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LONDON, 29 October 2014 – Baird, a leading, global middle-market investment bank, today released an in-depth report anticipating a new wave of M&A within the European for-profit education sector. The report identifies a backlog of more than 50 for-profit education M&A opportunities across Europe and details how the sector is transforming, presenting opportunities for businesses to grow rapidly. Noting Graphite Capital’s 5.8x return on its sale of Education Personnel and Palamon Capital Partners’ 14.6x return on its sale of Cambridge Education Group, Baird concludes that investors who understand the sector and the business models are well-positioned to generate attractive returns.
Since the start of 2013, there have been more than 40 transactions in the European education sector. Last year was a record year with M&A volume increasing 63% to 26 deals. The UK accounted for most of this activity, though M&A in continental Europe has accelerated. In 2013, Apax Partners paid €200m for higher education provider INSEEC, the fourth private equity deal in the French higher education sector. In Germany, the private higher education sector has grown six-fold in the last 12 years.
Martin Luen, a Director in Baird's Technology and Services Investment Banking team, commented: “Since January 2013, we have seen ten acquisitions valued at over 10x EBITDA, accounting for over $3 billion in aggregate deal value. These are high quality assets which justified their valuations. Another important factor though, is the scarcity of high quality education assets of scale. European financial sponsors are under increasing pressure to deploy over $120 billion of dry powder in buyouts. The deals we saw in this sector last year are just the tip of the iceberg.”
European education companies are increasingly seeking new investors to support the next stage of their development in emerging markets. Companies like Nord Anglia and Cognita have established networks of schools in emerging markets to capitalise on the expanding middle class. Additionally, more overseas students are looking to study in Europe. This has attracted private equity firms to invest in companies like Study Group, Cambridge Education Group and INTO University Partnerships, which specialise in attracting foreign students to western universities.
Jonathan Harrison, a Managing Director in Baird's Global Investment Banking business, comments: “European schools and universities have grown their international operations with great success in the face of limited opportunity to expand domestically. Europe has an enviable academic reputation overseas. We expect future consolidation to take place as investors seek to build larger platforms, achieve cost savings in recruiting students and attract premium valuations.”
The deal catalysts also extend to the European corporate training sector, which is growing in sophistication but remains fragmented. This year Skillsoft, the $2.4 billion Irish-based corporate e-learning company, announced the acquisition of HR software provider SumTotal Systems, and John Wiley & Sons acquired the French digital learning company CrossKnowledge for $175 million. European businesses need the scale and resources of global operators to serve their multi-national clients and accelerate their growth. Large scale operators can share their existing content authoring, technology and distribution infrastructure.
With 250 investment banking professionals and offices in the United States, Europe and Asia, Baird’s Global Investment Banking business provides comprehensive mergers and acquisitions, equity financing, corporate restructuring and debt advisory services to middle-market companies, entrepreneurs, private equity and venture capital firms. The business had a record year in 2013, some highlights of which include:
- 63 M&A transactions completed in Europe, North America and Asia, including the United Kingdom, Germany, Austria, Norway, Sweden, the Netherlands, Italy, France, the United States, Canada, China and Japan
- Over 50 deals completed with a financial sponsor as a buyer or seller, including numerous deals with a financial sponsor on both sides of the transaction
- Significant transactions for entrepreneurially owned companies and financial sponsor owned companies including Schülerhilfe, Alexander Mann Solutions and CMO Compliance in Europe
For additional information about this report, or if you would like to speak to a member of the Baird team, please contact:
+44 (0)202 7759 1194
Baird is an employee-owned, international wealth management, capital markets, private equity and asset management firm with offices in the United States, Europe and Asia. Established in 1919, Baird has approximately 3,000 associates serving the needs of individual, corporate, institutional and municipal clients. Baird has more than $125 billion in client assets. Committed to being a great place to work, Baird ranked No. 9 on FORTUNE’s 100 Best Companies to Work For in 2014 – its 11th consecutive year on the list. Baird’s principal operating subsidiaries are Robert W. Baird & Co. and McAdams Wright Ragen, Inc. in the United States and Robert W. Baird Group Ltd. in Europe. Baird also has an operating subsidiary in Asia supporting Baird’s investment banking and private equity operations. For more information, please visit Baird’s Web site at rwbaird.com.