William Blair's Investment Banking education team interviewed 60 business leaders and investors in the U.S. across the education and training sector from March 23 to April 3 to learn more about the impact COVID-19 was having on their businesses, services, and investments. The participants represented a broad range of public and private companies that focus on early childhood education, higher-education, education technology platforms, and corporate training firms.
The key takeaways of the report include:
Market impact varies across the sector. Businesses in clinical and allied health education, online education/learning, online compliance/training, and IT training are facing the most advantages. Those in construction training, compliance training, higher education, K-12, and middle skills training are seeing a more neutral impact. But firms serving early childhood providers, center-based education, food and safety training, skilled trades training, and testing and assessment services are most disadvantaged from COVID-19 related forces.
Acceptance of online e-learning education accelerating due to COVID-19 pandemic. School and university closures worldwide forced educators to shift to online learning. But “technology gaps” between educators and students and a lack of internet access and home computers among lower-income students are pushing schools to address these challenges.
Public health and the economic environment to drastically change training landscape. High unemployment is expected to drive reallocation of the existing workforce, increasing demand for training. Nimble providers of online training will benefit. Over the long term, platform improvements may be required as a new normal emerges.
PreK-12, higher education, and adult learning sectors face different challenges. Elementary through high school educators seek new tools to transition to e-learning. Colleges and universities see massive increased demand to support online education. Companies are experiencing an uptick in demand for IT/technical skills.
Industry fundamentals remain value drivers. These include growth and profitability, payment models, scalability, regulatory requirements, and technical skills.
Emerging trends. Among those are increased investment in remote learning models, digital learning platforms (K-12 through higher education), and online adult learning. Other trends are a heightened emphasis on ROI, self-funded skills acquisition, STEM learning, more employees working remotely, and a consolidation of investment opportunities.
The analysis also includes specific sub-sector findings on:
- Center-based K-12
- Online K-12
- Higher education
- Healthcare training and higher education
- Classroom-based training and adult learning
Conclusion
Many companies are facing sudden performance challenges and/or liquidity needs driven by the COVID-19 crisis, while others are exhibiting stable or even strong performance. Within the education and training sector, the shift to digital work and e-learning environments will impact the future of learning, thus expanding the education technology ecosystem. Continued excess capital is leading to market opportunities for some companies and investors.
How William Blair can help
While the current environment continues to be uncertain, deals continue to close. Additionally, some transactions are using creative structures to balance future uncertainty fairly for both buyer and seller. William Blair Investment Banking, with over a decade of providing advisory services to the education and training sector, provides clients thoughtful and analytical-driven M&A and capital-raising expertise.