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January 4, 2018

Corporations Stepping Into the Education Void

MHT Partners  | Education Investment Bank

More and more, MHT Partners’ education investment banking team notices corporations increasing internal training capabilities for existing employees and accepting alternative credentials vs. traditional college degrees when hiring new employees, citing the slow pace of change within the U.S. education system, most notably higher education.  Not only is slow change an issue among U.S. higher education, but the number of students and graduates is decreasing.  Since 2011, the number of students enrolled in higher education has declined by 2.6 million.

The problem many corporations cite is too few graduates from higher education with the requisite skills to fill open positions.  A recent study completed by The Manpower Group suggests that 40% of employers are having trouble finding workers with the skills they need.  The solutions: develop content and curriculum specific to the needs of the corporation via corporate training partners and/or increase the acceptance of alternative credentials from online learning platforms.

From an education investment bank perspective, we see strong interest in both types of providers/solutions from training partners and institutional investors.  Bisk Education, Academic Partnerships, iDesign and other online program managers (“OPMs”) are increasingly turning their attention to corporations looking to strengthen their training and professional development programs in support of retraining or upskilling existing employees.  This solution has the added benefits of increasing retention of existing employees and strengthening the professional development capabilities of corporations without the overhead of large corporate training departments.

On the other hand, some corporations are increasingly accepting alternative credentials, such as micro credentials from online learning platforms, in lieu of traditional degrees.  AT&T, IBM, Google, Apple and many others in the Fortune 500 are rethinking their acceptance alternative credentials due to the talent shortage and short shelf life of skills.  If the recent billion-dollar sale of Ascend Learning is any indication, investors are apprised of this trend and are paying rich valuations for platform investments.

What does this mean for investors?  MHT Partners believes many employers will continue to develop these solutions and capabilities in 2018 and beyond.  As a result, investors should have numerous opportunities to partner with technology and training companies in the professional training and development sector.

National Student Clearinghouse Research Center; The Hechinger Report
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