2015 Investment

Opportunities in
European Education
February 2015

Agenda
Introduction to Parthenon and EY

Introduction to Parthenons Education Practice

Overview of Investing in European Education

Parthenon | Page 2

Introduction to Parthenon and EY

Deep industry expertise in numerous sectors

Consumer

Education

Financial
Services

Healthcare

Life Sciences

Information
and Media

Industrial

Technology

$
Private Equity

Parthenon | Page 3

Introduction to Parthenon and EY

Comprehensive coverage of strategy and transaction processes

Growth strategy
Market diligence
Market entry strategy
Intellectual property monetization
New market development
Portfolio optimization
Strategic options assessment

Corporate/business unit strategy

Competitive analysis and strategy
Economic forecasting/modeling
Innovation
Marketing/distribution strategy
Strategic resource allocation

* Services delivered in collaboration with other TAS and Advisory competencies.

Commercial due diligence

Divestiture preparation
Forecast achievability
assessment
Merger and acquisition strategy
Target identification/prioritization

Brand audit
Cost optimization
Marketing mix effectiveness
Pricing
Sales force effectiveness
Product strategy
Post-merger integration

Parthenon | Page 4

Agenda
Introduction to Parthenon and EY

Introduction to Parthenons Education Practice

Overview of Investing in European Education

Parthenon | Page 5

Introduction to Parthenons Education Practice

Over 1,000 education projects in more than 70 countries

Major offices
Education projects
completed by Parthenon

Pre-Kindergarten

K-12

Career and
Professional

University

Vocational
and Other

Parthenon | Page 6

Introduction to Parthenons Education Practice

across the entire education landscape

Post-secondary
Further, Vocational and
Employability
Higher Education

Educational Tours & Travel

Corporate

Specialist SEN and Educational Care

Continuous
Professional and
Executive

6th Form

K-12

Nurseries

Pathway
Foundation

Education Delivery

Pre-K, Primary and Secondary

Tutoring and Test Preparation

Education Support
Services

Language (Including EFL)

Policy

Infrastr
ucture

Publishing

Technology

Assessment

Digital Content

Traditional Publishing

Software

Testing

School Improvement

Awarding Bodies

Legal and Financial

Technology Platforms and e-Learning Tools

Property and Construction

Professional
Support

Recruitment

Training
& Prof.
Dev.

Accommodation

Managed Services

Other Services

Facilities Management

Learning Services

(e.g. Catering, cleaning, security)

(e.g. Learning Specialist Support)

IT

Procurement

Administration
(e.g. Payroll)

Learning Supplies

Hardware Supplies

Technology Infrastructure

Government Policy
Foundation & Not-for Profit Policy

Parthenon | Page 7

Agenda
Introduction to Parthenon and EY

Introduction to Parthenons Education Practice

Overview of Investing in European Education
Recent Deal Activity
Global Education Themes
Businesses to Watch in 2015

Parthenon | Page 8

Recent Deal Activity

~200 PE deals have taken place in the sector since 2004; deal volumes between ed.
support and ed. delivery are broadly inline with private spend
Number of PE Deals in Education by Sector, Europe, 2004 2014
100%

142
Pathway Provider

Language (including EFL)

Tutoring and Test Preparation
80

Higher Education

59

Total = 201

Other Services
Training and Professional Development
Digital Content

Recruitment

Corporate Training
Nurseries
60

Technology Platforms and

e-Learning Tools

Specialist SEN and Educational care

40

K-12

Professional Training

Traditional Publishers

20
Further, Vocational Employability
0

UK
Market
Size

Educational Delivery

Educational Support

Public and and Private Expenditure

~90B

~3B

Private Expenduture

~10B

~3B

Source: Preqin, Baird, Parthenon Analysis

Parthenon | Page 9

Recent Deal Activity

Deal volumes have grown; the growth is in education delivery rather than services
Number of PE Deals in Education by Year & Segment, Europe, 2004 2014

40

Growing deals in sector driven

by educational delivery
31

Softening in 2014; deal volume

expected to be close to 22

30
25
23

22
19

20
15

19

22
16

14

16

19
17

14
10

9
5

Source: Preqin and Baird

2004

10

16

11

10

2
6
2005

5
2006

2007

Educational Delivery

9
5

2008

2009

6
2010

5
2011

3
2012

2013

Educational Support

2014

Parthenon | Page 10

Recent Deal Activity

The proportion of deals in the UK is falling as European markets grow: deal volume
typically fall before elections
Number of PE Deals in Education by Year & Country, Europe, 2004 2014

40

31
30
6
25
1

23

1
1

20
15

2
2

19

1
1

10

9
1
1
1

8
2
1

% UK

14
1
1

1
1
1
1
1
1

1
1

2
2

15
10

13

4
8

14

Other
16

Switzerland

1
1

France

Netherlands

Germany
Sweden

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

YTD
2014*

67%

63%

33%

65%

53%

29%

32%

32%

68%

45%

38%

UK General
Elections

Spain

UK General
Elections

Source: Preqin and Baird

2
19

3
3

1
1

1
1

22

UK

UK General
Elections

Parthenon | Page 11

Agenda
Introduction to Parthenon and EY

Introduction to Parthenons Education Practice

Overview of Investing in European Education
Recent Deal Activity
Global Education Themes
Businesses to Watch in 2015

Parthenon | Page 12

Global Education Themes

Post-secondary enrolment growth is being driven by rising wage differentials and
emerging market household income growth
Rising Tertiary Enrolment Ratios and Income Differentials

Rising Household Income Driving Student Mobility

Germany HE Gross Enrolment Ratio

Bilateral Flows of International Students

100%
80
60

62%

50%

53%

57%

47%

2007

2008

2009

2010

40
20
0

2011

Earnings of 25-64 Year Olds by Qualification Level, 2011

0X

Hungary

Germany

1.0X

0.7X

1.0X

0.9X

1.0X

1X

0.7X

2X

1.6X

1.6X

2.1X

3X

Tertiary
Upper Secondary (Base)
Below Upper Secondary
UK

Higher Education

Professional and Executive

K-12

Pathway & HE

Language (EFL)

University of Kent

BPP

Nord Anglia
Education

Cambridge
Education Group

British
Council

Parthenon | Page 13

Emerging Education Themes

leading to the rise of the non-traditional students and liberalisation
of the private market
Non-traditional Students

Liberalisation and Role of the Private Sector

US University Student Segments

Career Starter

Industry Switcher

Coming of
Age

Aspiring Academics

Academic
Wanderer

US
University
Career Accelerator
Student
Population

Growth in Private & Public HE Enrolments,

Selected Countries, 2010-12 (CAGR)
100%

70%
69%

20

40

60

80

100%

20

Employers Most Important Recruitment Criteria, UK

5%

40
20
0

5%*
3%

82%

1%
68%

% of Employers
Mentioning

60

20%

10

100%
80

Public
Private

Employability
Skills

67%

0%

50%

-3%
-10

Degree Subject

Higher Education

Relevant Work
Experience

Degree Result

8%

4%

University
Attended

Foreign
Language Capability

Private Share
(2012)

US
37%

France

UK

Germany

18%

6%

5%

Professional and Executive

Further, Vocational and

Employability

Higher Education

QA

learndirect

Bimm

BKF
University of
Applied Sciences,
Budapest

Professional
and Executive
The University
of Law

Parthenon | Page 14

Emerging Education Themes

In parallel, technology and accountability are driving the development of new products,
especially in K-12
E-volution

Increased Accountability & Competition

E-Learning Developments

Maths PISA Scores, 2012

800
613

E-Learning Expectations

600

573

561

560

554

514

495

494

481

Korea

Germany

France

United
Kingdom

United
States

16

25

26

36

400

200

Innovation
Trigger

Peak of
Inflated
Expectations

Trough of
Disillusionment

Slope of
Enlightenment

Plateau of
Productivity

Rank (/65)

Shanghai- Singapore Hong

Chinese
China
Kong-China Taipei

Time

Publishing and
Digital Content
Renaissance
Learning

Testing

Technology Platforms and

e-Learning Tools

GL Education

itslearning

Testing

Professional
Support

Technology Platforms and

e-Learning Tools

Renaissance
Learning

Education
Personnel

itslearning

Parthenon | Page 15

Emerging Education Themes

Attractive investment theses currently include most of post-secondary education and
special educational needs
Post-secondary
Private Higher
Education

Investment Thesis

Fastest HE enrolment growth

will come from nontraditional students looking
for employment related
courses
Private for-profit providers
will benefit most as they are
focused on:
- Career orientated subjects
(e.g. IT, business etc.)

- More tailored University

experience with smaller
class sizes and
specialised facilities

K-12

Providers best positioned to

grow have:

Quality outcomes and ratings

- Employer connections
- National
coverage/capability
- Online offering

- The sector remains

fragmented and subject to
consolidation

Corporate spend on
professional training will
increase as economic growth
recovers

Spend on outsourced
training will be prioritized for
specialist areas

Online capabilities which

allow for flexibility (time and
location) will be most
attractive to employers and
students

Technology

SEN (Mainly UK)

Corporate Training

Vocational (Mainly UK)

There is an increasing
preponderance for provision
of special education needs
which is being supported by
robust government funding
and a continued pupil bulge

US K-12 technology
companies developing real
scale

Most of Europe still have to

small domestic markets to
build scale

Opportunities exist for a

multisite strategy similar to
what has been achieved in
traditional K-12 models

Investors and
Their Assets

- Career office and

counselors focused on
specific industries with
strong links to employers

Sovereign
Capital

Studialis

GSM
London

CEE Equity
Partners

Bregal
Capital

BKF

Sovereign
Capital

LDC

Lifetime
Training

Bridges
Ventures

learndirect

Babington
Business
College

Auctus

Bregal
Capital

Career
Partner

QA

Teachers'
Pension Plan

Hellman &
Friedman

EQT

Acorn

Renaissance
Learning

itslearning

Care and Education

Parthenon | Page 16

Challenges to Investment Theses

Emerging Education Themes

but two of the most attractive investment theses in recent years (K-12 and traditional
international pathways) may becoming more challenging for new entrants
K-12

Traditional International Pathways

Buy-and-build

UK, US, Aus

Whilst parental demand for a premium fee-paying K-12 school continues to grow,
without an existing platform it may be a challenge to secure the acquisition of an
asset

The UK market has become increasingly crowded with several established

platforms looking to grow through acquisition
Minerva Education

Cognita
Teaching Excellence

Is its possible to enter the market through a smaller asset and compete with the
large global pathway providers?

Cambridge
Education Group

Bellevue
Education

StudyGroup
INTO

Navitas
EDUCAS

Kings Group

Alpha Plus

GEMS Schools

ACS International
Schools

There are examples of some growing smaller providers, but it is becoming more
challenging to find the opportunities to scale
Oxford International
ISIS Education

Kaplan

Kinds
Education

Shorelight
Education

Opportunities may exist in Europe and globally

HIG Capital

Magnum Capital
Industrial Partners

International School
of Europe

There may be an opportunity to target students at a younger age. Parents from key
source countries are making their childs HE decisions at an earlier age for a
number of reasons
- Immersive English language

International Schools
Partnership

Laude Colegios

Nace Centros
Educativos

- Assess to higher ranked universities

- Greater portability of international school qualifications

Parthenon | Page 17

Agenda
Introduction to Parthenon and EY

Introduction to Parthenons Education Practice

Overview of Investing in European Education
Recent Deal Activity
Global Education Themes
Businesses to Watch in 2015

Parthenon | Page 18

Businesses to Watch in 2015

UK

UK

StudyGroup

Estimated EBITDA

20M+

learndirect

Alpha Plus

QA

GSM London

10M - 20M

Lifetime
Fitness
BPP

Kisimul

Mander
Portman
Woodward

5M - 10M

A4e

Polestar
Kedleston
Schools

Treetops
Nurseries

Bimm
Orbitaled

Solar
Care
Group

Kings
Education

paragon
Babington

<5M
Playforce

David
Game

Phoenix

Business College

Learning & Care

MetFilmSchool

Alpha Schools
Group

Pre-K

K-12

Source: Preqin, Capital IQ, OneSource and Parthenon Analysis

Corporate &
Professional

Higher
Education

The Institute of
Contemporary Music
Performance

Itnmark
Education

Explore
Learning

Fleet Tutors
Judicium
Education

Educaedu
Oxford Royale
Academy

Vocational and Educational

Employability
Services

Parthenon | Page 19

Businesses to Watch in 2015

Europe

Europe
AcadeMedia

Doga Koleji

20M+

Studialis
Swiss
Education
Group

Internationella
Engelska
Skolan

Estimated EBITDA

Noordhoff
Uitgevers

NCOI
Opliedingsgroep

Wydawnictwa
Sckolne
i Pedagogiczne

10M - 20M
Babilou

Leya Portugal

Vindora

5M - 10M

Les Petits
Chaperons
Rouges

Empik School

Okyanus
Kolejleri

Seagull

Studiekring

Anabilim

Studienkreis

Inlsningstjnst AB
Semantix

Baggium
ASC

<5M

Career
Partner

Hibernia
College
Dublin

Vaughan
Systems

International House of Education Group

Collge Du
Lman

Pre-K

K-12

Source: Preqin, Capital IQ, OneSource and Parthenon Analysis

Weidinger &
Partner

Institut F2i

Corporate &
Professional

Higher
Education

Fleurus
Presse

Osprey
Publishing

Vocational and Educational

Employability
Services

Parthenon | Page 20

Agenda
Appendix

Parthenon | Page 21

Appendix
About Parthenon and the Education Practice
About Parthenon-EY
Parthenon combined with Ernst & Young LLP on August 29, 2014. Parthenon is a leading advisory organization focused on strateg y consulting. We are
committed to combining our unconventional thinking with our clients smarts to deliver actionable strategies. In todays complex business landscape, creativity has
become a necessary ingredient for sustained success. Together with EY, we have an ideal balance of strengths specialized expertise with broad executional
capabilities, intimate client relationships with larger networks of support, and proven processes along with a progressive spirit to unlock opportunity for our
clients, amplify the impact of our strategies, and make Parthenon the global partner of choice for business leaders.

About Parthenons Education Practice

Parthenon has served as an advisor to the education sector since our inception in 1991. Our Education Practice the first of its kind across management
consulting firms has an explicit mission and vision to be the leading strategy advisor to the global education industry. To achieve this, we invest significantly in
dedicated management and team resources to ensure that our global expertise extends across public sector and non-profit education providers, foundations, forprofit companies and service providers, and investors. Parthenon has deep experience and a track record of consistent success in working closely with
universities, colleges, states, districts, and leading educational reform and service organizations across the globe.
Learn more about us at www.parthenon.ey.com

Matthew Robb

Courtney Gainer

Managing Director

Vice President

mrobb@parthenon.com

courtneyg@parthenon.com

+44 (0) 207 201 0475

+44 (0) 207 201 0459

+44 (0) 779 134 9 228

+44 (0) 781 468 5339

Follow Us
for Regular
Updates

Twitter | @Parthenon_Group
Facebook | www.facebook.com/ParthenonGroup
LinkedIn | www.linkedin.com/company/the-parthenon-group
Parthenon | Page 22

EY | Assurance | Tax | Transactions | Advisory

About EY
EY is a global leader in assurance, tax, transaction and
advisory services. The insights and quality services we
deliver help build trust and confidence in the capital
markets and in economies the world over. We develop
outstanding leaders who team to deliver on our
promises to all of our stakeholders. In so doing, we play
a critical role in building a better working world for our
people, for our clients and for our communities.

EY refers to the global organization, and may refer to

one or more, of the member firms of Ernst & Young
Global Limited, each of which is a separate legal entity.
Ernst & Young Global Limited, a UK company limited by
guarantee, does not provide services to clients. Parthenon and
Parthenon-EY refer to the combined group of
Parthenon and EY professionals providing strategy
services worldwide. For more information about our organization,
please visit ey.com.
Ernst & Young LLP is a client-serving member firm of
Ernst & Young Global Limited operating in the US.
2014 Ernst & Young LLP.
All Rights Reserved.

This material has been prepared for general informational purposes

only and is not intended to be relied upon as accounting, tax, or other
professional advice. Please refer to your advisors for specific advice.

ey.com