpod
- Kahoot’s $435 million acquisition of K-12 secure-sign-on provider Clever
If you own an education-related business, including a Title IV college or vocational school, a k-12 proprietary school, or an EdTech company and are beginning to think about selling, we would be delighted to speak with you and help you explore your options.
Contact Rich Jackim, Managing Partner of Jackim Woods & Co at 224-513-5142 or rjackim@jackimwoods.com.
