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Berkery Noyes Releases First Half 2010 Education Industry M&A Trends

NEW YORK, July 26, 2010/via PRNewswire/ -- Berkery Noyes, a leading middle market investment bank, has released its 2010 Half Year Education M&A Trends Report. This report analyzes merger and acquisition activity in the Education Industry in the first half of 2010 and compares it with activity in the four previous sixth month periods from 2008-2009.

Revenue multiples in the Education Industry continued their strong upward trend, rising 38% to 1.8, which represents a 200% growth from the low of 0.6 in 1st Half 2009.

Despite strong growth in revenue multiples, transaction volume decreased for the fifth straight half-year period, falling 14%, from 86 in 2nd Half 2009 to 74 in 1st Half 2010. Gains in aggregate deal value had been significant in the past year, but such growth has ceased and total value has regressed 7% from 2nd Half 2009.

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Of the top ten transactions by value, four were financially sponsored: the announced acquisition of SkillSoft plc by Bain Capital, Advent Intl. Corp., and Berkshire Partners LLC for $1.06 billion, Ontario Teachers' Pension Plan's pending acquisition of Acorn Care & Education Ltd. for $245 million, JLL Partners' pending acquisition of Ross Learning LLC for $232 million, and Thoma Bravo, LLC's pending acquisition of PLATO Learning, Inc. for $137 million.

These financially sponsored transactions accounted for just 32% of the transaction volume, but comprised 82% of total transaction value within the industry. The lack of strategic and PE backed acquisitions can be traced back to the Congressional discussion of Title IV of the Higher Education Act, the legislation that regulates student financial aid programs. Lawmakers have come to question specific practices within the higher education model and have proposed a set of rules intended to prevent abuses of federal financial aid programs by establishing new eligibility standards both for students and the colleges they attend. This regulatory spotlight on the industry has raised many concerns from investors in the sector and has had a significant impact on the valuations of publicly traded for profit institutions and the volume of M&A in the first half of 2010.

In the K-12 sector, traditional publishers have seen continued softness in their sector due to the constraints state and local governments have experienced with their fiscal budgets. Although the states have benefited from increased funding from the federal government, most have focused their spending on retaining and compensating teachers, rather than directing spending on additional instructional materials for the classrooms, which has negatively impacted pure play educational publishers. However, certain technology and digital education providers have benefited from an increased emphasis on data driven decision making, which has been the forefront of the current administration's new legislation called Race to the Top. Experts believe this part of the education sector will see increased growth in the coming years which will result in higher volume of M&A activity.

Berkery Noyes provides skilled transaction management to publicly traded and privately held businesses and private equity groups in both sell-side and buy-side mergers and acquisitions. We have managed transactions ranging from several million to more than four billion dollars in value, with an emphasis on mid market transactions of $10 million to $500 million in enterprise value.

Our clients include private companies seeking a buyer, most of the major international information companies, and private equity firms who use the firm's expertise in locating, analyzing and negotiating with acquisition candidates and in managing divestitures. The firm operates with a staff of forty professionals serving the information industry.

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CONTACT: Patrick Scanlan, +1-646-442-7966,