Third Quarter Mergers, Acquisitions Up, From Amplify to Middle Schoolers’ App

Associate Editor


The number of deals in the K-12 media and tech market increased 67 percent from the second to third quarter of 2015. Of the 122 transactions in all of education—which includes higher education and corporate training—25 occurred in K-12, according to a report by Berkery Noyes, a New York-based investment bank. 

From News Corp.’s high-profile sale of Amplify to a group of executives within the ed-tech company, to the acquisition of an app developed by six Texas middle school students by a company in Boston, the K-12 market has been increasingly appealing to investors, as they see schools purchasing more technology and ed-tech. Investors recognize that long-term change is transforming the sector, which dramatically increased investment in the space, according to a Berkery Noyes release.

The most attractive acquisition candidates are online and digital, according to Mary Jo Zandy, a managing director at Berkery Noyes. Companies that show growth are “selling for a nice multiple,” she said. “For K-12, people are looking for reoccurring revenue from companies that have traction and repeat sales, and [whose products] are adopted by more and more school districts,” she said.

The segment’s largest transaction during the third quarter was Blackbaud’s acquisition of Smart Tuition, a provider of payment software and services for private schools and parents, for $190 million, according to Berkery Noyes. Blackbaud, a supplier of software and services to nonprofit organizations, also completed an education transaction in 2014 with the acquisition of WhippleHill Communications for $35 million. WhippleHill provides cloud-based enrollment, learning, content, and student information management solutions to K-12 private schools.

Other transactions, provided by Berkery Noyes’ research team using their MandASoft Inc. platform:

  • Educational Development Corp., which is the U.S. distributor of a line of books produced in the United Kingdom by Usborne Publishing Ltd., acquired Demibooks, Inc., a company that allows students and teachers to create and share interactive story apps, games, and class lessons directly on an iPad.
  • LLR Partners invested an undisclosed sum to merge CaseNEX, LLC and Longleaf Solutions. CaseNEX provides professional development and tools to help schools break down complex student data for instructional purposes, and Longleaf Solutions provides K-12 education data and performance management solutions.

Zandy noted that, as attractive as technology companies are, “print-only” publishers are challenging to sell.

Print is not dead, said Zandy. “All companies have a print component in their sales. Students and teachers want print to a certain extent, but when you go to sell a company, people want the thing they don’t have.”

As for the fourth-quarter environment for mergers and acquisitions, Zandy said Berkery Noyes expects “ample funding for quite awhile,” which is a function of the broader capital markets and favorable interest rates.

See also:

Photo Credit: Cassandra Baquero, left, and Caityln Gonzolez demonstrate their “Hello Navi” app that gives verbal directions to help users navigate unfamiliar spaces, during the 2014 White House Science Fair at the White House. –Evan Vucci/AP-File

Graph: From Berkery Noyes’ 3rd Quarter 2015 Education Industry Trend Report


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