Carnegie Learning, the Madison Dearborn-owned education technology company, is seeking core and supplemental K-12 education acquisitions, but is not relying on M&A for growth, said CEO Barry Malkin.

Since Madison Dearborn invested in 2020, the company has doubled in size, Malkin said. As reported by Mergermarket, Carnegie Learning was marketed on USD 15m-USD 20m in EBITDA in its sale process led by Macquarie, a range the CEO confirmed for this report. He would not disclose current financial metrics.

The Pittsburgh-based company has made four acquisitions since Madison Dearborn invested. “The four acquisitions were small – not transformational in any way, shape or form. They were to augment the offerings we had or were building,” Malkin said. One deal, Scientific Learning, closed at the time of the private equity investment. Subsequently, the company acquired Zorbits, a supplemental math provider, and curriculum assets from Muse Global. The company also acquired Literacy Design Collaborative in 2021, a deal he characterized as an acqui-hire, adding 10 people to Carnegie’s ranks. The deal was not announced.

“The vast majority of growth has been organic,” Malkin said. Nevertheless, the company is looking for further acquisitions to enhance its product portfolio and invest in artificial intelligence, he added.

“We are definitely proactive. All acquisitions have been outside of an auction process – proprietary and initiated by Carnegie Learning’s team,” Malkin said, adding that the company does sometimes work with bankers.

Carnegie Learning’s first product was an artificial intelligence math software program for middle and high school students developed at Carnegie Mellon University. Carnegie Learning is celebrating its 25th year, the CEO noted.

Math content represents the majority of revenue, followed by literacy and world languages, he said. Carnegie Learning could acquire to add other subjects but also looks for technology or tools and capabilities for its existing subjects. Any potential target must have technology that is research-backed with a demonstrable impact on outcomes in education, he stressed. Because of its private equity backing, the company has no explicit limit as to target size, but this does not mean it is looking for a large deal, he said.

“We are growing rapidly and not dependent on acquisitions. I actually think we can accelerate our growth rate with new products on the horizon,” he said.

These products include a K-5 math product, a literacy product to debut in the spring for grades six through 12, an adaptive video product for middle and high schoolers using math influencers on YouTube and TiKTok, and a generative AI chatbot for the same age group.

While valuations of startups and small growth companies have come down a bit, for “scaled companies with high quality solutions, valuations have held up incredibly well,” Malkin said, adding that “companies driven by research are the ones that will prevail. Our research focus and AI put us in a good place.” The company recently won the best educational game award for 2023 for its MATHia Adventure product.

Asked about a timeline for an exit, the CEO said Madison Dearborn is “in no hurry to sell.”

The company has a score of 18 on Mergermarket’s Likely to Exit (LTE) index. Mergermarket’s LTE predictive analytics assign a score to sponsor-backed companies to help track and predict when an exit could occur through M&A, an IPO, a direct listing or a de-SPAC transaction.

A higher score signals a greater likelihood to exit sooner. Malkin declined to comment on the score.

He said the M&A landscape is fragmented with many players, but the company regards the largest education publishers, such as Pearson and McGraw-Hill Education, as its closest competitors.

Goldberg Kohn in Chicago and Kirkland & Ellis are the company’s law firms.