School & District Management Opinion

A Busy Summer for Investment Bankers and Lawyers

By Marc Dean Millot — September 14, 2007 3 min read
  • Save to favorites
  • Print

In the course of preparing the “catch up” issue of School Improvement Industry Provider Announcements (the monthly publication takes a vacation in August), I was surprised at the number of investments that took place in July and August. Going back to July revealed even more transactions. Investment bankers did a lot more business in the sector than they have for a while.Here’s my quick scorecard:


Children’s Internet by private investors
Harcourt by Houghton Mifflin Riverdeep Group
• Freerain by eSchoolMall
Educate by management
• Thomson Prometric by ETS

Equity Investment

Achieve 3000
SMART Technologies
Princeton Review

Public Offering Announced
Scientific Learning Inc.
K12 Inc.

Haights Cross Communications


1. The school improvement industry has come a long way from the dark days’ after the internet bust. Recall that the internet boom only reached the “new education economy” at the end of its expansion – as all that free money created by irrational exuberance ran out of pure internet plays but still needed to be placed by venture capital firms.

I remember observing a board meeting of Co-nect as the President of the Education Entrepreneurs Fund after the bust. Then-board chair Lamar Alexander compared the environment to “nuclear winter,” and reminded the group that “after nuclear winter, there is no spring.” The image resonated with this former nuclear strategist. At one point thereafter Co-nect owed the Fund $3 million. My successor, Keith Collar was undoubtably satisfied that it weathered the storm and was purchased by Pearson in 2005.

2. Looking at the deals on their own merits, they fall into three categories.

The Harcourt and Prometric acquisitions are rearrangements of the parts, or “same monkeys different trees.” Education conglomerates units are just moving around. I see no huge impact of the market for years. If these are smart moves by the buyers, the proof wont be clear for perhaps a decade. Why”? Because the plays are strategic, Houghton Mifflin Riverdeep Group is trying for the end-to-end solution, just like its big rivals. ETS is consolidating its testing presence.

Most of the equity investments are bets that the company in question possesses unrealized value. SMART is a bet on smart whiteboards, Princeton on a brand that’s been sub-optimally managed, Tutor.com on CEO George Cigale, Achieve on edtech. The management buy out of Educate on the Sylvan name. These bets depend on the prospect of a sale to the publishers, and the value of that depends at least in part on whether the investors have the option of an IPO,

Scientific Learning’s and K-12’s offerings are to some extent a bet on the markets interest in public education. The first strikes me as a company with less risk, because it has a high quality product and proprietary technology. K12 is weak on the merits. But in the end, whether these transaction take place, and the funds they raise, depends a lot on perceptions of public education as a safe place to put your money.

3. I can’t help but wonder if we are not seeing a repeat of the internet boom-bust experience. I fear that the school improvement industry is the last place to benefit from an investment boom, and the first to affected by a “liquidity crisis.” We’ve just been through a huge amount of hype about private equity, a sure sign the best deals are behind investors, and a reason to worry about the more recent. And now we are in the midst of the mortgage markets implosion. If the K-12 IPO doesn’t go forward, one reason will be that the markets just aren’t prepared to place whatever money they have left in the risky school improvement sector.

The opinions expressed in edbizbuzz are strictly those of the author(s) and do not reflect the opinions or endorsement of Editorial Projects in Education, or any of its publications.


This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Budget & Finance Webinar
Innovative Funding Models: A Deep Dive into Public-Private Partnerships
Discover how innovative funding models drive educational projects forward. Join us for insights into effective PPP implementation.
Content provided by Follett Learning
Budget & Finance Webinar Staffing Schools After ESSER: What School and District Leaders Need to Know
Join our newsroom for insights on investing in critical student support positions as pandemic funds expire.
This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Student Achievement Webinar
How can districts build sustainable tutoring models before the money runs out?
District leaders, low on funds, must decide: broad support for all or deep interventions for few? Let's discuss maximizing tutoring resources.
Content provided by Varsity Tutors for Schools

EdWeek Top School Jobs

Teacher Jobs
Search over ten thousand teaching jobs nationwide — elementary, middle, high school and more.
View Jobs
Principal Jobs
Find hundreds of jobs for principals, assistant principals, and other school leadership roles.
View Jobs
Administrator Jobs
Over a thousand district-level jobs: superintendents, directors, more.
View Jobs
Support Staff Jobs
Search thousands of jobs, from paraprofessionals to counselors and more.
View Jobs

Read Next

School & District Management Quiz What Do You Know About the Most Influential People in School Districts? Take Our Quiz
Answer 7 questions about the superintendent profession.
1 min read
Image of icons for gender, pay, demographics.
School & District Management Opinion I Invited My Students to Be the Principal for a Day. Here’s What I Learned
When I felt myself slipping into a springtime slump, this simple activity reminded me of my “why” as an educator.
S. Kambar Khoshaba
4 min read
052024 OPINION Khoshaba PRINCIPAL end the year with positivity
E+/Getty + Vanessa Solis/Education Week via Canva
School & District Management The Complicated Fight Over Four-Day School Weeks
Missouri lawmakers want to encourage large districts to maintain five-day weeks—even as four-day weeks grow more popular.
7 min read
Calendar 4 day week
School & District Management From Our Research Center Principal Salaries: The Gap Between Expectation and Reality
Exclusive survey data indicate a gap between the expectations and the realities of principal pay.
4 min read
A Black woman is standing on a ladder and looking into the distance with binoculars, in the background is an ascending arrow.