Education Industry Acquisitions Decrease in 2020 Due to COVID Concerns
Fueled by a multi-billion-dollar deal, the value of mergers and acquisitions in the education sector increased by more than 80% in the first half of 2020, even though the number of transactions dropped to a 30-month low, a new report by Jackim Woods & Co finds.
Overall, the market value of deals in the education sector increased from $4.9 billion in the first half of 2019 to $9 billion during the same period in 2020, according to research by the mergers and acquisitions firm, Jackim Woods & Co.
Jackim Woods & Co is an investment banking firm that provides advice and financial consulting to middle-market companies in the education sector.
Their analysis tracked 1,128 education sector deals between 2018 and June 2020.
Sixty-six percent of that total came from Blackstone’s $6 billion acquisition of student housing company iQ Student Accommodation, which has been described as the largest-ever private real estate deal in the United Kingdom.
Meanwhile, overall dealmaking activity in the education sector slowed significantly due to COVID-19 shutdowns and concerns about the long-term impact it would have on the sector. Jackim Woods & Co tracked 207 mergers and acquisitions in the education sector during the first six months of the year, down from 242 during the same period last year.
That figure also represents the fewest number of total deals for a six-month stretch since at least the beginning of 2018, the period covered in the report by Jackim Woods & Co.
The overall dip in the number of mergers and acquisitions during the first half of 2020 was due to a steep decline in private equity sponsored deals. According to Rich Jackim, Managing Partner at Jackim Woods & Co, only 41 of the 207 deals closed during the first six months of 2020 were financed by private equity firms or other financial investors. That’s the lowest number of deals closed in the 30-month period the report covered and a 50% decrease compared to the same period in 2019.
Only seven deals in the first six months of 2020 were valued at more than $100 million, and at least two were in the K-12 sector. About 33% of the total transactions had values in the range of $4.5 million to $54.6 million.
The sector of the education industry that saw the most activity in the first half of 2020 was the professional training services category, which rose from 44 to 60 transactions. That accounted for nearly 30% of all deals during the first six months and marked the most transactions closed for the sector since 2018.
Activity in almost every other segment of the education industry tracked by Jackim Woods & Co — aside from the professional training sector — was down compared to the first half of 2019, according to the report. That includes sectors specific to K-12 institutions and the K-12 EdTech space, which includes companies that provide media and software used in schools.
The most interesting K-12 deals during 2020 include
• China Maple Leaf Education System’s $487 million acquisition of Singapore’s Canadian International School;
• K12 Inc.’s $165 million acquisition of Galvanize, a Denver-based company that offers coding boot camp programs; and
• Chegg’s $96 million acquisition of the math problem-solving app Mathway.
If you own an education-related business, including a Title IV vocational school, K-12 school, or EdTech company,
and are thinking 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 at rjackim@jackimwoods.com.
