Private Equity Firm Thoma Bravo to Acquire Instructure for $2 Billion

Author

Phil Hill
December 04, 2019

That was a short process. Less than three weeks after Instructure announced that it was considering strategic alternatives that could involve an acquisition, the company has agreed to be acquired by a private equity firm, Thoma Bravo. 1Bravo also owns Frontline Education, a school administration vendor for the K-12 market. From Instructure’s press release:

Instructure (NYSE: INST) today announced that it has agreed to be acquired by Thoma Bravo, LLC, a leading private equity investment firm, in an all-cash transaction that values Instructure at an aggregate equity value of approximately $2 billion. As part of the terms of the agreement, Instructure stockholders will receive $47.60 in cash per share. The price per share represents an 18% premium to the Company’s 3-month volume-weighted average price as of October 27, 2019, the day prior to the Company’s third quarter earnings call at which it announced a strategic review for its Bridge business.

The main emphasis in the initial press releases is the continuity of the management team.

The Instructure management team, led by CEO Dan Goldsmith, will continue to lead the Company in their current roles. Thoma Bravo will support Instructure as it increases investment in education technology innovation and expands internationally.

“Instructure believes the opportunity to become a private Company will provide additional flexibility and position us to invest more strategically to drive innovation for our customers,” said Goldsmith. “We look forward to working closely with all parties to complete this transaction and enter into our next chapter of growth and industry leadership.”

Obviously this is big news for the LMS market, and it is worth noting that in the press release Thoma Bravo specifically mentions Canvas but not Bridge, which should give a hint about future plans. And perhaps more importantly, the press release explicitly mentions future growth that will or could include M&A – Instructure buying other companies.

“Instructure’s Canvas product is the gold standard for learning management systems in the global education market,” said Holden Spaht, a Managing Partner at Thoma Bravo. “We are excited to partner with Dan and the senior management team to support continued investment and innovation in the Company’s market leading products and world class customer support.”

Brian Jaffee, a Principal at Thoma Bravo added, “We’ve followed the impressive Instructure growth story for many years and believe Canvas is a highly unique vertical market SaaS leader with exciting scale and future growth potential. We look forward to building on the strong momentum in the business and accelerating growth and product investment both organically and through M&A.”

Also worth noting is that there is a “go shop” period of 35 days that allows Instructure to receive other bids.

Stay tuned for more coverage on the news and the likely impacts on the LMS market in particular and EdTech market in general.

Disclosure: Instructure is a subscriber to our LMS Market Analysis service.

1 Disclosure: Instructure is a subscriber to our LMS Market Analysis service.