The education market is one of the most active sub-sectors for M&A activity, driven by private equity funds either seeking platform acquisitions or looking to bolt-on new businesses to an existing portfolio company.
Whilst trade buyers are being more selective over which opportunities to pursue, well capitalised consolidators are taking advantage of what remains a fragmented market and paying strategic prices when the investment thesis stacks up.
A lack of quality assets in the market, in conjunction with an overhang of funds, is driving unprecedented premium multiples for businesses that are profitable and of scale. Increasingly private equity funds are providing follow-on capital to support buy-and-builds in a bid to achieve scale, and in turn, multiple arbitrage.
The European sector has in recent times seen a diverse group of buyers drawn to the positive long-term dynamics of the sector. These buyers are from across the world with increasing investment not just from the US but increasingly Asia too, often linked to the rapidly growing and lucrative international student market.
Meanwhile, corporate and vocational training providers are increasingly incorporating e-learning tools into their delivery models.
With investors sat on record levels of pent-up capital, a buoyant debt market, and a strong motive for trade players to engage in M&A, we will continue to see high volumes over the coming year. This will be led by the schools, colleges and universities market due to the fragmented marketplace and the sheer number of private equity backed portfolio companies across Europe seeking bolt-ons.