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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.

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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.”

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In Their Own Words: What Students Want From Ed-Tech Products

EdWeek Market Brief talked with two tech-savvy students about where digital products meet their needs, and fall short.

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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.

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A Changed K-12 Market: What Education CEOs See on the Horizon

As students in many states return in person to classrooms, executives of education technology companies say they are dealing with a market that has been altered in a number of key ways.

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

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

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How School Districts Will Spend Money From the New Federal Stimulus

How will K-12 districts spend federal stimulus funding?

School systems are expected to have broad latitude to spend money from the American Rescue Plan on classroom and non-academic needs.

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Bipartisan Legislation Would Allow E-Rate Funding for School Bus Wi-Fi

Ben Ray Lujan

A bill recently introduced in the U.S. Congress would make make E-Rate money available to support Wi-Fi on school buses, the latest of several recent recent efforts to expand student internet connectivity outside school hours.

Sens. Ben Ray Lujan, D-N.M., and Lindsey Graham, R-S.C., have introduced the legislation, which would require the Federal Communications Commission to issue regulations to make Wi-Fi access on school buses eligible for support under the E-Rate program no later than 180 days after enactment. Under the bill, schools would be reimbursed for equipping buses with Wi-Fi.

The E-Rate program is funded at $4 billion annually, and allows schools to receive reimbursement for certain internet services provided on campus.

If policymakers provide more financial support for off-campus wireless services, it could increase the ability of students to make use of companies’ ed-tech tools, apps, and platforms, including on long bus rides where students have access to laptops and other devices, if this bill gets enacted.

The bill is aimed, in part, at promoting digital equity for rural and tribal communities in states like New Mexico, according to Lujan’s office.

Approximately one-quarter of New Mexico’s over 350,000 students don’t have affordable internet, according to a statement by the New Mexico Homework Gap Team, which describes itself as an ad hoc group of professionals who support narrowing the digital divide for K-12 students in the state.

A December study by the Alliance for Excellent Education estimated that almost 17 million students nationwide lack home internet access to complete school assignments.

“For rural and tribal students who travel hours to and from school, these commutes can be valuable time accessing the internet, completing assignments, and conducting research,” Lujan said in a statement. “Empowering our schools to equip buses with Wi-Fi is an opportunity to uplift our students, tackle the homework gap, and help alleviate the financial strain that too many families are experiencing at home.”

If passed, the legislation would give schools more flexibility in terms of figuring out how they can best use ed tech to promote equity, said Amina Fazlullah, equity policy director for Common Sense Media, a nonprofit dedicated to promoting safe and effective technology use for children.

“Every community has different layers of barriers to equitable access to education related to technology,” she said in an interview. “Having that flexibility ultimately in the E-Rate program will be incredibly useful for schools where students have long commutes.”

But Fazlullah suggested that the ed-tech funding expansion outlined in the Lujan-Graham bill shouldn’t substitute for other potential federal initiatives to support costs for students’ home connectivity.

It remains to be seen whether the FCC will act decisively on some lawmakers’ and education advocates’ calls for a long-term, dedicated funding source to support students’ home connectivity.

The COVID-19 stimulus package approved earlier this month allocated $7 billion to the FCC for the creation of what is being called the “Emergency Connectivity Fund,” separate from E-Rate, to pay for high-speed internet and devices used off campus.

The commission also recently announced plans for a policy that, among many other things, would allow school districts to apply for reimbursement for costs they have paid for students and teachers to access broadband at home.

FCC Acting Chairwoman Jessica Rosenworcel, in an interview with Education Week this month, said the agency remains in the “process of evaluating how we can update the current E-Rate program to meet the moment students and families find themselves in.” She spoke after the agency in February issued a request for public comments on whether E-Rate funds could be used to support remote learning during the pandemic.

In 2018, then a U.S. congressman, Lujan became familiar with how Wi-Fi operates on a school bus when he attended a “Rolling Study Halls” event. Hosted by Santa Fe Schools and funded by Google, the event took a Wi Fi-equipped bus to a Native American pueblo in New Mexico, Tom Ryan, chief information and strategy officer for the district, noted in an email.

In addition to Santa Fe, the Albuquerque district is one other school system that has outfitted school buses with mobile Wi-Fi units, installing hot spots on 80 buses across the area as of October.

Rep. Peter Welch, D-Vt., has introduced legislation similar to the Lujan-Graham bill in the House.

The legislation has picked up endorsements from the National Education Association, Competitive Carriers Association, Free Press, Public Knowledge, School Superintendents Association, Association of Educational Service Agencies, Association of Latino Administrators and Superintendents, National Rural Education Association, National Rural Education Advocacy Consortium, and the State Educational Technology Directors Association.

Photo: Sen. Ben Ray Lujan, D-N.M., is pictured on June 29, 2018, visiting the Kewa Pueblo, a Native American settlement southwest of Santa Fe, N.M.  The program was called “Rolling Study Halls” which was funded by Google.


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Where Venture Capitalists Are Investing as Districts Shift to In-Person Education

Investors are putting a premium on companies that have the products and expertise to span distance learning and a return to in-person lessons.

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Congress Eyes Major Expansion of Apprenticeship Programs

a view of the U.S. Capitol Building in Washington, Tuesday, Dec. 31, 2019. (AP Photo/Susan Walsh)

A measure moving through Congress would greatly expand apprenticeship programs for students  pursuing careers in areas including computer science, green jobs, and cybersecurity.

The U.S. House of Representatives last week approved a bipartisan measure that calls for more than $3.5 billion in spending on apprenticeships over five years.

It tasks the U.S. Labor and Education secretaries with striking an interagency agreement to align national apprenticeship programs with secondary and adult education.

The bill would authorize an increase in the amount of federal funding provided to states to support the administration of those programs, including businesses involved in career-focused training and the apprentices themselves, said Katie Spiker, director of government affairs for the National Skills Coalition.

It’s unclear whether Congress would actually appropriate up to the allowable amount provided in the bill.

Congress appropriated $185 million to registered apprenticeship programs in annual spending legislation passed in 2020.

Many state and district officials see support for computer science, coding, and other STEM-related studies as an important strategy for long-term job creation. And education companies have increased their focus on computer science training for students.

“These investments will provide more 21st century job opportunities for our kids, more qualified employees for our local employers, and more economic resiliency for our communities,” said Rep. Derek Kilmer, D-Wash., in a statement. The lawmaker introduced an amendment to promote computer science programs that was ultimately adopted into the legislation.

The National Apprenticeship Act now heads to the Senate Committee on Health, Education, Labor, and Pensions for further consideration.

Senate HELP Committee spokesperson Maddy Russak said committee Chairwoman Patty Murray, D-Wash., is “pleased the House has passed this important legislation and is looking at all options to expand apprenticeship opportunities as quickly as possible.”

If enacted, the bill would mark the first time since 1937 that the national apprenticeship system has been comprehensively updated.

Dubbed the National Apprenticeship Act, the legislation also directs the agencies to find ways to inform parents and students no later than middle school of programs under the national apprenticeship system and their value in choosing careers.

In addition, the legislation instructs the Labor Department’s office of apprenticeship to award grants to expand national apprenticeship programs, including pre-apprenticeships and youth apprenticeships, and to strengthen alignment between the apprenticeship system and education providers, according to a bill summary.

Industry Partnerships

The National Apprenticeship Act also charts a process for state agencies to gain recognition as state apprenticeship agencies, which would have sole authority over recognizing and registering pre-apprenticeship, youth apprenticeship, or apprenticeship programs in their given states.

These agencies would be charged with determining whether apprenticeship programs are in compliance with federal apprenticeship standards, and providing a certificate of recognition for these programs, among other things.

Under the bill, certain private education entities also could receive grant funding if they provide apprenticeships.

The money can support industry partnerships, trade associations, “a group of employers,” and professional associations that sponsor or participate in a program under the national apprenticeship system.

Organizations backing the legislation include the National Skills Coalition, the Association for Career and Technical Education, and the National Urban League.

Photo of the U.S. Capitol by Susan Walsh/AP.


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