Boston, MA – Capstone Headwaters released its Post-Secondary Education October Update today, reporting that COVID-19 headwinds and the approaching presidential election have created some deal hesitancy for post-secondary institutions, as they monitor the pandemic and wait to see how a potential administration change could impact funding and the regulatory environment. While the year has stalled immediate growth strategies, enrollment in colleges and universities has historically climbed during times of high unemployment and market uncertainty, positioning the industry for near-term growth.
Merger and acquisition (M&A) activity has declined 37% year-over-year through September with 27 announced or closed transactions compared to 43 over the same period in 2019. Following a period of languishing activity during economic upcycles, deal activity saw an uptick starting in June as investors began looking for companies that experience a marked uptick in performance during recessionary periods. Schools that offered programs in computer sciences, nursing, trade schools or certificate programs that allow students to upskill quickly were favored by buyers seeking to diversify their course offerings or capitalize on high-growth fields. Transactions were also spurred by schools seeking defensive synergies to stabilize finances amid COVID-19 impacts.
Jacob Voorhees, Head of Global M&A as well as the head of the Education & Training practice at Capstone commented, “Post-secondary institutions that performed admirably during Obama-era regulatory restrictions have seen a resurgence in interest from the private equity and strategic communities as concerns around 90/10, gainful employment and military funding are not major issues and now they have the tailwinds driven by countercyclical industry dynamics and renewed lender interest. We believe post-election that there will be an influx of interest in the space as the United States struggles to recover from the episodic recession primarily driven by COVID-19.”
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For More Information Contact the Key Report Contributors:
Managing Director, Head of Education & Training Practice
Director, Education & Training Practice