School Managers Chancellor and Beacon Merge
In the latest consolidation in the for-profit education industry, Chancellor Academies Inc. merged last week with Beacon Education Management to form the country's second-largest school management company.
Chancellor Beacon Academies Inc., as the new Miami-based company is called, will serve some 19,000 students in 81 schools, most of which are publicly financed charter schools. The company's roster of schools will trail only that of New York City-based Edison Schools Inc., which manages 136 charter and regular public schools serving some 75,000 students.
Last year, Edison acquired a much smaller management company, LearnNow, while Mosaica Education Inc. of New York City acquired another charter manager, Advantage Schools Inc. Most education management companies have grown steadily but have failed to reach profitability.
Beacon Education Management pulled the plug last summer on plans for an initial public offering of stock. The Westborough, Mass.-based company, founded in 1992, lost $2.7 million in fiscal 2000 and was on track to lose twice as much in 2001.
Chancellor Academies was launched in 1999 by a team led by Octavio J. Visiedo, a former superintendent of the Miami-Dade County school district. In an interview, he said the two companies were merging because they shared management and educational philosophies and could compete better as a larger concern.
"In this industry, we don't pretend our goal is to be the absolute largest," said Mr. Visiedo, who will be the chairman of the new company. "But you do have to have a certain scale to service your schools appropriately."
The merged company received a new shot of venture capital last week. The investment firm Warburg Pincus led a $26 million round of investment that also included Goldman Sachs Urban Investment Group and Zesiger Capital Group LLC.
Vol. 21, Issue 18, Page 8