GL Education attracts large-cap PE firms ahead of Q1 sale

Baird is advising incumbent sponsor Levine Leichtman Capital Partners (LLCP) on the exit, three of the sources said. Information memorandums are slated to be distributed in January, they added. LLCP acquired GL in 2016 from Investcorp for more than GBP 200m.

The asset is expected to be marketed based on EBITDA of GBP 30m-35m, three sources said. The vendor is seeking a minimum valuation multiple of 15x EBITDA, one added. 

Despite GL's mid-cap size, it has attracted an array of large-cap sponsors. These include Ardian, two of the sources said, and Bridgepoint, Carlyle and CVC, one of the sources said.

Ardian, which owns Study Group and AD Education, showed an early interest in La Maison Bleue before the auction for the French childcare provider was put on hold last week, as reported.

In terms of strategics, UK-listed education conglomerate Pearson could be a potential bidder, given it has a large assessment division, two sources said. GL, which was founded in 1981, provides tests used by more than three million pupils every year in British, bilingual and international schools, as well as by education ministries, in more than 100 countries.

However, an acquisition of GL would not be in line with Pearson's M&A strategy, countered a separate source familiar with the education group. Pearson has not engaged advisers for the upcoming auction, this source added.

Supporting Education Group, backed by ICG, is also weighing a bid, having spent time analysing potential synergies with GL, one of the sources said.

Business studies
Both sponsors and strategics are enticed by the international growth GL has achieved under LLCP's ownership, four of the sources said. Around a third of the company's turnover is now generated outside its core UK market, two of these sources said, one adding that more than 50% of its sales are expected to be generated overseas within five years.

The US presents a good opportunity – being a fragmented market in which GL is a relatively new entrant – as does the Middle East and China, one source said.

Bidders are also attracted by GL's high margins of around 50%, another said, adding that the assessments space is digitalising quickly, creating further potential for growth.

However, growth within the UK assessment sector is relatively flat due to market saturation, one of the sources said. As such, GL's market share has not expanded significantly in recent years, this source said. Still, the business has experienced a significant uptick in the UK since the pandemic, increasing its domestic market share, another of the sources said.

In comparison to its peer Tes Global, which repositioned itself as an education-technology provider following a string of bolt-on deals prior to its sale to Onex earlier this month, GL has not expanded its core business into other areas of education software, one of the sources said. However, GL is acutely focused on its core assessment products and is not currently prioritising edtech ventures, another source countered.

Under private equity ownership, GL has expanded its market share via M&A and market entries. In 2013, the company bought the international rights to the Cognitive Abilities Test. The following year, it acquired The Test Factory, and in 2015 took over Lucid Research, expanding its product offering in the special educational needs segment.

In 2016, GL Education struck a deal with China's education ministry to roll out its tests across mainland schools. The following year, the firm acquired Boardworks, a provider of digital curriculum content and the creator of formative assessment platform Doddle.

Ardian, Supporting Education Group, GL Education, CVC, Pearson, Carlyle and Bridgepoint declined to comment. Baird, LLCP and Blackstone did not return requests for comment.

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• Topics
• Exits
• Support services
• UK / Ireland
• Buyouts
• Ardian (formerly Axa PE)
• Bridgepoint
• Carlyle Group
• CVC Capital Partners