Happy Wednesday, Dear Readers!
This is Milana Vinn with your weekly Tech Take.
How are you this week? Those in the New York area, I hope, enjoyed the warmer weather. I spent the weekend on the roof of my new place listening to music and drinking chilled rosé.
Anyway, let’s talk tech.
E-learning companies are commanding tremendous PE interest.
A group of middle-market PE firms, led by RLG Capital and Trinity Private Equity, invested $38 million ineLearning Brothers. The company, based in American Fork, Utah, provides a complete suite of integrated training development and delivery tools. As part of the deal, eLearning Brothers acquired Trivantis and Edulence to expand its e-learning content capabilities to encompass course building and learning management services.
As some of your families may have experienced firsthand, the remote-everything environment has fueled demand for online learning tools and services. ELearning Brothers produced its best-ever revenue performance in Q1 since its founding more than a decade ago, CEO Andrew Scivally told me. The company is profitable and expects to generate $20 million in revenue in 2020, he said.
I also spoke to the lead investor at RLG, Mark Nelson, who said the investor group is eager to source and execute add-ons to fuel growth in the platform. The newly backed e-learning company doesn’t intend on waiting for the pandemic to pass.
“We are in the market at a time when there is more demand for these products and services than there was before, so this is a great time for us to continue to do more acquisitions,” Nelson said.
While the deal was just one of a few that RLG had in the works, eLearning Brothers made a lot of sense to execute amidst coronavirus, Nelson told me.
“It was a really hard time to get a deal done,” the investor said. “[But] more and more employees are working from home now, and they need to do training on the computer at home, so we hit the market at a perfect time,” he said.
EdTech: Meanwhile, BV Investments struck its first deal out of BV Fund X, which closed at its hard cap of $1.1 billion in February. The Boston-based firm invested in StraighterLine, an edtech company that helps universities and colleges establish new affordable learning pathways. StraighterLine’s platform offers a library of competency-based, student-paced online courses through a subscription model. The firm’s Fund IX also contributed a portion of the investment. Read our news brief here on PE Hub.
However, not all edtech offerings are equally attractive. An industry banker recently told me that e-learning companies that sell their products to K-12 schools are not seeing as much traction as people think. The source cautioned that schools run on tight budgets and can’t always afford to subscribe to new technology services, even amidst the pandemic.
What M&A activity are you hearing about?
Private equity firms are beginning to outline, in broad strokes, the impacts of the pandemic on their operations and investments in SEC disclosures. Recently updated Form ADVs as of late March for many GPs have details about how covid-19 and subsequent government lockdowns and forced business closures could impact their organizations going forward.
The forms reviewed by Buyouts include sections specifically citing covid-19, warning about potential impacts on employees, sourcing new investments, supply chain disruption, sector vulnerabilities and inability to properly manage existing investments.
“Covid-19 and corresponding containment efforts have impaired and will continue to impair, potentially for an extended period of time, our ability to monitor and manage existing fund portfolio investments as well as source new investments to execute the fund’s investment strategies,” TPG said in its latest disclosure. “Given the extraordinary nature of covid-19 and its inherent unpredictability, it may take years to understand the full scope of its ramifications.” Read Chris’s story here on Buyouts.
MPK Equity Partners acquired home services franchise Restoration 1 alongside the Suzanne Perot McGee Family and Mays Family, a business the firm considers recession-resistant, writes Karishma Vanjani on PE Hub. MPK closed the all-equity deal in late April. It is seeking to grow the platform with additional home services and plumbing acquisitions, Karishma writes. Read more here on PE Hub.
That’s it! Have a great rest of your day. Hit me up as always with tips n’ gossip, feedback or just to chat at email@example.com.
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