The Time is Now . . . Selling Opportunities for Edtech Companies

The demand for education technology (“edtech”) has increased drastically in the last decade amongst schools and corporations. In 2019, investments in edtech companies in the U.S. reached $1.66 billion – a 16 percent increase from 2018(1). Digitization has made the progression and steady implementation of edtech crucial in helping students and employees thrive in the classroom and the everchanging workplace. Investors are realizing this, driving them to invest more time and money in these companies in order to help advance initiatives and increase scale. Continued investment in the sector is an encouraging sign for entrepreneurial companies, ensuring the capital required to develop new innovative technologies and strategies. More importantly, favorable 2020 expected buyer demand, promising industry trends, and aligned strategic initiatives point to a time in which selling opportunities for edtech companies are ideal. That time… is now.

Expected buyer demand in 2020 is more favorable than ever for the edtech industry. After a record-breaking 2019, buyers are eager to invest in the education space as it proves to be the bridge among students, professionals, corporations, and the digital transformation process. The increasing buyer attraction is underpinned by the robust capital available for acquisitions (dry powder) in 2020. According to a survey conducted by Equiteq, 84 percent of financial buyers and 93 percent of strategic buyers are expecting the amount of capital available for M&A to increase or stay the same versus the last year. Two major factors contributing to this include an overall decline in interest rates and a rise in capital providers’ propensity to invest in a historically profitable market.(2) Furthermore, buyer demand is growing in sync with digital transformation. With the rise of technologies like big data, artificial intelligence and virtual reality, financial buyers see an opportunity to expedite the process by increasing the scale of edtech platforms. Similarly, strategic buyers are looking to acquire companies that augment their ability to meet vitalizing consumer demands or provide continuous training for their employees.

There are a couple other notable trends driving increased traction. One of these pertains to the closing gap between education and the workforce. Eight of the top deals in 2019 involved companies that offer educational services to employers and employees for purpose of retention or internal upward mobility. Those eight companies – Guild Education, BetterUp, Coursera, Andela, Degreed, MindTickle,EdCast, and A Cloud Guru – accounted for 39 percent of edtech investing in the past year.(3) Because of changing consumer demand, corporations are allocating more time and money to training platforms that enable their employees to continuously build the technical prowess needed to create differentiated customer experiences. In addition, the talent shortage among digital companies makes retention of talent a key component in ensuring the competitiveness of a company in its respective end market. Most importantly, the blurred line between higher education and the workforce presents a large market for edtech to penetrate, which buyers view as a significant investment highlight.

Another trend positively driving buyer demand is the unprecedented rise in the capabilities of edtech, largely driven by what many call the new industrial revolution or “Rise of the Machines,” which is the convergence of multiple advanced technologies like artificial intelligence, dig data, data science, robotics and virtual reality. The fusion of these technologies has fundamentally altered the way we live and work while also magnifying issues in our current education system. Edtech has begun leveraging these unique technologies to create high-quality learning experiences for all age groups.(3) However, the developments are still in infancy, presenting even more opportunity for edtech companies and buyers to capitalize.

Alvin Toffler, an American futurist and author once said that the “illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn and relearn.”(3) In a world that is more digital than ever, edtech has become the focal point amongst educators, professionals and corporations as they seek innovative learning platforms that deliver results, create opportunities and offer dynamic skillsets. Because of this, the market has seen exponential growth and is highly sought after by buyers/investors. As 2020 kicks off, there is no doubt that the edtech industry is on top; no doubt about increasing buyer demand; no doubt about favorable industry trends. In the same sense, there should be no doubt on when the best-selling opportunity is. Because that time is now!

[2] The Knowledge Economy Global Buyer Report 2020 – Equiteq

What Happened to Ballast Point?

Among the hundreds of consumer product M&A headlines in Q4 2019, one corporate divestiture in particular stood out to us: Constellation Brands’ sale of Ballast Point to the virtually unheard-of Kings & Convicts Brewing Company. Was this a shift in strategy for one of the leading beer, wine, and spirits producers as it pursued the cannabis space? Had Ballast Point fallen out of favor with consumers in the four short years since Constellation acquired the super-premium brand? Who / what is Kings & Convicts Brewing Company and what will be the fate of Ballast Point?

First off, a bit of a primer on the industry. The market for beer has drastically changed over the past two decades as consumer preferences shifted from more traditional choices such as light and premium brands to craft beer. The quality, variety, and the story that craft beer brands tell allowed craft beer production to become one of the fastest growing alcoholic beverage segments in the U.S., generating an estimated $27.6 billion in revenue in 2018, a little over 24% of the total beer market share (~13% volume share). While overall beer consumption volumes are flat to down in recent years, the U.S. is the world’s leading craft beer market with over 7,500 independent craft breweries established across the nation. Simply put: American beer drinkers are spending more while drinking less beer.

After a relatively short slowdown in U.S. beer M&A activity, deal volume picked up again in 2019, including two other significant acquisitions and one major regional brewer making its first acquisition. In May 2019, Boston Beer Company and Dogfish Head Brewery announced their $300 million deal, calling the transaction a preventive measure for being bought out by “industry giants.” Little World Beverages, a Kirin subsidiary, announced in November that it would acquire Colorado’s New Belgium Brewing from its employee stock ownership plan. The nearly $400 million transaction included San Francisco’s storied Magnolia Brewery. Also noteworthy was Sierra Nevada’s first ever acquisition, which entailed San Francisco’s Suffer Fest, a small but innovative craft brand aimed at outdoor enthusiasts.

So what happened to Ballast Point, the pioneer of the $15 six-pack? All reporting on the San Diego-based brewer indicates that despite Constellation’s massive distribution push beginning in 2016, sales volumes grew, peaked, and then rapidly declined through 2019 by over 50% from a peak of 431,000 barrels across 49 states. National craft beer demand growth slowed during this time and many competing regional craft brewers countered with citrus-infused IPAs, most of which retail for less than Ballast Point’s flagship Sculpin IPA. As Men’s Journal put it, “in craft beer, there are no sacred cows.” Another likely factor is consumer backlash, as craft beer has long been known as a category with loyal consumers who want to drink nothing but local suds. Building on that point, the proliferation of American brew pubs led to a 2013-2018 production CAGR of 10.9% vs. 8.6% for regional brewers. Now officially re-designated as a craft brewer (no single investor owns more than 25%), Ballast Point’s new owners, including experienced industry veterans, have vowed to hire 70 new sales staff and focus on reviving the brand.

MHT Partners’ Consumer Growth team remains bullish on the craft beer, as well as wine and spirits categories, as premiumization continues to more than offset flat-to-declining consumption volumes and presents opportunities for entrepreneurs and acquirers alike.


Notes from the 38th Annual J.P. Morgan Healthcare Conference

Last week healthcare executives, service providers and investors descended upon San Francisco for J.P. Morgan’s (“JPM”) 38th annual Healthcare Conference. In a rare turn of events, the skies in San Francisco were relatively clear after several years of biblical rainstorms during JPM week.

MHT Partners’ Healthcare Services Team was in attendance, hosting several events and numerous meetings with healthcare firms and financial sponsors (thanks to all of you who made the trek over to 101 Montgomery). The general mood of the conference was upbeat, perhaps due to the weather, but a bit more subdued than in prior years. Investors’ appetite for high-quality healthcare businesses, which solve important problems facing the industry (access, cost containment, interoperability, etc.) remains strong.

Here are a few notable observations stemming from our interactions at JPM:

  • There’s still meaningful interest in physician practice deals – Healthcare investors will continue to put dollars to work in the physician practice management space in 2020. Maturing sectors such as dermatology and vision will see slowing deal velocity. Platforms in these sectors will continue to seek quality add-ons while pricing for add-ons stabilizes. It’s likely that we’ll also see several sponsor-backed platforms trade hands. We anticipate increased interest in and deal momentum for third-wave specialties such as ENT, Urology, Podiatry, GI, and Orthopedics. These specialties pair well with ambulatory surgery centers (“ASCs”), which offer acquiring groups attractive, diversified streams of revenue.
  • Women’s health and fertility services groups are garnering attention – As fertility rates have declined, more women are open to seeking treatment, translating into rapidly growing global demand for fertility services. At the same time, a growing number of U.S. states have adopted a commercial payor coverage mandate for fertility services. Many financial investors are looking to invest in these trends.
  • Behavioral healthcare remains an active area of focus for many investors – Autism, Psychiatry, and Substance Abuse deals captured their fair share of headlines in 2019. We expect this trend to continue in 2020, as commercial and government payors expand coverage to address a wide range of mental health issues in the U.S. A scarcity of mental health professionals and a desire to build new and existing platforms will fuel private equity investment in behavioral health.
  • Demographic tailwinds lifting home health and hospice businesses continue to entice investors – An aging U.S. population and a need to provide cost-effective care outside of a hospital setting has provided many private equity groups with strong theses for investment in businesses that can deliver home-based care. Home-based care, regardless of the context, is highly local and presents unique recruiting and scaling challenges.
  • Everyone loves technology-enabled healthcare services – The promise of technology to reduce the cost of healthcare and improve health outcomes was a recurring theme in many of our conversations at JPM. Companies that can solve interoperability challenges, extend or manage the continuum of care, or provide novel insights into care delivery or drug development will receive significant investment interest.
  • Significant capital has been earmarked for healthcare services’ investments in 2020 – Many healthcare-focused private equity firms have raised new funds and are actively looking for platform investments across a variety of industry sub-verticals. Based on conversations at the conference, MHT expects the healthcare deal market to be robust, with an emphasis and focus on high-quality assets in 2020.

MHT Partners, a leading healthcare services investment bank, would love to be a resource for you as you consider the rapidly evolving healthcare landscape and the implications for your business. If you would like to learn more about MHT’s healthcare services advisory practice, please e-mail Taylor Curtis ( or Alex Sauter (

The Evolving Fitness Frenzy

The global health club industry boomed to an estimated $94.0 billion in 2018. The U.S. alone contributed $32.3 billion to the industry. (1) The industry has been rapidly changing due to several key trends, including increased disposable income, growing health consciousness, a changing age mix, and new workout preferences. As generation Z and millennials start dominating the fitness industry, health club providers can no longer rely on the “one-size-fits-all” approach when thinking about their product or services offered. Wide-ranging fitness abilities, diverse health conditions, and heavy time constraints create demand for individualized fitness and wellness experiences. Boutique studios and home fitness solutions have risen to meet this new demand. To compete, traditional health clubs have expanded amenity offerings and even adapted some of the most successful boutique fitness concepts, like High Intensity Interval Training classes (“HIIT”), to their clubs to attract and retain customers.

Technology’s influence in fitness and wellness has also expanded tremendously. Fitness posts on social media and apps exploded in 2019, allowing friends to compete and share their fitness experiences with each other. In conjunction with rising awareness of health measures, consumers highly value the ability to track fitness data in real time. For example, wearable technology like smart watches, apps, and other forms of fitness monitors have been cited repeatedly in the top 10 fitness industry trends over the past couple of years, as they allow users to track progress and participate in a “community.”

Yet the two preeminent deals in the digital and tech-enabled fitness market of 2019 have both faltered. Peloton announced its IPO in September and has remained relatively flat hovering at around $28 per share. After speculation by Wall Street in recent months over Peloton’s value, the stock price has not achieved steady growth, highlighted by falling stock prices following negative reception of its holiday ad campaign. In November, Google announced that they would be acquiring Fitbit for $2.1 billion. However, the Department of Justice announced it will be reviewing the acquisition due to data privacy concerns, in addition to existing scrutiny of Google’s business practices, potentially halting the transaction.

Notwithstanding the aforementioned “bumps,” tech-enablement attributes differentiate fitness companies in a highly competitive and constantly evolving fitness industry. We believe the trend is here to stay, as the proliferation of new digital and technology-driven fitness businesses continues. Direct-To-Consumer (“DTC”) models, in particular, that marry both the “equipment” and “data” are in a particularly attractive spot. DTC models are highly customizable and allow for higher quality interactions between the end user and the brand. Companies and investors in the space tend to agree and view Peloton and Fitbit’s setbacks as mistakes not to be repeated in their own ventures, rather than flaws in the industry itself. Digital and tech-enabled fitness firms such as Tonal and iFit have both successfully secured VC funding recently (Serena Ventures/ Shasta Ventures/ Mayfield Fund and Pamplona Capital respectively) and garnered significant media attention.

MHT Partners, a leading consumer investment bank, will closely follow the exciting activity in the digital and tech-enabled fitness world and the continued evolution of the fitness and wellness space.

1) 2019 IHRSA Global Report

The Use of Technology in Higher Education

As the world digitally evolves, education technology (“edtech”) continues to proliferate, increasing the impact it has on learning. The growing exposure of students to technologies in various aspects of their lives has caused a noticeable shift in the way students learn and retain information. As a result, institutions have begun to rely on technologies such as big data, cloud computing, artificial intelligence and virtual reality to carry out their initiatives to differentiate learning experiences and implement unique, adaptive curriculums. In addition, the technologies are being used to recruit students, predict dropout rates, track student successes as well as help to improve operational efficiency, which ultimately drives growth, increases revenue and reduces costs. While campuses are certainly becoming smarter, many are seeing that implementation of these technologies doesn’t automatically result in improvement. Layering technologies over inefficiencies can be compared to a person buying the incorrect batteries for a TV remote – it simply doesn’t work, though well intended. The same logic must be applied when administrators and educators implement technologies on their campuses. With any luck, stakeholders will take the necessary steps to ensure adoption and utilization that are required to increase students’ performance and differentiate their college experiences.

The use of edtech on campus has created additional growth opportunities for students and schools. According to Educause, a renowned education non-profit that advocates for edtech use in higher education, the use of big data, cloud computing and online learning platforms are among the most important technology-driven changes in higher education. Colleges and universities are finding new, creative ways to utilize the data including but not limited to recruiting students and predicting dropouts by monitoring the data once the students are enrolled. The adoption of these new practices allows institutions to understand the changing habits and needs of their students and proactively create, implement catered curriculums, and differentiate learning experiences. In addition, institution leaders can grow their campuses by using data to attract and retain students and top-notch instructors.

Technologies like artificial intelligence and virtual reality are also expanding rapidly into higher education as they are giving college administrators innovative ways to track students, teach students and create smarter, more efficient campuses. The combined use of big data and artificial intelligence is becoming a dominant force on campus as educators seek to carry out advanced initiatives and implement technologies that are catered, adaptive and dynamic. Virtual and augmented reality tools are helping to take these initiatives to the next level by providing students with experiences that would be “otherwise too expensive or even impossible to replicate in the real world.”1 For example, Hamilton College utilizes these tools to change the way their 1,850 student liberal arts program teaches human anatomy. Students use virtual reality applications to record themselves explaining sections of human anatomy, enhancing the students’ critical thinking and oral communication skills. The learning capabilities of big data, artificial intelligence and virtual reality tools are endless. And – quite frankly – unmatched when you factor in their ability to drive growth, increase revenue and cut costs.

With all new things, though, there is a potential for misuse. While not intended, misuse is a latent problem that applies to the capabilities of emerging education technologies. The intricacies of these technologies must be closely examined before use on a campus, or they could be just as useless as “Triple A” batteries bought for a remote that requires “Double A.” Yes, the intent is there; however, intent alone doesn’t lead to results.

Christopher Brooks, director of research for Educause, said it best when speaking on the implementation of technologies in higher education. It truly does take “a village to get a 3D project off of the ground.”1 Implementation is not a single action, yet it is goal-oriented strategy that seeks to solve a set of problems at the core. This rationale must be kept in mind by administrators and educators in order to unlock the potential of emerging education technology which is needed to differentiate learning experiences and spark student improvement.

We welcome further discussion on this and other trending topics in the education space. Feel free to reach out to a senior member of our education team: Alex Hicks ( or Rebecca Bell (


Private Equity’s Appetite for IT Services Firms Remains Ravenous

Private equity firms continue to actively invest in the IT Services sector. IT Services companies remain attractive investment targets for a variety of reasons, including:

  • The information technology market is huge and experiencing secular growth;
  • The complexity of technology solutions continues to increase, driving demand for outsourced services;
  • The IT Services market is highly fragmented, which provides an opportunity for growth through acquisition;
  • IT Services businesses benefit from economies of scale as personnel utilization improves, purchasing power increases and fixed costs are used more efficiently in larger businesses; and
  • Customer relationships often involve providing managed services, which result in improved visibility into future financial performance.

These attractive attributes provide private equity firms with the opportunity to build large, profitable enterprises that generate significant returns on investment.

Recent examples of capital being put to work in the sector include:

  • Trinity Hunt Partners, a private equity firm based in Dallas, announced the acquisition of a majority stake in Dataprise on January 6, 2020. Dataprise is an IT managed services provider offering IT management, IT strategy and consulting, information security solutions, help desk support services and cloud services.  Trinity Hunt stated they will support Dataprise as it grows through acquisitions to become a national managed services provider.
  • NetGain Technologies (NetGain), a managed services provider in the Central and Southeastern U.S, acquired Progressive Computer Systems, Inc., an IT services provider in North Carolina, on December 24, 2019. NetGain is part of Evergreen Services Group, which is a family of managed IT service providers and a portfolio company of Alpine Investors.
  • Logically, a provider of managed IT services to small and midsize organizations, acquired IQ Technology Solutions, Inc. (IQ) and Carolinas IT, Inc. (Carolinas IT) in December 2019. Logically is a portfolio company of Riverside Company, a global private equity firm focused on the smaller end of the middle market.  Carolinas IT is a provider of outsourced IT services to small- and medium-sized businesses in North Carolina.  The acquisition of Carolinas IT extends Logically’s East Coast footprint and adds audit and compliance services.  IQ is a provider of outsourced IT services to small- and medium-sized businesses based in Reno, Nevada. The acquisition of IQ expands Logically’s presence on the West Coast.
  • Coretelligent, a provider of comprehensive managed IT, security, and cloud services and a portfolio company of private equity firm VSS, acquired SoundView IT Solutions on November 19, 2019. SoundView is a full-service IT integration company with a focus on hedge funds, family offices, and corporations. The Soundview acquisition strengthens Coretelligent’s market position in the Financial Services sector.
  • Staple Street Capital acquired Cyberlink ASP Technology on November 6, 2019. Cyberlink is a managed IT services firm providing cloud, network, storage, managed application, desktop and security services to clients in a variety of industries.
  • Sentinel Capital Partners recapitalized New Era Technology on September 12, 2019. New Era provides managed services and systems integration capabilities for a wide range of IT solutions, including collaboration, data networking, and security. New Era historically has been an active acquirer, having completed 12 add-on acquisitions since its founding in 2013.
  • BC Partners, a London-based private equity firm, entered into a definitive agreement to acquire Presidio, Inc. (NasdaqGS:PSDO) on August 14, 2019. Presidio is an IT solutions provider delivering digital infrastructure, cloud and security solutions for commercial and public sector customers.

Other recent transactions involving private equity include Thrive (portfolio company of M/C Partners) acquiring EaseTech, VC3 (portfolio company of WestView Capital Partners) acquiring masterIT, and Ntiva (portfolio company of Southfield Capital) acquiring 3Points.

MHT Partners, a leading technology investment bank, believes companies offering differentiated IT services and technology solutions will be highly attractive targets in the current M&A market. Demand for acquisitions remains high as numerous private equity firms are looking to make initial investments in the sector and IT Services companies already owned by private equity firms will continue to look for add-on acquisitions.

To learn more about MHT Partners, please contact Mike McGill ( or Kevin Jolley (

Private Equity Investment in Ambulance & Medical Transportation, Part 3: How Ride Sharing and Technology Innovation is Impacting Traditional Ambulance Services

As private equity investment in healthcare services has boomed over the past decade, select funds have turned an eye toward one of the most important and challenging areas of healthcare services: ambulance and medical transportation. In part three of our series on private equity investment in medical transportation, we’ll examine how technology and innovation are altering traditional dynamics in the industry and overhauling existing business models.

Modern ambulances are critical to the U.S. healthcare system and can provide life-saving services in many situations, but for a large and growing population of ambulance riders, high-acuity advanced life support (“ALS”) or basic life support (“BLS”) services exceed patients’ needs. According to recent estimates, non-life-threatening events account for up to 51% of emergency ambulance trips. Utilizing private services such as Uber and Lyft for select non-critical medical transportation is one way that the technology community is working to reduce the cost of care and improve patient outcomes by alleviating a strain on finite ambulance resources.

A one-way ambulance trip can cost a rider thousands of dollars. Insurers often pay a portion of the sum, but in many cases leave a remainder for the patient to pay out-of-pocket. If Medicare determines ambulance transportation to have been medically necessary, Medicare patients are responsible for 20% of the Medicare-approved reimbursement for ambulance transportation, which can vary from $200 to over $450 per trip based on the ambulance type and location. If Medicare determines the ambulance trip not medically necessary, the patient can be stuck with the whole bill. Comparatively, the average cost of an Uber or Lyft is only ~$25. In a true emergency, the financial burden takes a backseat to the patient’s life, but in less critical scenarios, many patients can benefit from evaluating the relative costs of transportation alternatives.

In response, transportation network companies such as Uber and Lyft have introduced non-emergency medical transportation (“NEMT”) services platforms. Both state Medicaid programs and Medicare Advantage (“MA”) plans have begun to arrange NEMT services to transport members to doctors’ offices and hospitals in lieu of traditional ambulance services. The health plans work with NEMT brokers, such as American Logistics Corporation, National MedTrans, and Access2Care, who contract directly with the transportation network companies. In the past, these NEMT brokers have coordinated taxi services or worked with specialized medical transportation providers, but they are increasingly turning toward mainstream ride-sharing platforms.

Uber and Lyft’s NEMT services offerings focus on providing Medicare and Medicaid patients with reliable transportation to doctor appointments. The platforms, marketed as Uber Health and Lyft Concierge, provide a HIPAA-secure environment for healthcare organizations to arrange rides on behalf of patients days in advance of appointments and coordinate with riders via text message or phone call so that riders do not need access to a smartphone. The platforms also provide usage reports and centralized billing functionality for healthcare organizations. Combined, the companies currently have thousands of healthcare partners, including major healthcare organizations such as Allscripts, Ascension, Cleveland Clinic, and Florida Blue.

The introduction of cost-effective, easy-to-use ambulance alternatives has already had a measurable impact: a recent study found that the entry of UberX service into a new market reduced per capita ambulance volume by at least 7%. As adoption of these tech-enabled options continues to increase, the cost of routine medical care and the number of missed doctor appointments will decrease, improving healthcare outcomes.

MHT Partners, a leading healthcare services investment bank, believes that private investment can be a force for good in the ambulance and medical transportation industry, and that companies investing in technology to improve care and manage costs are poised for long-term success. If you would like to learn more about MHT’s healthcare services advisory practice, please e-mail Taylor Curtis ( or Alex Sauter (


Sources: Inappropriate Ambulance Use study; “Did UberX Reduce Ambulance Volume?” by Leon S. Moskatel and David J.G. Slusky (10/24/17)