The Dance of PE Elephants: Two huge EdTech-related deals this week

In December 2019 I noted the major trend in EdTech financial deals when word first leaked that ERP-provider Ellucian was up for sale.

Consider Ellucian to be the latest company that either has been sold or is up for sale in a consolidating EdTech market. There is a broad trend at play here, and it is quite different from the venture capital wave of earlier years, where most investment was driven by growth potential. EdTech is in a new era.

In a March 2020 post, I added more thoughts on the trend.

Don’t treat the following as a full analysis of the overall trends, but a common trend in these buyouts (whether completed or not) is that there is a real shift in EdTech financing. Gone are the days when Venture Capital investments in startups drove investments, with the new trend driven by mergers and acquisition (M&A) activity. To a large degree, this is a trend of EdTech hype shifting into corporate reality. A shift from the primacy of an exciting story to a need for profitability and sustainability.

For the biggest deals, the deals are often private equity firms buying EdTech-related companies from other private equity. Well that trend has been accelerated due to the pandemic lockdowns and increase in digital education, with a new peak this week, and it’s only Tuesday.


Yesterday it was announced that Blackstone Group and Vista Equity Partners have reached a deal to acquire Ellucian for an undisclosed amount, although the speculation at the time was that Ellucian could bring in up to $5 billion.

Blackstone (NYSE: BX) (“Blackstone”) and Vista Equity Partners (“Vista”) today announced that private equity funds managed by those firms have agreed to acquire Ellucian (the “Company”), a leading higher education technology solutions provider, from TPG Capital, the private equity platform of global alternative asset firm TPG, and Leonard Green & Partners, L.P. (“LGP”). Blackstone and Vista will invest in Ellucian through their respective long-term private equity strategies, which hold investments for longer periods than traditional private equity.

Ellucian delivers mission-critical, enterprise resource planning (ERP) software to higher-education institutions. The Company’s solutions and services are created with a single goal: to set its customers up for long-term success with secure, flexible technology designed for the complexities of higher education. Ellucian has more than 2,700 customers in over 50 countries, improving operations and enhancing the user experience for their faculties, staff and over 26 million students.

From my December 2019 post:

The biggest planned acquisition, and the largest one based on expected value, is Ellucian, which sells CRM, Financials, and HR systems as well as Student Information Systems (SIS).

To a large degree, the SIS market and associated systems are seen as outdated, yesterday’s news. Despite their reputations, SISs matter. A lot. There is a broad movement in higher ed to adapt to changing student demographics with new needs. The ability to start terms more than two or three times per year, the ability to support competency-based education programs, the ability to support certificate programs and open enrollment programs with non-matriculated students. I have seen outdated, inflexible student systems prevent schools from implementing initiatives that serve these needs, or at least determine the actual implementation details of those programs. Even for traditional programs, there is no other system that touches almost every campus stakeholder in the same way as the SIS.

One and half years later, and that sales process enters its final stage.

McGraw-Hill Education

Today, the Wall Street Journal reported that Platinum Equity has reached a deal to acquire McGraw-Hill Education from Apollo Global Management for $4.5 billion, including debt.

The deal for the textbook publisher and educational-technology company, expected to be announced later Tuesday, is valued at about $4.5 billion, including debt, the people said.

Apollo agreed in 2012 to buy the education unit of McGraw-Hill Cos. for about $2.5 billion, including debt. After the sale was completed, the remaining parent company changed its name to McGraw Hill Financial Inc., later changing it again to S&P Global Inc. The Apollo-owned company retained the McGraw Hill name. [snip]

The company became less print-centric under Apollo’s ownership, completing six acquisitions of digitally focused companies since 2013. It now brings in $1 billion in annual revenue from digital, accounting for more than 60% of its top line, compared with less than 25% in 2013.

I described the failure of another deal just over a year ago.

In a long-rumored move, McGraw-Hill Education and Cengage Learning have called off their planned merger. Officially, the reason is that the Department of Justice (DOJ) had required more divestitures of titles than either party had assumed going into the “merger of equals.” [snip]

It was one year ago that McGraw-Hill and Cengage announced their agreement to combine the second and third-largest global course materials providers. Had the plan gone through, and had COVID-19 not changed the education landscape, the combined company was planned to have roughly $3.2 billion in revenue, second only to Pearson’s $3.9 billion.

I suspect there will plenty of additional news in EdTech financing over the remainder of the year, and less than a month ago OPM company Keypath Education had its IPO on the Australian stock exchange. Stay tuned.