Blog + Higher Ed + K-12 + Private Equity
Blog + Higher Ed + K-12 + Private Equity
Last month Anthology and Blackboard announced that the two companies would merge, creating the largest educational technology company in the world, with more than 4,000 institutional customers. Financial terms were not disclosed, but a Bloomberg reporter covering the merger estimated a combined enterprise value of $3 billion with the merger valuing Blackboard shares at $2 billion and Anthology shares at $1 billion. Anthology’s majority private equity shareholder Veritas provided additional cash financing for the merger and will remain the combined company’s majority shareholder at close, with previous Anthology minority shareholder Leeds Equity and Blackboard’s previous owner Providence Equity becoming minority shareholders in the new enterprise.
The pairing marries Blackboard’s #2 learning management system share with Anthology’s #3 administrative technology share. Anthology itself is the result of the merger of three companies: Campus Management, a student information systems and enterprise resource planning company; Campus Labs, a firm focused on assessment, learning and student success technology; and iModules, a community engagement software company. The new company, whose new name is still to be determined, will be led by Anthology’s current Chairman and CEO Jim Milton. In an interview with press, the leaders of both companies cited the ability to unify student data across the organization as being of benefit to both student and school performance.
The benefits of the merger seem straightforward enough. The ability to cross-sell solutions, offer better integrated and thus better functioning systems, and the scale to mount a serious effort to compete against weaker players outside the U.S. are straightforward advantages for the new company. Unlike the corporate software market where a company can grow forever if it can promise that its solutions will drive business growth for its clients, enterprise software in the saturated postsecondary market is operating in a zero-sum game. Because the number of customers is fixed and finite, labor is extremely difficult to displace with technology and prove ROI. Therefore, share of wallet only comes at the expense of other institutional spending priorities, and growth is increasingly predicated on offering as wide a range of solutions as possible.
Some critics of the combination have noted that if the benefits were real, this type of merger between academic and administrative software might have happened years ago. This argument posits that because the buyers of LMS functionality are squarely on the academic side of the house, with provost or equivalent academic officials making the final selections, whereas SIS and ERP solutions are chosen primarily by CIOs, that the theoretical benefits of the merger will offer few real synergies and no meaningful benefits where it counts – with customers. We understand the basis for this criticism yet wonder if this separation between academic and administrative buyers may in fact be changing as academic leaders are increasingly being held to account for student success. Anthology itself combines the legacy Campus Management functionality, which is a classic CIO purchase, with its Campus Labs and iModules offerings, both of which fall well within the domain of the provost at most institutions.
Student success is certainly a business issue and often hinges on student financial concerns, but it is also a concern of student advising. Our work Driving Toward a Degree, a longitudinal study of student advising suggests that student success is enhanced at institutions that effectively break down silos between administrative and academic functions to better optimize supports for students in all aspects of the student experience, both inside and outside the classroom. In other words, the most successful schools fully integrate administrative and academic systems. Indeed, in recent years, accreditors have become increasingly focused on the issue of student success to the point of specifically recommending that certain institutions update SIS and ERP systems, which in past years would not have been considered related to their predominantly academic areas of focus.
Tyton Partners has experienced this blurring of distinctions first hand as we advised Othot, which provides AI solutions for student engagement, in its sale to Liaison, which provides a range of software based tools – including TargetX CRM — to colleges and universities in support of both student recruitment and student success. There is increasingly less distinction between tools used in the recruitment process and tools used to keep students engaged and to help them persist in their academic progress. As a result, academic and administrative leaders are increasingly interested and invested in the systems traditionally used by the other.
So, while the buyers may have been meaningfully distinct ten years ago, Anthology and Blackboard may in fact be riding a new and emergent trend that has these school solutions being considered in tandem with input from both academic, technology, and finance leaders for the benefit of both the student and the institution. Either way, the merger is likely to prompt further consolidation as the ability to be heard and considered next to ever larger and more influential vendors intensifies and distinctions between academic and non-academic solutions continue to blur in the process.