Posted on

Pace of Mergers and Acquisitions in Education Market Jumps, New Analysis Finds

The total value of mergers and acquisitions in the education industry grew by more than 50 percent from the second half of 2020 to the first half of this year, as companies across the market rushed to add to their portfolios, according to a report by investment banking firm Berkery Noyes.

The overall number of individual M&A transactions also rebounded to pre-pandemic levels.

Education companies closed 240 acquisitions in the first six months of 2021, up from 222 deals in the second half of 2020, and 210 mergers in the first half of last year. There were 238 acquisitions in the education industry in the second half of 2019.M&AGraph

The total value of education acquisitions from January through June was $19.4 billion, largely driven by Platinum Equity’s $6.4-billion acquisition of McGraw Hill, the report noted.

Deals made during this period had nearly as much value as mergers and acquisitions for the full year of 2020, when they totaled $21.4 billion.

The investment group, which provides advice and financial consulting to middle-market companies in the technology and information sectors, tracked 1,152 education deals between 2019 and June 2021.

Private equity financed 40 percent of acquisitions during the first half of this year, 8 percent higher than the 2019-2021 overall average.

According to Berkery Noyes, 97 of the 240 deals during this time frame were financed by private equity, venture capital, or some other investment firm, the most in at least three years and a 131 percent increase over the first half of 2020.

Twelve deals in the first half of this year carried values of more than $100 million, and at least seven of those involved the K-12 sector. About one-third of the total transactions had values between $4.5 million and $54.6 million.

K-12 media and tech surpassed professional training services as the education industry’s most active market segment year-to-date.

There were about 50 acquisitions that involved professional training services and roughly 40 deals that involved K-12 media and tech in the second half of last year, while nearly 60 deals touched K-12 media and tech and about 45 deals covered professional training services in the first half of 2021.

The report showed a mixed picture for market activity in various segments for the first six months of this year compared with the second half of 2020.

The rate of deals in the childcare services and higher-ed media and tech spaces increased during this span, but the number of deals in professional training technology, higher-ed institutions, and K-20 services fell. Deals involving K-12 institutions remained stable.

In addition to the McGraw Hill acquisition, notable K-12 deals in the first half of 2021 included a Byju’s purchase of Indian tutoring provider Aakash Educational Services for $900 million, Renaissance’s $650 million acquisition of Nearpod, and Kahoot’s $435 billion addition of K-12 single-sign-on provider Clever.

Image by Getty

Follow EdWeek Market Brief on Twitter @EdMarketBrief or connect with us on LinkedIn.


See also:

Posted on

Congressional Bill Aims to Incentivize Education Companies, Schools to Sharpen Cybersecurity

A bill recently introduced in the House would help define best cybersecurity practices for K-12 vendors and outline new spending that could benefit certain education companies focused on online safety.

The Enhancing K-12 Cybersecurity Act, introduced June 17 by Rep. Doris Matsui, D-Calif., would task the Department of Homeland Security with establishing a program to circulate K-12 cybersecurity best practices, training, and lessons learned, and with recommending online safety tools for purchase by state education agencies and school districts.

The bill calls on DHS to consult with school IT vendors and cybersecurity companies in putting together the list of best practices.

Doug Levin, the national director for the K12 Security Information Exchange is lobbying for the Matsui bill, expects significant regulatory action at the federal and state levels around K-12 cybersecurity, though it’s difficult to say exactly when that will happen. The K-12 Security Information Exchange operates the K-12 Cybersecurity Resource Center, an online database that tracks K-12 cybersecurity incidents.

The House bill could face a steep climb to become law, as the House Education and Labor Committee currently has no plans to consider the measure, and companion legislation has yet to be introduced in the Senate.

Lawmakers failed to vote on a similar bill introduced in 2020, before the previous congressional term ended in December.

Schools are relying more on technology for remote learning, and policymakers are seeing the need to start imposing baseline internet safety expectations for school districts and vendors, he said.

With cybersecurity policies likely to tighten, school districts and government agencies will increasingly look toward education companies that have already crafted and adhere to a set of best practices for cybersecurity, Levin said.

If passed, the federal bill charts the creation of a DHS-run database that would recommend security tools and services for schools to purchase, and allow schools and states to find and apply for funding opportunities to improve cybersecurity.

H.R. 4005 doesn’t spell out how the money would be dispersed, so the federal government would likely issue further guidance on expenses that might qualify for any cybersecurity grants issued, if the legislation is enacted, Levin said.

In addition to defining best practices and outlining new channels for K-12 cybersecurity funding, the legislation proposes the development of a voluntary registry of K-12 cyberattack incidents, and would require yearly DHS reports analyzing cyber incidents across all levels of K-12.

Information to be collected into the registry may include descriptions of the incidents’ size, and whether each incident was the result of a breach, malware, distributed denial of service attack, or other method designed to cause a vulnerability.

“The bill certainly is responsive to the needs that members of Congress have been hearing from the field,” Levin said. “School districts are feeling under assault from ransomware.”

Levin has compiled data showing that many cyberattacks have targeted teacher and student data stored by education companies, not just within schools.

According to the K12 Cybersecurity Resource Center’s most recent annual report on the state of K-12 cybersecurity, at least 75 percent of all data breach incidents affecting public K-12 school districts resulted from occurrences involving school vendors and other partners.

The Federal Trade Commission has ratcheted up its focus on data breaches in K-12 recently, signaling a stricter enforcement posture toward companies that collect data on K-12 students and teachers.

Organizations endorsing the Enhancing K-12 Cybersecurity Act include the National Association of Secondary School Principals, the National Association of Elementary School Principals, the Council of Chief State School Officers, the National Association of State Chief Information Officers, the State Educational Technology Directors Association, and the Consortium for School Networking.

“As cyber criminals grow more sophisticated and aggressive, we must provide the resources and information necessary to protect our schools,” Matsui said in a statement. “The Enhancing K-12 Cybersecurity Act provides a roadmap and prepares our cyberinfrastructure for the threats of tomorrow.”

Follow EdWeek Market Brief on Twitter @EdMarketBrief or connect with us on LinkedIn.


See also:

Posted on

Inside One Education Company’s Efforts to Organize a Product Around Learning Recovery

Houghton Mifflin Harcourt is one of many companies across the K-12 market that has sought to create products to help districts address academic remediation for students who have fallen behind during COVID.

Schedule a Tour

Join us to get access to the rest of this premium article.

Already a member? Log in.

Posted on

Connect Students Online, Boost Your Country’s Gross Domestic Product?

Expanding and improving internet connectivity for schools can have a positive impact reaching beyond improving students’ access to information.

A new analysis by the Economist Intelligence Unit released earlier this year finds that closing the digital divide in education can boost a country’s economy. Even simply increasing the speed of broadband for school buildings can lead to gains in a country’s gross domestic product, the authors of the report contend.

The researchers say that a quality internet connection, when used well, leads to improved academic results, which then produce higher salaries that support a healthier economy.

A 10 percent increase in school connectivity can increase the effective years of schooling for children by 0.6 percent, and raise the GDP per capita of a country by 1.1 percent, the analysis found.

“The biggest takeaway is the massive amount of potential that school connectivity has to close gaps that exist not just in education but in communities and beyond,” said Shivangi Jain, an EIU public policy consultant and lead economist.

“It gives children all over the world access to basically the same information… I don’t think any other approach has quite that same potential.”

Having access to the internet provides students a “wealth of resources” and enables new forms of learning, including through adaptive learning platforms, the report says, which plays a role in improving the quality of education students receive globally.

“Improved learning outcomes proliferate through adolescence and adulthood, leading to a wider range of higher education and career opportunities,” the report said. “Ultimately, these benefits to individuals are reflected in terms of higher incomes, better health and improved overall well-being.”

Basic Access Not Enough

However, Jain, one of the report’s authors, said governments and schools need to take steps to ensure the new connectivity is being used to its full potential, including by prioritizing digital learning education policy and overcoming barriers to integration, such as building infrastructure or obtaining devices. Access also needs to be affordable and high quality in terms of speed and reliability, the report said.

In the United States, 99 percent of schools are connected to fiber infrastructure, according to the report. But the quality of connection varies greatly among states and areas. Improving the bandwidth per student at schools nationwide to meet the country’s highest standard would increase the GDP by as much as 5.5 percent, according to the report.

In developing countries, connecting schools to the internet could have a more immediate impact on the wider community by enabling local entrepreneurship, introducing the gig economy, and providing access to online banking and improved emergency communications.

The report was sponsored by UNICEF and comes two years after the organization launched an initiative to connect every school to the internet. Globally, two-thirds of children between the ages of 3 or 17 — 1.3 billion — don’t have access to the internet.

It also comes after the U.S. approved $7 billion in federal aid for improved internet connectivity, spurred in part by the gaps in access that were spotlighted during the pandemic and schools’ abrupt pivot to remote learning. That funding, approved as part of the stimulus measure signed into law by President Biden, focus specifically on increasing students’ access to reliable internet services at home.

“This is the moment to be discussing this,” Jain said. “Children need access to connectivity regardless of where they are, and the pandemic really highlighted that … or at least enables people to see what [connectivity] can offer.”

Photo: AP Photo/Meg Kinnard

Follow EdWeek Market Brief on Twitter @EdMarketBrief or connect with us on LinkedIn.


See also: 

Posted on

How One Company Adapted Its PD for COVID and Beyond: A Case Study

Achieve3000’s efforts during the pandemic offer a window into how education businesses have sought to overhaul support for teachers to suit virtual environments.

Schedule a Tour

Join us to get access to the rest of this premium article.

Already a member? Log in.

Posted on

Sales of K-12 Instructional Materials Soaring, New Industry Estimates Show

Pre-K-12 instructional materials are just one slice of a publishing industry that broadly thrived over the past year.

Data released last week by the Association of American Publishers show that sales of educational instructional materials in March more than doubled, year over year.

Overall educational revenues for instructional materials climbed by $111.7 million, while revenues for pre-K-12 resources reached $61.4 million in March —  an 82 percent jump over a year ago.

Sales of higher education course materials rose even more sharply, reaching $50.4 million in March, a 179 percent increase over the previous year.

Education publishers’ gains over the past year have come at a time when public and private investment in education markets has soared. Federal lawmakers have approved three different stimulus measures, the most recent of which will channel $130 million into K-12 education. Venture capitalists poured $16.1 billion total into ed tech in 2020, $7.9 billion more than the previous record set in 2018.

One factor driving the increases in education publishers’ revenues: Two of the three largest state markets for vendors in terms of student population – Texas and Florida – purchased significantly more instructional materials this March than a year ago, according to AAP’s PreK-12 Books & Materials Monthly Report for March 2021.

Florida and Texas K-12 leaders bought $8.5 million and $2.3 million worth of pedagogical materials, respectively, showing increases of 331 percent and 137 percent over March 2020.

On the other hand, sales of instructional materials in California, the state with the largest K-12 population, dropped from $6.1 million to $3.9 million.

In addition to higher monthly sales, Florida also generated a sizable increase in revenues for instructional materials across the full years of 2019 and 2020, growing from $6.9 million to $11.4 million. During the same period, annual sales for California fell from $12.1 million to $10.1 million, and yearly sales for Texas declined from $7.8 million to $7.2 million.

The educational sales data account for materials covering reading and language arts, science, social studies, math, English as a second language, career and technical education, as well as miscellaneous other subject areas.

Other segments of the publishing industry have also seen their revenues increase over the past year. Consumer books grossed $743.9 million in March, a 34.2-percent increase year-over-year, while professional books generated $33.1 million, a 33.2-percent gain.

AAP released the information based on questionnaires they sent to publishers, the group said. The monthly reports draw revenue data from approximately 1,300 publishers.

Publishing sales for this year are more comparable to 2017-2019 levels than to industry revenues last year, which was a “tough” time for the industry, AAP said.

School buildings across the U.S. started closing in March 2020 amid the initial onslaught of COVID-19, forcing districts to quickly pivot away from traditional instructional methods and swiftly reprioritize their spending.

Though the publishing industry posted striking growth rates in March, the industry typically sees stronger performance over the summer, and so the next few months will provide a better indicator of the sector’s resilience, according to the AAP.

Posted on

Learning Loss During COVID Will Fuel Economic Losses, Business Leaders Predict

The impact of learning loss during the pandemic won’t just be felt in the classroom. It could also saddle the future economy.

That was the core argument put forward recently by a group of eight business leaders from North Carolina, who made a public plea for state policymakers to address students’ academic slippage during COVID.

Among their recommendations, laid out at a recent online event, were for state policymakers to set up a recurring funding stream to train all of the state’s educators, and to move from a “student tutoring model” for literacy education to a model that supports educators based on the “science of reading.”

Reading proficiency among North Carolina 3rd graders slightly worsened during the pandemic.

According to a report last month by the (Raleigh) News & Observer, accounting for 67.7 percent of 3rd-grade students who had taken midyear assessments, 75.4 percent of 3rd graders were not reading at a proficient level, compared to 73.6 percent last school year.

“Let’s be clear: This is not just a North Carolina problem,” said Kelly King, chairman and CEO of Charlotte, N.C.-based Truist Financial Corp., a consumer and commercial bank holding company. “This is a national problem.”

The impact of learning loss does not appear to be hitting all U.S. school communities equally. A report released by McKinsey & Company in December found that there was a 10 percent drop in average K-5 reading levels among majority-white schools during COVID, but a 23 percent drop in average K-5 reading levels among minority-majority schools.

Another participant in the North Carolina event, Honeywell Chairman and CEO Darius Adamczyk, noted that COVID has likely accelerated the need for higher educational attainment, a demand that is unlikely to abate. Honeywell, headquartered in North Carolina, is a conglomerate with a heavy focus in aerospace and building technologies, among other industries.

Investing in early reading proficiency is integral to weathering a changing economy, and for students to gain education and skills to meet the needs of businesses, Adamczyk said.

“The recommendations we’re making today will address inequities in our workforce and help us develop a strong, diverse, and resilient talent pipeline well into the future,” he said.

In addition to recommending recurring state investments in teacher training in reading, the leaders called for North Carolina policymakers to maintain and even expand funding for pre-K access in the state and to eventually accomplish the goal of enrolling 75 percent of the state’s pre-K-eligible children, and to ensure that every county hits that benchmark.

The state currently funds pre-K programs at about $154 million per year.

Fred Whitfield, president and vice chairman of Hornets Sports & Entertainment, noted that about 9,100 fewer children enrolled in North Carolina pre-K for the 2020-2021 school year compared with the previous school year, eliminating all of the enrollment gains made in the state over the last four years.

Before COVID, enrollment in the state’s pre-K had topped 31,000 children — about 50 percent of the children eligible for the program statewide, he said. Now, pre-K programs in the state are serving only 36 percent of eligible children.

A Big Focus on Pre-K

“The drop in enrollment should not be viewed as a decrease in demand or need for North Carolina pre-K,” Whitfield said. “To the contrary, although we have much to overcome, this proven high-quality program, targeted at some of our most at-risk children, is needed now, more than ever.”

In addition to calling for more support for pre-K, the business leaders are asking state officials to inflation-adjust North Carolina’s pre-K funding for the first time in nine years, to require an annual such inflation adjustment, and to modify county-state cost sharing percentages to help economically disadvantaged counties cover program costs, Whitfield said.

During their presentation, the business leaders cited a 2016 CEO action plan to support improved U.S. literacy rates put forward by Business Roundtable, an association of CEOs at leading U.S. companies.

North Carolina business leaders were inspired by the action plan to initiate several pro-education initiatives, including creation of a comprehensive aligned education system for grades pre-K-3, as well as launching a data methodology to ensure that children stay on track to achieve reading proficiency, said Dale Jenkins, CEO of Raleigh, N.C.-based medical malpractice insurance provider Curi.

A “robust data system” is scheduled to roll out later this year, Jenkins said.

In 2017, the North Carolina General Assembly formed the Birth through Third Grade, or B-3, Interagency Council, which is a joint council between the North Carolina Department of Health and Human Services and the North Carolina Department of Public Instruction.

The goal of the effort was to create a vision for a birth through 3rd-grade system of early education, and a system of accountability tied to it, including standards and assessment, data-driven improvement and outcomes, and teacher and administrator preparation and effectiveness.

“We’ve made progress on these goals through the B-3 Interagency Council that was created in 2017 to address these issues among others,” Jenkins said. “We applaud the General Assembly and the governor for moving this forward together.”

Follow EdWeek Market Brief on Twitter @EdMarketBrief or connect with us on LinkedIn.


See also:

Posted on

Why Do Ed-Tech Products Soar in Some Districts, But Flop in Others?

DigitalVision Vectors/Getty

The EdTech Genome Project aims to give districts more accurate, granular comparisons of what ed-tech products work in what kinds of schools.

Schedule a Tour

Join us to get access to the rest of this premium article.

Already a member? Log in.

Posted on

‘Global Education Recovery Tracker’ Offers Country-by-Country Status on School Reopening

Johns Hopkins University, World Bank & UNICEF (2021). COVID-19 Global Education Recovery Tracker. Last updated as of 24 March 2021. Baltimore, Washington DC, New York: JHU, World Bank, UNICEF.

Three organizations with a major focus on education have developed a tool that tracks and displays school reopening and recovery planning efforts in over 200 countries and territories.

The World Bank, Johns Hopkins University, and UNICEF have unveiled the COVID-19 Global Education Recovery Tracker.

The online database breaks countries into six reopening categories: in-person education; hybrid/remote education; combination of in-person, hybrid, remote, and closed; schools closed due to a regular school calendar closure; completely closed; and, unknown status/data not available.

The tracker also includes U.S. state-by-state and country-by-country information on the status of vaccine availability for teachers.

“The world was facing a learning crisis before COVID-19,” World Bank Global Director for Education Jaime Saavedra said in a statement. “The learning poverty rate – the proportion of 10-year-olds unable to read a short, age-appropriate text – was 53 percent in low- and middle-income countries prior to COVID-19, compared to only 9 percent for high-income countries.”

These divides have gotten even worse during the pandemic, and COVID-19-related school closures are likely to raise the learning poverty rate by another 10 percent, Saavedra said.

Data through early March show that 51 countries have fully returned to in-person education, and that in over 90 countries, students are being instructed through multiple modes, with some schools open, others closed, and many offering hybrid learning options, an announcement by the organizations states.

Researchers from the World Bank, Johns Hopkins, and UNICEF each have subsets of countries for which they’re responsible for compiling data, which is gleaned from publicly available sources, including government data and news sources, said Megan Collins, a bioethicist, pediatric ophthalmologist and professor of ophthalmology at Johns Hopkins University, who is also a leader of the education recovery tracker project.

Information gleaned from news stories needs to be accompanied by at least one other source for validation, she said.

After researchers gather the data, on a bimonthly basis, the team looks through and validates the data, after which researchers answer survey questions intended to decipher the status of school reopenings and the prioritization of groups considered more vulnerable to contracting the disease, such as teachers, Collins said.

“The survey is broken down into, ‘Are schools in the country open or closed right now? Are teachers being vaccinated as a priority group? Yes or no,” Collins said.

“’If schools are in person, what types of learning modalities are being employed? If schools are virtual, what types of learning modalities are being employed?’”

As of March 24, the U.S., Australia, Japan, Germany, and Argentina, were among the major education markets whose schools were operating with a combination of in-person, hybrid, remote, and closed classrooms.

Fully Open Schools in Russia, France, Spain

Meanwhile, the major markets of Brazil, Mexico, India, Sweden, Norway, and Saudi Arabia were either combining remote and in-person instruction and/or their students were exclusively learning remotely.

The U.K., Russia, France, Spain, and Ethiopia, were among the countries where schools are fully open and students have returned for in-person instruction.

“Institutions like the World Bank are helping developing countries’ education systems by providing the evidence to understand where investments are likely to be most impactful,” World Bank Education Global Practice senior operations officer Kali Azzi-Huck and World Bank senior education specialist Tigran Shmis said in an email.

“This tracker helps us to gather critical data and provide advice on country policies to tackle learning loss and accelerate learning in countries.”

Many education companies in recent years have taken a growing interest in exploring international markets outside their home countries. Those ambitions have been fueled by several factors, including the ease of delivering products and services via ed tech, rising income levels in developing nations, and the hunger for new forms of online learning during the pandemic.

Another resource released by the World Bank, Johns Hopkins and UNICEF, shows country-by-country school status/education modality, along with whether that country has authorized COVID-19 vaccines and whether teachers are currently being vaccinated as a priority group.

One revealing takeaway from the tracker is that teachers in low- and middle-income countries are largely not being vaccinated against COVID-19, and that two-thirds of the 130 countries where vaccine information was available are not currently vaccinating teachers as a priority group.

A few of the challenges that the organizations have faced when standing up and updating this resource include the lag between the time of data collection and publication, mostly due to the breadth and complexity of the data; as well as the inability to get granular data, Collins said.

The tracker is “an amazing opportunity to look at what’s happening globally,” she said. “But it certainly does not have the capabilities to dive down to the level of what’s happening for fourth graders living in a certain district of a certain school system in India.”

Collins said Johns Hopkins has been “uniquely positioned” to provide information during the pandemic, noting that her Hopkins team that is working on the tracker organically formed a year ago to think about ways to help children, initially releasing a tracker looking at school reopenings in the U.S.

“For kids from disadvantaged backgrounds, they’re going to be impacted much more severely,” she said.

“As we’ve had schools thinking about reopening or recovery, what are the students going to need, and what are students going to need the most? [We’ve been] doing issue-spotting, hopefully for educators and policymakers to think about providing the actual resources that are needed.”

Follow EdWeek Market Brief on Twitter @EdMarketBrief or connect with us on LinkedIn.


See also: 

Posted on

How New Data-Privacy Expectations Could Impact Education Companies

State laws affecting the deletion of student information and other practices can have a big impact on education companies, says Tyler Park of the Future of Privacy Forum.

Schedule a Tour

Join us to get access to the rest of this premium article.

Already a member? Log in.