The Education Investor: Year-End 2003

As the culmination to Eduventures' quarterly Education Investor series, The Education Investor: 2003 Year-End Review and Outlook both reviews financial activity and forecasts how the industry will take shape in 2004.

Education businesses, investors, acquirers, entrepreneurs, and others can use this publication to:

• Understand the implications of consolidation and strategic investment on the overall education industry competitive landscape;


• Compare current activity with historical trends;


• Formulate strategies to account for forecasted activity;


• Identify attractive areas for investment or acquisition; and


• Identify potential investors or acquirers.

The report's key findings include:

• M&A activity in the industry surged 57% in 2003 to reach a near-record 113 announced transactions (one short of the 114 transactions seen in the market rationalization of 2001).
  
  


• For another consecutive year, private investment in education businesses declined. In 2003, the dollar value of announced transactions declined by 29% versus the 2002 total. The $181 million total invested in 2003 represents the second-lowest level in a decade. M&A deals outnumbered investment rounds by a 4:1 margin in 2003.
  
  


• The postsecondary sector led in terms of the amount of M&A activity across the year, followed by pre-K-12, corporate & professional, and consumer (in descending order). The year was dominated by activity in the education delivery (i.e., instruction/schools) segment of each sector, where investors had been enamored with technology solutions in 2002 and prior years.
  
  


• In 2004, Eduventures anticipates that M&A activity will remain high, but will tail off as the most attractive opportunities are exhausted. The private investment climate remains less certain, and successful IPOs may become the wildcard that sparks investor interest in 2004.