2023 Key Deal Highlights and Predictions for 2024

Tyton Partners 2023 Transactions

K-12 Transactions

The K-12 market continues to be an active sector as the ESSER funding cliff looms in 2024. With the increase of many new providers and solutions over the last few years during the pandemic, K-12 districts are now consolidating many of those same products and services and only retaining the most useful solutions for students, teachers, and administrators. Strategic and financial investors are responding to these market conditions with an increased focus on inorganic activity to bring more comprehensive solutions to the market to address the needs of their customers.

Tyton Partners represented the following K-12 transactions: School Specialty’s divestiture of EPS School Specialty, a K-12 supplemental curriculum product provider, to Excolere Capital Partners; Tinkergarten, an early childhood curriculum and educator training provider, in its sale to Highlights; Fairmont Schools, a private PreK-12 educational institution, in its sale to International School Partnerships; Creative Learning Systems, a K-12 STEM lab provider, in its sale to Exeter Capital; and an online dual enrollment and post-secondary course and certificate provider, in its sale to a private equity backed strategic sponsor.

Higher Education Transactions

Corporate L&D and Staffing Transactions

Tyton Partners Closes 2023 with Strong and Consistent Results and Focus on a Robust 2024

We are pleased to announce that Tyton Partners Investment Banking Division closed 2023 with a strong performance despite a global slowdown in M&A activity. We continued to serve our clients across the PreK-12, Higher Education, and Corporate Training and Continuing Education markets, as well as the broader TMT ecosystem. While macroeconomic conditions dampened investor sentiment for risk and large-scale M&A transactions, the lower middle market remained healthy and robust, particularly in the global knowledge sector. Several trends contributed to these market conditions including:

• Lower middle market transactions have a smaller financing emphasis and are traditionally deemed less risky, limiting the impact of 2023’s interest rate hikes on this asset class.
• Inflated fundraising valuations earned by many early-stage companies during 2021 prompted early exits from companies’ institutional backers in 2023 leading to an accelerated M&A timetable and opportunities for buyers to realize quick wins through buyer-friendly transactions.
• The prominence of Generative AI in 2023 and its potential impact on learners from early childhood into their corporate careers prompted new investors to enter the global knowledge sector, causing additional excitement in the Ed Tech vertical.
• The upcoming end of government-funded pandemic relief programs in 2024 across the global knowledge sector has prompted strategics and PE-backed platforms to focus on expanding their portfolio of service offerings through M&A to appeal more to decision-makers who now have fewer budgetary dollars to spend.

In 2023 corporate divestitures made a return after a dozen year bull run where historically even strategically incongruent divisional assets stayed within larger strategic platforms. Last year became the time to trim and prune non-essential assets. Tyton was sought out for its expertise in complex carve-outs and divestitures, securing over a dozen mandates to divest. Some of these were completed, several are in the market now, and we are bringing a host of additional divestitures to market in 2024.

Despite the market turmoil, Tyton Partners Investment Bank had another nearly record year, completing its 100^th M&A transaction in 4 years.

In addition to leading the lower middle market league tables with completed transactions at Tyton Partners Investment Bank, Tyton Partner’s Center for Higher Education Transformation (CHET) has also witnessed a dramatic step up in deal flow, as ailing and distressed university and college market mergers compound, as well as strong and healthy institutions taking advantage of a plethora of geographical, online, and degree and certification curricular expansion opportunities. We expect 2024 to have the highest number of college and university mergers and acquisition activity in the history of Title IV regulation.

As always, we look forward to discussing these trends and their impact on your business over Q1, and supporting you in navigating the market shifts, identifying near-term growth opportunities, and exploring compelling capital market opportunities in 2024. Please reach out to us here if you are interested in a more in-depth discussion about the trends above and how to best position your business or investment thesis within the global knowledge sector for 2024 and beyond.

Wishing you great success and all the best in the New Year!