Companies that provide e-training services have become attractive targets. A stellar example can be found in LinkedIn’s recently announced intention to spend $1.5 billion to buy Lynda.com, an online learning company that teaches career skills. The deal represents the social media company’s biggest acquisition in its 12-year history and signals a continuing expansion beyond professional networking.
Before Lynda.com’s recent deal with LinkedIn, the startup bought Video2brain GmbH, a video training company, in 2013. In early 2015, it raised $186 million and was expected to spend some of the capital on more acquisitions. A slate of services similar to Lynda.com have been scooped up by competitors, and it will be interesting to see if LinkedIn will continue buying in the space.
Until then, private equity firm the Riverside Co. shows no sign of slowing down when it comes to buying up companies in this sector. Most recently, the firm invested in Health & Safety Institute (HSI), a provider of healthcare and workplace safety training to help clients meet compliance requirements.
Terms of the deal were not disclosed. Riverside previously invested in Eugene, Oregon-based HSI and exited the investment in 2012. Since then, HSI has amassed more than 780 training courses for emergency care, workplace safety and professional responders.
Another private equity firm that is active in the category is Denver-based Revelstoke Capital Partners, which closed its first e-learning deal in April with Career Step LLC, a Provo, Utah, training company.
Kaplan, a unit of Graham Holdings Co. (NYSE: GHC), acquired Dev Bootcamp- a provider of training tools for software programmers - last year, while Bertelsmann reportedly paid more than $500 million for Relias Learning, a training service to health-care professionals. In May 2014, Falfurrias Capital Partners bought a majority stake in American Safety Council Inc., an e-learning business, just weeks after John Wiley & Sons (NYSE: JWA) acquired CrossKnowledge for what was believed to be in excess of 19 times Ebitda.
Considering the volume of deals that are being announced in the space, LinkedIn’s interest isn’t surprising. Analysts such as James Cakmak at Monness Crespi Hardt & Co., say the deal should boost LinkedIn’s revenue by 3 percent to 5 percent in 2015. In addition, they expect to see more companies express a long-term interest in the sector and a greater penetration of e-learning services across educational institutions.
Lynda, headquartered in Carpinteria, Calif., provides software, technology, creative and business training two more than 2 million people through its library of 87,000 videos. It was founded in 1995 by teacher and author Lynda Weinman.