Hobsons, which offers a suite of software for college and career planning, admissions and enrollment, and student success and advising, will be broken up and sold in a pair of transactions totaling approximately $410 million.
The company’s owner, the Daily Mail and General Trust (DMGT, which is also the publisher of the British newspaper Daily Mail), announced it has reached an agreement to sell Naviance and Intersect to PowerSchool for $320 million. The two products complement one another. Naviance is used by students to learn about their life and career interests, and provides recommendations for what educational options can best support them. Some of that data is shared with Intersect, which is sold to colleges and universities to support their recruitment and enrollment efforts.
“After high school, every student has their own unique preferences, path, and aspirations for education, career, and life choices,” PowerSchool CEO Hardeep Gulati said in a prepared statement. “By bringing these two solutions into PowerSchool’s unified portfolio, we are focusing on providing tools and insights that can help simplify, guide, and provide all the options they need to help with that journey.”
The addition of Naviance and Intersect “offers PowerSchool a way to service colleges and universities,” says Gates Bryant, a partner at Tyton Partners, a strategy consulting firm and investment bank. “That’s a new market for PowerSchool.”
PowerSchool is best known for its K-12 student information system, which is the most widely used of its kind among U.S. schools and districts. But it has been actively expanding its portfolio, purchasing nearly a dozen edtech companies over the past five years. The two most recent acquisitions are Hoonuit, a set of data management and analytics tools, and Schoology, a learning management system.
Across these products, the Folsom, Calif.-based company claims it serves more than 45 million students in more than 80 countries.
Hobsons’ other major business line, Starfish, which provides advising, communication and “nudges” to support student engagement and retention at higher-ed institutions, will be sold to Washington, D.C.-based EAB for $90 million. Bryant believes it fits nicely with the other tools in EAB’s portfolio, which include advising, communication, enrollment and intervention technologies that make up its “student success management system” used by more than 1,900 colleges and universities.
These acquisitions come at a time when PowerSchool and EAB are preparing for even bigger deals. Both companies are currently owned by private equity firm Vista Equity Partners. (Onex Corp. is also a major shareholder in PowerSchool).
Vista acquired PowerSchool for $350 million in 2015, and earlier this month filed confidentially for an IPO that could value the company at over $6 billion. Vista purchased EAB in 2017 for $1.55 billion, and there are rumblings that the firm is considering putting the company up for sale.
Hobsons, founded in 1974 and based in Cincinnati, has developed and purchased dozens of products over the years. Naviance and Starfish were brought into the fold via acquisitions in 2007 and 2015, respectively. But figuring out how all the pieces fit together as a business has been a challenge. In 2017, Hobsons sold five of its products to Campus Management Corp. (which itself was acquired three years later and merged into another higher-ed technology company, Anthology).
The value of these two pending transactions with PowerSchool and EAB, totalling $410 million, would be 3.4 times that of Hobsons’ 2020 revenue of £85 million (approximately US $119 million). Hobsons also reported a profit of £6 million ($8.4 million)
For DMGT, which acquired Hobsons in 1990, these deals could mark a permanent exit from the education business.
“These two transactions mark another major milestone in DMGT’s transformation and are a clear demonstration of the benefits of our strategy,” said DMGT CEO Paul Zwillenbeg in a prepared statement. “Hobsons was restructured in 2017 to focus on high-growth opportunities in Student Success. The combination of operational execution and organic investment drove a significant increase in capital value.”
He added: “Consistent with our strategy, the divestitures will increase the focus of the DMGT portfolio, resulting in the Group operating in four sectors, compared to ten in 2016.”
source: Read More, EdSurge Articles