Admissions Complexity Bolstering Demand for Education Consulting

The higher education admissions process has become more competitive than ever. The number of applicants has more than doubled since the early 1970s with little change in school sizes, and the arithmetic of that has been brutal: across a set of 56 U.S. colleges and universities, applications tripled between 2002 and 2022 while the average acceptance rate fell from 31% to 10%. The Wall Street Journal and The New York Times labeled the 2023-2024 cycle the most confusing and chaotic admissions season in years, and peak admissions insanity, respectively.

Uncertainty and competition on that scale, combined with largely insufficient school-provided college counseling, has prompted families to pursue private education consulting to prepare students and curate applications. The industry reached $2.9 billion in revenue in 2023 and is forecast to reach $3.06 billion by 2028. Growth is modest in percentage terms, which is exactly why the M&A story here is one of consolidation and of adjacency: the larger prize sits in the $36.7 billion tutoring and test preparation market that increasingly wraps around the counseling relationship.

Education Consulting At-A-Glance

Educational consultants, distinct from the education branches of larger consulting firms, help students and organizations with educational planning. The industry has enjoyed revenue growth over the past few years, bringing industry revenue to $2.9 billion in 2023, and is forecast to continue growing at a CAGR of 1.1% to a predicted $3.06 billion in 2028.

Demand is largely driven by the number of K-12 students, government investment, per capita disposable income, and the number of college students. The total number of college students is set to return to growth from 2023 through 2028 despite years of decline during and after the pandemic. Recent increases in federal funding for financial aid programs not only help more students afford higher education but encourage the use of education consultants’ services, and greater consumer disposable income indicates an increased ability to pay for them. A growing number of companies, including Morgan Stanley and Bank of America, now provide college counseling as an employee benefit, which adds an organizational demand channel on top of the household one.

Across the U.S., acceptance rates continue to fall while the number of applications rises as students apply to more schools, a practice supported by the waiving of standardized test requirements. Optional test policies encourage admissions staff to place more weight on extracurriculars, essays, and transcripts, all of which demand guidance from college counselors. Working the other direction, several top institutions have reinstated standardized test requirements, and students targeting those schools are increasingly pursuing admissions consultants to position themselves. According to the Independent Educational Consultants Association, 26% of students hired an independent educational consultant to assist in their college search in recent years, a rate about triple what has normally been assumed for the industry.

Online Tutoring and Test Preparation Services

Test preparation and online tutoring often accompany college counseling platforms as part of a complete application guidance service, and that adjacency is where the scale sits. Tutoring and test preparation market revenue is estimated at $36.7 billion and is expected to grow at a CAGR of 1.8% from 2024 to 2029. The market is strikingly fragmented: Pearson holds notable share at 3.9%, followed by Educational Testing Service at 3.4%, with other key players including Kaplan, The Princeton Review, Compass Education Group, Varsity Tutors, and PrepScholar. A market of that size where the leader holds under 4% is the textbook setup for platform building.

Demand is driven by the increasing popularity of personalized tutoring alongside the reinstatement of mandatory standardized testing. Higher education institutions continue to reinstate test requirements as scores have been shown to predict first-year college grades and to help admissions officers evaluate an applicant in context. Complexity in evolving application requirements adds to it, causing students and parents to increasingly view academic services as essential rather than optional.

The embrace of technology in academic environments has propelled the online tutoring market and driven significant growth in recent years. Organizations are increasingly incorporating AI into their platforms to tailor learning content to each student’s needs. GoStudent, Europe’s highest-valued edtech company specializing in online tutoring, plans to further integrate AI into its business model and expects to boost revenue by 40% over the next five years. Pearson acquired Faethm, an AI-based analytics company based in Australia, and is using its data analytics to enhance its learning products.

M&A Activity in Testing and Educational Support

M&A in the online tutoring and test preparation sector has been driven by increasing demand for flexible and accessible education solutions. Providers are using acquisitions to expand market reach, enhance technological capabilities, and diversify service offerings, which reflects the growing recognition that online education can deliver personalized learning experiences at scale and serve a more diverse student population.

Volume set an annual record in 2021 with 61 relevant transactions worldwide, largely on pent-up demand as pandemic restrictions eased. Of those 61, 26 were financial buyers, or 43%, and 35 were strategic buyers, or 57%. So far in 2024 there have been 19 transactions in the space, split 47% financial and 52% strategic. Since 2021, there have been 144 total transactions with 58% financial and 42% strategic buyers.

What the deal list shows underneath those numbers is a barbell. At one end, admissions-specific advisory assets keep changing hands to buyers who already own audience or distribution, as with U.S. News acquiring CollegeAdvisor.com and Sallie Mae buying both Scholly and Nitro College. At the other, sponsors are assembling tutoring and exam-prep platforms across borders, with Keystone Education Group, Dukes Education, PhysicsWallah, and Primavera Capital each completing multiple deals in the period.

Notable Transactions

March 2024: ESM Group International acquired Metro Academic Prep to integrate into its academic tutoring and test preparation platform. Metro Academic Prep is based in Manhattan and has assisted over 300 students with exam preparation, tutoring, and higher education admission guidance. ESM Prep has mentored over 4,000 students globally and has acquired several brands including UES Education, Summit Educational Group, and Applerouth Tutoring Services.

December 2023: New Story Group, a special education service provider, acquired Greenwich Education Group through its financial sponsor Audax Private Equity. Greenwich Education Group provides educational consulting and services spanning boarding school advisory, college counseling, and tutoring and test preparation. New Story Group operates over 75 locations, serves over 3,800 students and clients, and has made more than five acquisitions since August 2022 in the educational services space.

March 2023: Ivy Tutors Network expanded its geographic presence with the acquisition of Alexander Academy. Based in New York City, Ivy Tutors Network provides personalized tutoring for a range of exams and subjects, including test preparation and college essay and admissions coaching. Alexander Academy offers tutoring and test preparation in Atlanta, specializing in SAT and ACT exams. As of June 2024, Ivy Tutors Network had released the BluePrint plan, a personalized service providing college admissions guidance to students seeking Ivy League admission.

February 2023: U.S. News & World Report acquired CollegeAdvisor.com, a provider of personalized college advising. U.S. News has produced an annual set of rankings of U.S. colleges and universities since 1983 that has been shown to have significant effects on institutions’ applications and admissions. The CollegeAdvisor.com platform has served over 7,500 families and enables U.S. News to give students more knowledge and tools for the admissions process, pairing an audience already at the top of the funnel with a service that monetizes it.

Select Transactions

The table below covers education consulting, tutoring, and test preparation transactions from January 2022 through June 2024. The list is notably international, with UK, Indian, Chinese, Japanese, and Nordic targets throughout, and it shows how often the buyer is adjacent rather than direct: lenders, ranking publishers, publishers, and school groups all appear alongside dedicated tutoring platforms.

Public Company Data

The comparable set trades across an unusually wide band, and the dividing line is profitability rather than category. The legacy publishers and diversified operators, Pearson, Graham Holdings, and John Wiley, trade in the mid-single digits to around 9x EBITDA on real margins. The consumer-facing digital learning names sit at the extremes: Coursera and Udemy carry high revenue multiples against thin 3% EBITDA margins, while Chegg traded at 19.3% of its 52-week high and 2.6x EBITDA. Nerdy showed negative EBITDA outright. For sellers in this sector, the read is that scale in digital delivery has not been rewarded absent margin.