While coronavirus has impacted business operations across all sectors of the economy, the resilience of the people working in the education and training space has shone through, with businesses adapting to continually changing circumstances.
A snapshot of our education deals in 2020
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Discover our key successes in the sector
During the first lockdown, our team supported many clients with the operational and economic challenges faced, including helping with access to government funding, such as the Coronavirus Business Interruption Loan Scheme (CBILS) for small to medium businesses and the Coronavirus Large Business Interruption Loan Scheme (CLBILS) for mid-size and larger businesses.
As the market adjusted to remote learning, we saw investor interest in education and training increase, reflecting robust sector fundamentals in the long term, such as:
- growing demand
- high levels of revenue visibility
- the acceleration of tech-enabled solutions.
Unsurprisingly, deal activity by volume was down on 2019 by 22%, but ahead of 2018 by 12%. Two key themes emerged in 2020:
1 The acceleration and mass digital adoption of edtech and e-learning solutions.
2 Investor appetite for the safe haven of government-funded revenue streams, leading to a wave of consolidation in the school support services, skills and employability training markets.
School support services
M&A activity in the school support services software vertical was driven by the announcement in June that Capita planned to sell its Education Software Solutions (ESS) division, including Capita SIMS. Competitors were swift to act.
CBPE backed the merger of The Key and Arbor Education to create the second largest provider of Management Information Systems (MIS) to the state sector, behind SIMS; followed by IRIS Software Group acquiring iSAMS, looking to cross-sell iSAMS software to its 10,000-strong state school client base. In December, Montagu Private Equity backed ParentPay and folded ESS into the combined group.
Juniper Education continued to bolt-on further schools’ software and services acquisitions to its platform, bringing the total to seven since the business was backed by Horizon Capital in June 2019. This pace shows no sign of slowing down, with the acquisition of Jane Systems already announced in January 2021. Furthermore, the supporting Education Group has continued to grow its education services division, acquiring three businesses - two of which were advised by our firm.
We predict more activity across the school services space in 2021, due to the highly fragmented nature of the market and the appeal of school-driven recurring revenue streams.
Skills and employability training
The skills training sub-sector saw 23 transactions complete in 2020, with three apprenticeship deals that stood out:
1 The secondary PE buy-out of Learning Curve to Agilitas PE in March
2 Apiary Capital Partners backing Access Creative College in April
3 The MBO of Corndel backed by THI Investments in November
Each of those businesses are well-positioned to grow, benefitting from a blended delivery model, blue-chip employers providing quality opportunities and cross-party support for apprenticeships.
Other notable training deals included the sale of BIMM by Sovereign Capital to ICG and the backing of Improve International by RJD Partners. We conducted financial due diligence for RJD.
Employability training providers are set to receive greater attention in 2021, with rising unemployment levels expected. This includes across youth markets, with adult education of increasing importance to help those looking for work.
We assisted Palatine Private Equity with its investment in Back2Work in October.
K-12
Coronavirus has put unprecedented pressure on independent schools. As facilities were closed in the summer term and again in early 2021, a growing number of charitable independent schools encountered financial difficulties with some high-profile closures such as Ashdown House and St Mary’s Shaftsbury.
Despite this, the upfront collection of school fees and controllable costs enabled good schools to weather the disruption financially. Operationally, the private sector adapted faster to remote learning and has attracted a growing number of pupils away from the state sector, where provision has been less consistent.
M&A predictably slowed with 57% fewer transactions in 2020. However, good schools continued to attract considerable interest from investors, with Dukes Education’s acquisition of The House Group in March standing out.
Nurseries
In the nursery subsector, the start of the year continued where 2019 left off, with high levels of demand and market activity, much of which was halted when coronavirus hit, as providers turned their focus to operations.
As lockdown initially eased, buyer appetite came back swiftly with a large increase in the number of enquiries recorded per transaction reported. Competition for assets increased with a reduced volume of quality settings seen later in the year.
Group-led consolidation continued apace with:
- Kids Planet acquiring Kids Allowed - advised by us
- The Old Station Nursery Group, owned by La Maison Bleue, purchasing the 11-setting group Sunhill Daycare Nurseries
- Kindred Nurseries, backed by Unigestion PE, acquiring a six-site group
- new entrant MiChild, growing to 18 sites
- a new Chinese operator, Ann Education, entering the market
- Grandir, another French operator, expanding further during the year.
Edtech
In a year where working from home became the new normal and the majority of learners were unable to attend their educational institution, the edtech sector stepped in to fill the gap. Coronavirus has been the catalyst to accelerate the transition to online provisions as understanding and acceptance grew across all verticals.
Notable activity included:
- the sale of Texthelp by LDC to Five Arrows
- the Access Group’s (backed by Hg Capital) acquisitions of MicroLearn, eLearning For You and Unicorn Training, advised by us
- Learning Technology Group PLC’s acquisitions of Open LMS, eCreators and eThink
- Kallidus (backed by Apse Capital) acquiring Engage in Learning
- Sponge’s (backed by Aliter Capital) acquisition of Skill-Pill M-Learning
- UCAS’ acquisition of MO University Assistant - advised by us.
Our predictions
Our belief is that continuing consolidation is changing education and training for the better, making schools safer, learning easier, upskilling the nation, closing the disadvantage gap and allowing management to make more-efficient decisions.
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