Growth Driven by Online Learning and the Rising Significance of STEM in K-12 Education

K-12 education covers the schooling journey from the first years of primary school through the end of high school, typically ages 5 to 18. The category was long split between public and private schooling, but distance learning has claimed a durable third position since 2020. For yearend 2023 the market is heading toward annual revenue of $143 billion, and it is projected to compound at a 17.7% CAGR to global revenue of $525.7 billion by 2031.

Two forces sit behind that trajectory. The first is the online learning and analytics toolset built during the pandemic, which outlasted the return to classrooms and changed how instruction, assessment, and reporting are delivered. The second is employer demand for STEM skills, which is pulling curriculum priorities earlier into primary and secondary education. Deal volume has normalized from the 2021 peak, but valuation has not: K-12 assets transacted above the broader middle market on both revenue and EBITDA multiples.

A $525.7 Billion Market by 2031

During K-12, students lay the groundwork for their academic careers and acquire essential skills in academics and behavior, socialization, and emotional development. That makes the category unusually resilient in spending terms, and the last three years added a growth layer on top of that resilience. The market is heading toward $143 billion of annual revenue for yearend 2023, up from $104 billion in 2021, and Bloomberg and Allied Market Research project global revenue reaching $525.7 billion by 2031 at a 17.7% CAGR. The extraordinary expansion was primarily fueled by the COVID-19 pandemic, which drove the acceleration of new educational technologies and increased government expenditure on K-12 education.

Federal relief funding is the clearest expression of that government spending. The Elementary and Secondary School Emergency Relief (ESSER) Program was introduced in 2020, with Congress allocating funds for primary and secondary schools starting in March 2020 to address challenges posed by the pandemic. ESSER was disbursed in three rounds, the largest being $122 billion in March 2021. Those funds are scheduled to be available for utilization until September 2024, which keeps district budgets elevated through the near-term forecast period and gives vendors an unusually visible spending runway.

Online Learning Tools Are Driving Sector Growth

Amid the pandemic the educational landscape produced a new generation of online learning tools built to accommodate the varied circumstances of students. Most K-12 schools had reverted to in-person learning by 2023, but the tools forged during that period left a lasting impression on the entire industry. Distance learning in particular has grown quickly, and the reason is straightforward: students can learn and progress at their own personalized pace. In a digital environment, fast learners have the freedom to navigate past familiar lessons and keep advancing, an opportunity that is not always readily available in a traditional classroom. Online education also introduces flexibility, letting students learn without constraints of time or location, and studies show it lifts engagement through interactive features, gamification, personalized learning experiences, and more individualized attention.

Analytical tracking tools and AI have been the other catalyst, and they now serve both distance and in-person instruction. These tools let schools track individual student progress, behavior, and performance, which in turn allows tailored content for each child. For educators the effect is leverage: close monitoring of student analytics alongside access to content resources, assessment tools, grading tools, and administrative functionality. Learning management systems and their associated software extend the same benefit to students, connecting them to their teachers and enabling quick, efficient feedback.

Student preference has followed the tooling. Survey data cited in the report shows 69% of students preferring online or hybrid instruction against 31% preferring face-to-face, a mix that keeps digital delivery central to district purchasing decisions well after the return to classrooms.

STEM Job Demand Is Reshaping K-12 Priorities

Demand for science, technology, engineering, and mathematics talent in the job market has become a driving force behind the emphasis on STEM in K-12 settings. As employment opportunities in STEM continue to surge, educational institutions are recognizing the need to equip students with the skills and knowledge those fields require. The growing significance of STEM among students, combined with rapid technological advancement and the rising trend of online learning, has further fostered growth in the K-12 market.

The two trends reinforce each other. During the pandemic, learning STEM subjects online proved remarkably effective, with students retaining 25% to 60% more information through online STEM learning compared with 8% to 10% retention in physical classrooms. That intersection between STEM content and digital delivery is a positive structural trend for the sector. As TechTarget notes, emphasizing STEM during primary and secondary education is essential to give children the academic groundwork needed to excel in college and, ultimately, in the workforce. For buyers, it explains why STEM curriculum, courseware, and assessment assets carry a scarcity premium in a fragmented supplier base.

K-12 Education Outperformed the M&A Market

Transaction volume in K-12 education has followed a dynamic path. Activity climbed sharply between 2019 and 2021, from 62 deals to 111, driven by the increase in government funding and the emergence of online learning tools during the pandemic. Those developments made K-12 an attractive investment landscape for prospective buyers, and capital followed.

In tandem with the broader slowdown across M&A, the sector then saw a modest decline through 2022 and the first half of 2023, with 109 deals in 2022 and 36 through August 2023. Both the M&A market and the K-12 market peaked in 2021, and deal volume has been normalizing since. What did not normalize was pricing. Measured on key valuation metrics, K-12 outperformed the M&A middle market: from July 2021 to July 2023 the industry achieved a 9.3x EV/EBITDA multiple against 8.8x for the trailing-twelve-month M&A market, and 2.7x EV/Revenue against 1.5x. The premium reflects recurring district budgets, high renewal rates, and the strategic value of installed bases inside school systems.

Notable Transactions

Kahoot! / Goldman Sachs

In July 2023 Kahoot! agreed to go fully private, acquired by a group of investors including Goldman Sachs, General Atlantic, and Kirkbi Invest, in a $1.72 billion deal. Kahoot! is a gamified e-learning platform headquartered in Norway and used worldwide. The largest shareholder in the consortium is Goldman Sachs, with the private equity division of its Asset Management arm leading the bid. Goldman Sachs Asset Management has taken part in over 1,500 M&A deals and other investments since inception and is widely recognized as a top M&A investor.

Aequitas Solutions / Banyan Software

In April 2023 Banyan Software announced the acquisition of Aequitas Solutions, a leading provider of K-12 student information systems. Aequitas delivers educational resources through software alongside assistance and related services for students, and its platform helps educators recognize and adjust to changes within their school or district. Banyan Software is a buy-and-hold acquirer that provides a permanent home to software businesses, and the acquisition expands its presence in education software.

OKIN Educate / Educ8

In February 2023 Educ8 announced the acquisition of OKIN Educate, a provider of education services aimed at linking students with their coursework and teachers beyond the traditional classroom setting. Educ8 is a US-based EdTech company focused on developing educational services and engaging tools for students. The acquisition supports its market expansion and its continued delivery of online educational materials to students and teachers.

Select Transactions

The table below covers M&A activity across K-12 education from January 2022 through July 2023, spanning curriculum and courseware, student information and administrative software, assessment, tutoring, and school operators in the US and abroad. Enterprise values and multiples are shown where disclosed.

Public Company Data

The public comparable set spans K-12 courseware and content publishers, school administrative and information software, and online school operators. Software-led names such as Instructure, Tyler Technologies, and PowerSchool trade at premium revenue multiples on recurring district contracts, while publishing and print-exposed names such as Scholastic and Graham Holdings trade closer to one times revenue.

Buyer Universe

Navagant has long-standing relationships with many of the firms below through transactions completed in the Education and Training industry, and tracks the buyers that have been most acquisitive in K-12 education. The strategic set is led by curriculum and courseware publishers, school software platforms, and online school operators; the sponsor set is dominated by education-focused and lower-middle-market funds with existing K-12 platforms.