As the world becomes increasingly digital, European dealmakers have been taking a crash course in upskilling and reskilling.

The need for workers to refresh their skillsets came into sharp focus during the first phase of the pandemic, with a shift to online learning raising interesting questions about how education should be delivered. As a result of the health crisis, Europe’s education sector saw a significant spike in M&A activity in 2020, with 244 deals worth EUR 7.7bn, according to Mergermarket data.

Deal volumes dipped to EUR 3.1bn in 2021 and EUR 2.5bn in 2022, but the secular trend is likely to remain on an upward trajectory over the long term. Indeed, total volumes grew to EUR 3.5bn in 2023. Despite the prospect of growth in volumes, the sector has experienced a sluggish start in 2024, with just 68 deals worth EUR 156m.

The largest deal of 2023 was the acquisition of Norway-based social learning platform Kahoot! by a consortium of investors led by Goldman Sachs Group for EUR 1.6bn. Meanwhile, the largest deal of 2024 so far has been a funding round for Zen Educate in the UK.

Do your homework

Upskilling and reskilling have tended to dominate M&A activity in the online learning domain, particularly in the corporate learning and advancement space.

Strong demand is driving the trend – companies are increasingly investing in platforms that offer personalised and adaptive learning content for their employees. Experts expect investments in learning technologies to continue throughout this year. This could drive activity for dealmakers.

Sugar rush

Despite the fundamental case for upskilling, deal activity in the space in 2020 was somewhat reminiscent of kids rushing around frantically after eating too much sugar. The result was exhausted and tearful kids, as discussed in a previous column – valuations in the edtech space tended to fall in 2022 and 2023.

The mood in the sector is once again positive, with a healthy pipeline, which includes several big-ticket deals. UK-based Nord Anglia Education, owned by EQT and Canada Pension Plan Investment Board, could reach a valuation of USD 15bn in its dual-track process.

Another deal to watch is France-based higher education platform, AD Education, a potential unicorn which has a Likely to Exit (LTE) score of 41 out of 100, according to Mergermarket’s predictive algorithm*. Its owner Ardian has  retained Centerview Partners, Lazard and Eurvad to advise on an exit.

Providence Equity Partners-owned international school operator Globeducate (LTE score of 67) is already in auction process with first-round bids ongoing. Its FY24 EBITDA is in the region of EUR 90m.

Other processes include the sale of a EUR 1bn minority stake in international school operator Cognita. Its majority owner is Jacobs Holding.  Meanwhile, Schülerhilfe’s sponsor Oakley Capital has kicked off a sale process for the German tutoring services provider.

So, let’s lace up our new shoes, pack our rucksacks and prepare to go back to school.