Following the Money in Ed-Tech Investment: Number of Mergers Grows

Investors are rushing to buy into higher-education-related companies these days, and there’s plenty of consolidation in the market as well.

The number of mergers and acquisitions in the industry has reached its highest peak in two and a half years, according to a recent report by the investment-banking firm of Berkery Noyes. In the past six months, the number of such mergers grew by 9 percent.

Most mergers highlighted in the report don’t share a major theme, said Trace Urdan, an independent analyst. LinkedIn’s $1.5-billion acquisition of Lynda.com is an outlier in terms of the size of the transaction, though it could be a model of a coming trend in higher education in which traditional colleges could get involved, he said.

“Those investor dollars are forging new frontiers in innovation,” Mr. Urdan said. “I think this LinkedIn thing with Lynda is a really interesting example pushing towards what’s going to happen next.”

Colleges are becoming more aware of the need to ensure that students are “employment ready” when they graduate, he added. Other areas drawing attention from private investors include international models in higher education and new uses of technology.

Just as investor dollars pushed the growth of for-profit higher education, Mr. Urdan said he expects investments to continue to spur innovation in higher education. “These investor dollars are a road map for where you’re going to see higher education go in the future,” he said.

The growth in mergers shouldn’t come as a surprise, said Bradley C. Wheeler, chief information officer at Indiana University. “The areas that investors will target are areas where they can grow those economies to scale and stake out a fairly advantaged position in the marketplace,” Mr. Wheeler said, citing as examples the markets for scholarly journals and learning-management systems.