2025 Education Sector Deal Recap: A Year of Reset and Disruption

Introduction

The 2025 rebound many expected after a partial bounce back in 2024 never materialized. Instead, global and U.S. education deal volume fell roughly 20% year over year—representing a ~30% dip from pandemic-era highs. This slowdown wasn’t unique to education—tariffs and other restrictive policies dampened investment across sectors, while elevated borrowing costs made it harder to justify bets on anything that didn’t have a clear path to accelerated growth or margin expansion.

Education did face a unique set of headwinds that exceeded expectations coming into the year. The Trump administration’s aggressive efforts to eliminate the federal Department of Education created uncertainty around funding, regulation, and procurement—particularly in K–12 and higher education (HED). Pandemic stimulus dollars ran out just as inflation lingered, tightening budgets. Meanwhile, enthusiasm for AI was tempered by caution: investors hesitated to back models whose pricing power and defensibility over five-plus year hold periods remain unproven with competing technology that changes so rapidly.

Taken together, 2025 was less a recovery than a reset—forcing sharper discipline on growth assumptions and widening the gap between durable platforms and fragile models. Still, select segments captured outsized investment, which we explore in the following analysis with an eye towards what 2026 will bring.

Strategic M&A a Relative Bright Spot

While overall education deal volume fell sharply in 2025, strategic M&A proved resilient—up 4% globally, compared to private equity activity dropping ~25% and minority investments plunging 29%. For operators and strategics, acquisitions became the go-to lever for growth, offering scale, capability expansion, and TAM extension without platform-level risk.

Strategic M&A activity skewed toward smaller transactions, with a handful of larger exceptions in higher education, including the break-up of Anthology—which filed for Chapter 11, refocused on its Blackboard LMS, and saw its SIS/ERP business acquired by Ellucian and its student success/lifecycle engagement units acquired by Encoura under a court-supervised restructuring. Other illustrative deals and rationales across the ecosystem included:

• Edmentum + MajorClarity: Enhanced Edmentum’s career-connected learning model by integrating MajorClarity’s career discovery and academic planning with CTE curricula—creating one of the most comprehensive K-12 district college & career readiness platforms.
• 95 Percent Group + All About Learning Press: Expanded 95 Percent Group’s offerings in multisensory literacy programs targeting the homeschool market, and offered a channel to expand TAM and sell into the growing school choice ecosystem.
• Seesaw + Little Thinking Minds: Accelerated Seesaw’s TAM growth internationally by adding Arabic literacy capabilities alongside an existing footprint in the UAE.
• VitalSource + RedShelf: Consolidated the digital course materials ecosystem, expanding VitalSource’s distribution scale and reinforcing its role as a core infrastructure provider as institutions and publishers continue shifting away from physical textbooks.
• Encoura + Ruffalo Noel Levitz (advised by Tyton Partners) : Combined Encoura’s data and analytics platform with RNL’s enrollment, retention, and advancement services to deliver a more comprehensive, lifecycle-oriented partner for higher education institutions.
• Coursera + Udemy Business: Strengthened Coursera’s position in workforce-aligned higher education and enterprise learning by expanding its corporate customer base and short-cycle credential offerings.
• KnowFully + EfficientCME: Expanded KnowFully’s continuing medical education footprint by adding specialty-focused CME assets, increasing content coverage and practitioner reach across regulated clinical domains where demand is driven by licensure, compliance, and ongoing credentialing requirements.

In 2025, strategic M&A wasn’t so much a bright spot as it was a necessity. Buyers used tuck-ins to unlock growth levers that organic strategies couldn’t reliably deliver: scale to strengthen market position, capabilities to deepen product ecosystems, and TAM expansion to capture new demand pools. With borrowing costs high and core markets slow, we expect this disciplined, purpose-driven approach to remain central in 2026.

 Where PE Still Deployed Capital 

Private equity activity declined ~25% in both the U.S. and globally and across most end markets, as sponsors extended hold periods and adopted a “wait-and-see” posture. While partially explained by political disruption and resultant market headwinds, another sentiment we’ve increasingly heard is reflected in the following investor comment: “It just takes longer these days to generate the necessary growth to bring assets back to market and justify expected valuation. In some ways, six years feels like the new three.”  

The upshot has been fewer quality deals coming to market. Even so, interest in deals remained high in 2025, funding was available, and capital still flowed (albeit in a more constrained way) toward segments viewed as more resilient. Noteworthy themes included:  

• PE investors remained active in early childhood education, backing childcare and early-learning platforms where demand is driven by labor force participation rather than public funding, discretionary spend remains resilient, and chronic supply shortages continue to support positive pricing and utilization performance in select geographies (e.g., Avathon Capital’s expansion of Yellow Brick Road, Harvest Partners acquisition of The Learning Experience).  

• Sponsors also leaned into K–12 and international school networks serving fee-paying families—models perceived as resilient and insulated from public funding volatility. This trend extended to enrichment-oriented models adjacent to these segments, where discretionary spend and parental choice remained strong growth drivers (e.g., Inspired Education’s acquisition of USPA banked by Tyton Partners; BDT & MSD investment in Global School Management). 

• Interest persisted in healthcare-oriented and therapy-adjacent education, where demand is anchored in long-term demographic trends, and protected funding streams exist tied to non-negotiable accountability requirements (i.e., FAPE). Special education staffing has been an especially busy sub-segment, with regional instructional/ therapeutic service providers trading for significant multiples in recent months (e.g., Ascend’s acquisition of Unison Therapy Services [Tyton Partners provided diligence services]; LightBay Capital’s investment in Ro Health). 

• Finally, higher education services and corporate learning platforms tied to workforce alignment, compliance, and mission-critical skills development remained compelling themes for investors. In particular, they favored asset-light, B2B and institutional models with recurring revenue and clear ROI for employers and institutions—spanning professional upskilling, credentialing, enrollment services, and operational enablement (e.g., Riverside’s investment in Wall Street Prep [Tyton Partners provided diligence services]; Vista-backed participation in Skilljar). 

PE investment in 2025 largely converged around predictable, modest-but-positive growth stories. Exceptions remained, but the prevailing mindset shifted toward stability over “rising stars.” We expect this resilience-first allocation to persist in 2026 as sponsors continue to prioritize durability over growth-at-any-cost.

Deals by Segment: Capital Rotates to the Edges of the System 

Deal activity declined across most segments in 2025, but the depth of the pullback varied. PreK–12 and Higher Education saw the sharpest contractions, with volume down year over year in both the U.S. (PreK-12: -35%; HED: -37%) and globally (PreK-12: -27%; HED: -41%). In contrast, Human Capital Optimization (HCO) proved comparatively resilient, capturing a larger share of overall activity despite modest absolute declines (-7% U.S., -2% Global). 

 A key driver of this divergence: relative stability of employer-funded spend versus public education dollars. As ESSER funding rolled off and per-student budgets tightened, investors shifted toward the “edges” of the education system – corporate learning, workforce development, healthcare training (along with early childhood centers referenced in the above section) – where funding sources are diversified and purchasing decisions are less exposed to state and federal budgets.  Within these segments, several themes stood out: 

• Recurring-revenue SaaS models sustained interest, particularly in corporate L&D and HCO. Platforms selling compliance, workforce enablement, and learning management software benefited from contract-based revenue and predictable renewals – helping maintain deal flow even as broader volumes declined. 

• AI upskilling moved from curiosity to mandate, driving investment in platforms that enable workforce transformation rather than experimental use cases. Transactions such as Workday’s acquisition of Sana and Accenture’s acquisition of TalentSprint reflect this pivot toward AI-driven operating strategy. 

In the “no hire, no fire” stagnant state the economy finds itself in, worker productivity will continue to win the day in 2026. While PreK-12 and HED should have weathered the worst of the storm and see volume pick up, we expect HCO investments to outpace those less insulated from political disruption.  

Looking Ahead 

2025 will likely be remembered as a year that hinted at improvement quarter after quarter—but never delivered—despite a global surge in transactions at the end of the year. As one US investor put it, “By August, we knew Q4 wasn’t coming and started building the 2026 pipeline. This was the earliest that’s ever happened.” 

Expectations for 2026 are cautiously more optimistic, though few anticipate a breakout year. Borrowing costs are still elevated, but the trajectory may change as (interfering) pressure pushes for relief. Political volatility will persist, yet the midterm elections are expected to result in checks on executive power that could help restore stability. And budgets will remain tight, though planning should be more predictable than the post-stimulus whiplash of 2025. 

In this environment, clarity – not acceleration – will define opportunity. Disciplined capital, strategic M&A, and a focus on durable demand drivers will remain central themes. Informed and thematic investing will win the day. If you’re exploring, creating, or refining your education-specific thesis, we’d welcome the chance to be a thought partner and to support your deal execution efforts. 

*Tyton Partners tracks education sector transaction activity through various public and proprietary sources. All announced deals are reviewed to ensure accuracy of data and alignment with methodologies developed across more than a decade of monitoring the landscape.