Valuations for Title IV Schools and Training Companies at Record Highs
Valuations for vocational schools and training companies are at record highs now. As business performance rebounds, buyers are competing for strong performing businesses. That has led to an increase in the number of education-related businesses that were sold in Q3 of 2021. The number of education deals that closed in the third quarter increased 17% over the previous quarter, and 11% from the same quarter in 2020, according to Jackim Woods & Co, which tracks and analyzes vocational school and training company sale transactions.
2021 Education Industry Seller Confidence Index
Valuations for vocational schools and training companies are at record highs now because seller confidence is up. As the economy rebounds, owners of vocational schools and training companies are returning to the market, feeling more confident they can sell their schools and training companies for a good price and less willing to wait until the COVID pandemic is over. Seller confidence increased to 57 out of 70; that’s up from 45 in 2020. This is the highest seller confidence level since the high of 58 in 2018. Today 49% of the respondents believe they can receive a higher sale price for their school or training company today compared to a year ago, and 46% of respondents said the top factor motivating their confidence was an improvement in enrollment and revenue.
The average revenue for vocational schools and training businesses that were sold in the third quarter was $755,000, up 6% from the same time last year. Meanwhile, buyers of education-related businesses, especially Title IV schools, are paying record-high prices for businesses that performed well during the pandemic. The average sale price in the third quarter hit a new high of $1,780,000; that’s 17% higher than the previous year and 40% above pre-pandemic levels.
With current valuations above where they were pre-pandemic, many school owners are thinking now may be the right time to exit.
2021 Education Industry Buyer Confidence Index
Valuations for vocational schools and training companies are also at record highs because buyer confidence is up. Buyers noted that there is a limited supply of profitable well-run schools and training businesses on the market. In addition, several buyers noted that because of the shift to online learning, schools will be able to expand their geographic reach while reducing the cost of delivering educational services. The combination of these two factors signals significant growth opportunities and higher margins for well-run schools and training companies in the future. As a result, buyer confidence increased to 60, up significantly from 48 in 2020 and only slightly above the buyer confidence level of 59 in 2018.
It is interesting to note that demand for high-performing vocational schools and training businesses is increasing. According to Rich Jackim, Managing Partner of Jackim Woods & Co., “buyer inquiries on our education-related listings are up 39% since the same time last year. However, many business owners are putting off selling until their schools or training companies have fully recovered, so the supply of profitable, well-run schools is still limited. This is driving up values and makes it a sellers’ market.”
If you are beginning to think about selling your training business or Title IV vocational school and would like to explore your options, please contact Rich Jackim at rjackim@jackimwoods.com for a FREE, confidential, no-obligation consultation.
