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About The Potential PowerSchool IPO Leaked by Bloomberg
Phil Hill
February 10, 2021
With the increased usage of EdTech due to the pandemic comes an increase in investment, and one trend that also appears to be playing out is a new wave of public offerings, whether through traditional means or backdoor through a SPAC. Today Bloomberg broke news of a major IPO planned in the K-12 space:
PowerSchool has filed confidentially for a U.S. initial public offering that could value the education software provider at more than $6 billion, including debt, according to people with knowledge of the matter.
The company, backed by private equity firms Vista Equity Partners and Onex Corp., could IPO later this year, said the people, who asked to not be identified because the matter isn’t public. Folsom, California-based PowerSchool has engaged Goldman Sachs Group Inc. to lead the share sale, one of the people said.
Previous Coverage of PowerSchool and Schoology
Readers of this blog will remember that PowerSchool acquired LMS provider Schoology in late 2019. The K-12 space favors consolidation much more than Higher Ed, and PowerSchool is the largest player. For background reading:
Schoology NEXT 2019: Increased focus on K-12 LMS Market, July 2019 – Jeanette covered the users conference and helped explain Schoology’s product direction and renewed focus on K-12 market;
About the PowerSchool Acquisition of Schoology, October 2019 – I covered the acquisition news, addressing how the deal might make sense for PowerSchool and how it might impact the K-12 LMS market;
PowerSchool Acquires Schoology: The K-12 Landscape Is Changing, October 2019 – Our partners at LISTedTECH shared data on both the K-12 SIS and LMS markets, (in combination with this November 2019 post) showing the overlap with this graphic:
LMS Market Acceleration: An initial view in North America, September 2020 – I looked at 2020 data to see how the pandemic is driving accelerated K-12 LMS market activity, with this view of New Implementations (graphic updated end of 2020 from the one in the original post, showing the rapid acceleration of Schoology adoption):
PowerSchool: The Path To Dominate The K-12 Market, January 2021 – LISTedTECH shared data and summary table to help describe PowerSchool’s overall consolidation-through-acquisition strategy.
Increased Valuation
Coming back to Bloomberg’s coverage of the planned IPO, we can see the financial expectations’ growth due to this consolidation and rapid adoption in K-12 during the pandemic.
Vista Equity agreed to acquire PowerSchool for $350 million in 2015 from Pearson Plc, after the education giant announced a carve-out plan earlier that year, a statement showed.
The company provides applications that power classrooms serving 45 million students in over 80 countries, according to its website.
A potential $6 billion-plus valuation would be twice the $3 billion it was worth in 2018 when Onex acquired a stake, the people said.
While this IPO news could be significant in and of itself, I suspect that if confirmed, it will have an impact on other EdTech companies looking to either consolidate or enter the public markets.
For the Iron Maiden fans out there, source image from the 1984 PowerSlave tour: http://bit.ly/powerslaveimage
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