Home News For-Profit Postsecondary Education M&A Poised For Quiet Comeback – Forbes

For-Profit Postsecondary Education M&A Poised For Quiet Comeback – Forbes

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Private equity firms are tiptoeing back into the for-profit postsecondary segment after a long M&A drought.

According to Mergermarket data, the first three quarters of this year saw 11 transactions with a total deal value of $472 million, compared with 12 transactions worth $841 million for all of 2017. (The October 2017 merger of Strayer Education and Capella Education to form Strategic Education accounted for $821 million of the $841 million deal value for 2017.)

Of the 11 deals so far this year, five were PE-related — either a direct buyout or a buy-and-build — compared with only one deal last year. The median revenue multiple for post-secondary education deals over the last five years was 1.9x and the median EBITDA multiple was 9.2x, according to Mergermarket data.

“There definitely is an upswing,” says Jacob Voorhees, co-head of investment banking for Capstone Headwaters. For two to three years, there were very few transactions as bad performers left the industry. “We closed two deals in 2014, both healthy,” he adds. Currently, Capstone has another couple of deals under LOI at healthy multiples, Voorhees says.

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