The Ongoing Skills Gap Continues to Drive M&A Activity in Corporate Training
Only 8% of degrees conferred in 2020-21 were in a STEM field, and 69% of HR professionals now recognize a skills gap inside their own company, up from 55% in 2021. Global corporate training revenue is projected to reach $587 billion by 2030, and deal volume set a record 113 transactions in 2022 before easing this year.
The skills gap is the discrepancy between an employee’s current knowledge and expertise and the requirements of the job role they are fulfilling. It persists for two structural reasons: students are not earning degrees in high-demand fields, and the labor pool is getting smaller. In 2020-21, only 8% of degrees conferred were in a STEM field, while over the past decade the number of degrees conferred in social sciences and psychology has more than doubled.
That mismatch is now a line item on the corporate P&L. Positions go unfilled or get filled poorly, productivity falls, and profitability follows. Employers have started to treat training as the fix rather than hiring their way out, and the market built around that decision is projected to reach $587 billion by 2030. Deal activity has tracked the same logic, growing 163% from 2019 to 2022 before easing with the broader M&A market.
How a Widening Skills Gap, Employer Recognition, and a Rebounding M&A Market Are Reshaping Corporate Training
The skills gap is widening and expected to persist. A decreasing labor force and high demand for workers in STEM fields are the two structural drivers. Science, technology, engineering, and mathematics fields are in the highest demand, while social science, history, and psychology are the lowest, and only 8% of degrees conferred in 2020-21 were in a STEM field.
Companies are acknowledging the disparity. Employers are developing corporate training initiatives to address the issue. According to a survey conducted by Wiley, 69% of human resources professionals now recognize a skills gap within their company, compared with 55% in 2021, which highlights how quickly the concern has moved up the agenda.
M&A is expected to regain momentum. After a subtle decline in activity, the market is expected to pick back up. Volume set an unprecedented annual record of 113 completed global transactions in 2022 and grew 163% from 2019 to 2022, with 39 transactions completed as of August 2023. Deloitte expects a rebound driven by buyers who held back during recent months.
Growth is durable post-pandemic. As the economy rebounds from COVID-19, the industry is positioned to sustain growth, with global revenue projected to reach $587 billion by 2030 at a 9% CAGR. Harvard Business Review estimates that addressing the skills gap could produce a GDP uplift of $6.5 trillion by 2030.
The Growing Skills Gap Poses a Challenge to Companies
The skills gap is significantly hurting businesses because the lack of skill match-up leads to lower productivity levels, which can directly and indirectly result in decreased profitability. Companies are having a difficult time filling positions due to the disparity in skill, resulting in unfilled roles or employees who are not an ideal fit. That leads to inefficient results and an overall increase in performance issues, and decreased profits typically follow a decline in efficiency and productivity, which ultimately lowers a company’s competitive advantage.
The supply side explains why the gap keeps widening. In terms of the job market, STEM fields are in the highest demand while social science, history, and psychology are the lowest. According to research from the National Center for Education Statistics, only 8% of degrees conferred in 2020-21 were in a STEM field. Looking at trends over the past ten years, the fields of social sciences and psychology have more than doubled in the number of degrees conferred. The disparity between the current needs of the job market and popular fields of study is what creates the challenge for modern companies.
The Solution to the Skills Gap: Corporate Training
As the gap continues to widen, an increasing number of companies are acknowledging the issue within their organization and its impact on overall performance. Corporate training is a method of education that equips employees with the necessary skills to excel in their roles, and it also describes an industry dedicated to developing specialized training programs across sectors.
How the Sector Segments
Corporate training can be classified on three metrics: training programs, industries, and regions. Training programs break into five categories: technical training, soft skills training, quality training, compliance, and other. The most relevant of these are technical and soft skills training. Technical training refers to acquiring the skills necessary for developing, designing, maintaining, and operating technology or any associated applications, products, or services within a specific job or field, and it has consistently held the largest share of the market from 2019 through the projected period ending in 2030, according to Allied Market Research.
By industry, the sector splits into retail, pharmaceutical and healthcare, financial services, professional services, public enterprises, and information technology, with retail projected to see the highest growth through 2030. By region, it divides into North America, Europe, Asia-Pacific, South America, and the Middle East and Africa. North America has historically held the largest market share, which can be attributed to the strong presence of multinational corporations.
M&A Transaction Volume Expected to Rebound
In 2022, the sector achieved an unprecedented annual record with 113 completed global M&A transactions. From 2019 to 2022, transaction volume grew by 163%, a significant surge. Among transactions completed between 2019 and August 2023, 47% of deals were completed by strategic buyers and 53% by financial buyers.
As of August 2023, 39 transactions had been completed, signifying a modest decline in volume. The deceleration can be attributed to several factors, including prospective buyers showing a preference for investing in top-tier companies, which leads them to wait for the most favorable opportunities, and a decline in the overall M&A market driven by the contraction of the macroeconomy. According to Deloitte, the M&A market is expected to rebound in the second half of 2023, driven by pent-up demand among buyers who held back on investments during recent months.
COVID-19 Sparks Robust Long-Term Growth
As the economy continues to recover from the pandemic, corporate training continues to see robust growth, for two overarching reasons. The first is that the skills gap grew immensely during the period, as more employees left their jobs and labor demands shifted, leaving struggling companies looking for solutions. The second is the shift from in-person to virtual work. Some companies are hesitant to take part in corporate training because it can be very costly, but online training programs provide growth and development opportunities at a fraction of the cost, which has made organizations more willing to invest in upskilling their employees.
Over recent years the global industry has experienced explosive revenue growth and expects sustained growth at a 9% CAGR through the forecast period ending 2030, reaching total revenue of $587 billion, according to Research and Markets. Addressing the skills gap could also result in a GDP uplift of $6.5 trillion by 2030, according to Harvard Business Review, which shows the scale of the economic benefit from investing in corporate training.
Notable 2023 Transactions
June 2023: Law Business Research (LBR) announced the acquisition of MBL Seminars, a provider of continuing professional development intended to serve the professional services sector. LBR, a portfolio company of Levine Leichtman Capital Partners, is a publishing company that specializes in making complicated materials accessible to its users. The acquisition allows LBR to expand its reach within the legal sector and into adjacent industries, increasing the accessibility of continuing professional development materials.
April 2023: Apax Partners, a UK-based private equity firm, completed its acquisition of Verb, an online platform specializing in teaching users traditional business skills alongside modern competencies such as self-awareness and servant leadership. The deal marks one of more than 30 Apax completed during the year and aligns the firm’s focus on backing ventures that foster societal and economic progress with Verb’s mission of creating well-rounded business leaders.
January 2023: The Professional Convention Management Association (PCMA) announced the acquisition of Event Leadership Institute, an organization offering event education, event training, and several online training and development programs. PCMA provides senior-level education for the global business events industry, and the acquisition lets it develop its training resources and drive new growth.
January 2023: LCVista, backed by Polaris Growth Fund, announced the acquisition of Prolaera, a developer of continuing professional education courses focused on the accounting field. LCVista develops learning and management software intended to provide clarity, understanding, and efficiency to firms, and the combination opens new opportunities and expedites growth within the market.
| Market Capitalization ($) | LTM | EV / LTM (x) | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Company | Price ($) | % of 52-Wk High | Market Cap | Enterprise Value | Revenue | EBITDA | EBITDA Margin % | 1-Yr Rev Growth | Revenue | EBITDA |
| 2U | 4.42 | 33.6% | 254 | 1,278 | 948 | 143 | 15% | -2% | 1.3x | 8.9x |
| Adecco Group | 42.76 | 99.4% | 7,186 | 11,059 | 25,266 | 794 | 3% | 9% | 0.4x | 13.9x |
| BTS Group | 25.10 | 69.5% | 490 | 507 | 248 | 40 | 16% | 26% | 2.0x | 12.8x |
| Docebo | 37.43 | 90.7% | 1,159 | 1,160 | 152 | 3 | 2% | 33% | 7.6x | NM |
| FranklinCovey | 47.87 | 87.5% | 603 | 618 | 281 | 45 | 16% | 11% | 2.2x | 13.8x |
| Graham Holdings | 606.17 | 88.9% | 2,766 | 3,730 | 4,213 | 708 | 17% | 20% | 0.9x | 5.3x |
| HealthStream | 22.71 | 82.0% | 684 | 707 | 274 | 55 | 20% | 6% | 2.6x | 12.8x |
| Huron Consulting Group | 101.56 | 97.1% | 1,874 | 2,210 | 1,295 | 153 | 12% | 25% | 1.7x | 14.4x |
| ICF International | 129.70 | 99.7% | 2,458 | 3,189 | 1,927 | 207 | 11% | 19% | 1.7x | 15.4x |
| Korn Ferry | 52.90 | 79.4% | 2,739 | 3,254 | 2,864 | 457 | 16% | 8% | 1.1x | 7.1x |
| Learning Technologies Group | 0.97 | 50.2% | 753 | 755 | 736 | 153 | 21% | 131% | 1.0x | 4.9x |
| NIIT | 1.03 | 20.4% | 129 | 130 | 42 | 2 | 5% | 36% | 3.1x | NM |
| NV5 | 107.70 | 69.5% | 1,657 | 1,697 | 781 | 134 | 17% | 5% | 2.2x | 12.7x |
| Skillsoft | 1.31 | 26.6% | 215 | 691 | – | – | – | NM | – | – |
| Stride | 39.56 | 83.6% | 1,694 | 2,209 | 1,809 | 282 | 16% | 11% | 1.2x | 7.8x |
Source: PitchBook. US$ in millions.
Prices as of July 11, 2023.
EV = enterprise value. LTM = last twelve months. NM = not meaningful.
| EV / Rev | EV / EBITDA | |
|---|---|---|
| Mean | 1.7x | 8.8x |
| Median | 1.4x | 10.3x |
| Harmonic Mean | 1.1x | 7.6x |
Buyer Universe
Our team has long-standing relationships with many of these firms through recent transactions we have represented in the Education and Training industry. We have also tracked buyers that have been highly acquisitive in the corporate training sector, particularly those that have completed notable M&A transactions. Our sector expertise and network provide us with unique insights into this buyer universe and into the sector and growth drivers for the companies within it.
Select Transactions
The table below summarizes corporate training transactions from January 2022 through July 2023, spanning continuing professional education, technical and IT training, sales and leadership development, apprenticeships and workforce training, and learning management software.
| Date | Target | Acquirer | Target Business Description | EV ($mm) | EV / Revenue | EV / EBITDA |
|---|---|---|---|---|---|---|
| 6/28/2023 | MBL Seminars | Law Business Research | Provider of continuing professional education for the professional services sector. | – | – | – |
| 5/1/2023 | Healthworks (Douglassville) | NewSpring Capital | Provider of clinical education and professional development services. | – | – | – |
| 4/26/2023 | Verb | Apax Partners | Developer of an online platform designed to deliver whole-person development via experiential learning. | – | – | – |
| 4/18/2023 | The Sales Board | RFE Investment Partners | Provider of sales training and consulting services based in Minnesota, United States. | – | – | – |
| 4/5/2023 | IT Chapter | Apside | Provider of information technology training and consultancy services. | – | – | – |
| 4/3/2023 | IEK AKMI | BC Partners | Provider of post-secondary education based in Greece. | – | – | – |
| 4/1/2023 | OilComp | Farvatn | Provider of educational and professional training services for marine professionals. | – | – | – |
| 4/1/2023 | Rede IOA | Crescera Capital | Operator of an education institution chain in the health sector. | – | – | – |
| 3/28/2023 | OMCP | NISM | Provider of certification standards for individual practitioners, agencies and educational institutions. | – | – | – |
| 3/21/2023 | Freeland Group | Bpifrance | Provider of professional development services. | – | – | – |
| 3/1/2023 | Escola Start | Vasta Educação | Provider of professional education and training services. | $1.7 | – | – |
| 1/31/2023 | Doceo Formation | Eduform’Action | Provider of professional training and coaching dedicated to recruitment. | – | – | – |
| 1/20/2023 | TransTech | Aspect Investors | Operator of a commercial driver’s license training school intended for students entering the commercial trucking industry. | $13.5 | 1.9x | 6.9x |
| 1/17/2023 | Yardstick Management | Diversified Search Group | Operator of a management consulting firm intended to provide strategic comprehensive solutions to global organizations. | CF | CF | CF |
| 1/13/2023 | Braxton School of Puerto Rico | FACTS Management | Provider of educational services through a professional framework. | – | – | – |
| 1/9/2023 | Event Leadership Institute | Professional Convention Management Association | Operator of a training institute intended for events and meeting industry professionals. | – | – | – |
| 12/22/2022 | Prolaera | LCVista | Developer of accounting learning and compliance management software created for continuing professional development. | – | – | – |
| 11/30/2022 | West LegalEdcenter | CeriFi | Provider of legal training services. | – | – | – |
| 11/28/2022 | Moscow Digital School | Ultimate Education | Operator of a digital school intended for professional education. | – | – | – |
| 11/18/2022 | Interaction Dynamics Group | Good Leadership Enterprises | Provider of professional team coaching services. | – | – | – |
| 11/17/2022 | Paradigm Learning | Culture Partners | Provider of education and training services developed for business. | – | – | – |
| 11/7/2022 | Hoffelijk | Capital A | Provider of educational programs intended to improve the quality of financial services. | – | – | – |
| 11/4/2022 | St Charles Consulting Group | NIIT | Operator of a consulting company intended to provide innovative and highly effective learning solutions. | $23.4 | – | 7.0x |
| 10/14/2022 | Southern Solutions Training Services | ReadCloud | Provider of educational services focused on empowering individuals through training within the childcare industry. | $2.0 | 1.4x | – |
| 9/19/2022 | AJS Formation | Andera Partners | Provider of professional training and coaching services based in Marseille, France. | – | – | – |
| 9/16/2022 | EduMind | Alpine Investors | Provider of training courses and exam prep services intended to serve college students. | – | – | – |
| 8/10/2022 | Key Associates (Education and Training Services) | McGuckin Group | Provider of executive coaching services catering to various sectors. | $15.0 | – | – |
| 6/23/2022 | Horizon Education | Serent Capital | Provider of test prep and professional development services intended to serve students. | – | – | – |
| 6/16/2022 | Firebrand Training | BPP Professional Education | Provider of professional training services intended for information technology. | – | – | – |
| 6/6/2022 | Sandler Systems | MRE Capital | Provider of workforce training program services. | – | – | – |
| 6/1/2022 | Diwa | Topp Holding | Provider of personnel services based in Munich, Germany. | – | – | – |
| 5/18/2022 | Cegos | Bridgepoint Advisers | Provider of training and development services intended for professionals. | – | – | – |
| 5/2/2022 | Akademie für Bildungsprojekte | Constellation Academy | Provider of online learning courses intended for digital learners. | – | – | – |
| 4/1/2022 | Affero Lab | Bossa.etc | Provider of corporate training services intended for the development of innovation and engaging educational solutions. | – | – | – |
| 4/1/2022 | Patina (Consulting Services) | Korn Ferry | Provider of professional services intended to help organizations accelerate their success. | $42.9 | – | – |
| 4/1/2022 | Paragon Skills | Sovereign Capital Partners | Provider of government-funded career training services intended to deliver apprenticeships. | $5.0 | – | – |
| 4/1/2022 | PeopleGrove | The Riverside Company | Developer of an educational platform intended for advisers, coaches and mentors. | – | – | – |
| 3/25/2022 | Aspire 2Be | Educ8 | Developer of an e-learning management platform created to help clients enhance digital competence skills. | – | – | – |
| 3/22/2022 | PrepForward | University Instructors | Developer of an educational platform designed to provide professional development and certification courses. | – | – | – |
| 3/15/2022 | MasterCPE | KnowFully Learning Group | Provider of continuing professional education intended for the accounting and finance industries. | – | – | – |
| 3/10/2022 | Becker Professional Education | Colibri Group | Provider of exam preparation services made to empower people to advance their careers. | – | – | – |
| 3/1/2022 | OnCourse Learning | Colibri Group | Provider of online professional training services. | – | – | – |
| 2/28/2022 | academyEX | Inspire Impact | Provider of learning programs intended to help students build relevant job skills. | $43.2 | – | 4.3x |
| 2/17/2022 | SECILOG | Certigo | Provider of professional training services catering to the health and safety sectors. | – | – | – |
| 2/2/2022 | Netcom Training | Apprentify | Provider of digital training services intended to provide government training opportunities for adults seeking to up or reskill. | $6.8 | 1.5x | 5.3x |
| 1/27/2022 | Kesson Group | Pluribus Technologies | Provider of online learning services dedicated to delivering education on a global scale. | $9.3 | – | – |
| 1/27/2022 | Pro Mainland Safety | Arcapita | Provider of professional safety training and assessments intended for oil and gas, construction, and manufacturing sectors. | – | – | – |
| 1/26/2022 | PTcourses.com | Physitrack Group | Operator of an e-learning platform intended to assist physical therapists and occupational therapists with their professional qualifications. | $1.8 | 3.0x | 18.0x |
| 1/25/2022 | MomSource Network | Boulo | Developer of an online community platform designed to provide ongoing professional development. | – | – | – |
| 1/10/2022 | Plataan | QBS Group | Developer of an educative platform designed for online and offline learning. | – | – | – |
| 1/6/2022 | Insight Advance | Bratenahl Capital Partners | Developer of an education training platform designed to drive educator growth. | – | – | – |
| 1/5/2022 | Career Team | Iron Creek Partners | Provider of career consultancy and software services intended for government and education sectors. | – | – | – |
| 1/4/2022 | Axi Education Solutions | Capital Southwest BDC | Provider of educational technology intended to enhance the teaching and learning process. | – | – | – |
Source: PitchBook. Enterprise value in US$ millions.
Multiples shown where disclosed.
EV = enterprise value. CF = confidential.
| EV / Rev | EV / EBITDA | |
|---|---|---|
| Mean | 2.0x | 8.2x |
| Median | 1.9x | 6.4x |
| Harmonic Mean | 2.0x | 6.4x |
Meet the Team Behind This Report
With over two decades of experience, Jacob is the Managing Director of Navagant, having been a key contributor since its inception. Leading as Managing Director and Co-Founder, he has played a vital role in establishing Navagant’s strong brand presence, building relationships with clients and servicing them with integrity. Demonstrating a remarkable talent for deal-making and unwavering dedication to his clients, Jacob has earned recognition as a leader in various industries, most prominently the Education and Training industry. He began his career at Rabobank International and later focused on software and direct marketing industries with Andersen Corporate Finance LLC. Then, in 2003, he founded Capstone Partners and led its Education and Training Practice until 2023, when he co-founded Navagant.
Shawn is a Founding Member and Managing Director of Navagant and brings over 19 years of experience to the firm. Shawn has led execution efforts on 70+ transactions resulting in over $3.5 billion of proceeds for clients. He assists owners of middle-market companies in achieving their strategic growth objectives, exit strategies, and liquidity goals. Formerly, he served as a Managing Director of Capstone Partners in the Education and Training practice. His investment banking career began with Raymond James, where he focused on deal execution and client development for both public and private companies. Shawn’s previous experience includes serving as an officer in the US Navy where he served as a destroyer navigator and communications officer, student naval aviator, and fleet Tomahawk cruise missile officer.
Jorge is a Senior Vice President at Navagant and has over 10 years of investment banking and commercial banking experience with expertise in M&A, leveraged finance, and project finance. Prior to joining Navagant as a Founding Member, Jorge was a Vice President in Capstone Partners’ Education and Training practice. He started his career at M&T Bank in the Business Banking group before joining the Commercial Banking team at National Cooperative Bank and the Commercial and Industrial M&A team at BB&T Capital Markets. Throughout his career, Jorge has worked with dozens of entrepreneurs, founders, and small business owners and analyzed hundreds of companies in the education, consumer, business services, and renewable sectors.
Endnotes & Sources
- Business News Daily. The Skills Gap Is Costing Businesses Dearly. Accessed July 13, 2023. https://www.businessnewsdaily.com/6038-skills-gaps-cost-companies-thousands.html
- National Center for Education Statistics. Undergraduate Degree Fields. Accessed July 13, 2023. https://nces.ed.gov/programs/coe/indicator/cta/undergrad-degree-fields
- Business Wire. Skills Gap Rapidly Widening, According to New Wiley Survey. January 24, 2023. Accessed July 13, 2023. https://www.businesswire.com/news/home/20230124005054/en/Skills-Gap-Rapidly-Widening-According-to-New-Wiley-Survey
- Business Wire. Global Corporate Training Market to 2030: Increasing Emphasis on Employee Development and Retention Drives Growth. June 8, 2023. Accessed July 13, 2023. https://www.businesswire.com/news/home/20230608005473/en/
- Deloitte. Mergers and Acquisitions Market Outlook 2023. Accessed July 25, 2023. https://www2.deloitte.com/uk/en/pages/financial-advisory/articles/mergers-and-acquisitions-market-outlook.html
- Allied Market Research. Corporate Training Market Size, Share & Growth. Accessed July 13, 2023. https://www.alliedmarketresearch.com/corporate-training-market-A06445
- Research and Markets. Global Corporate Training Market Forecast 2023-2030. Accessed July 14, 2023. https://www.researchandmarkets.com/report/corporate-training
- Harvard Business Review. Create Learning Pathways to Close Your Organization’s Skills Gap. February 2022. Accessed July 14, 2023. https://hbr.org/2022/02/create-learning-pathways-to-close-your-organizations-skills-gap
- PitchBook Data. Corporate Training M&A Activity, Buyer Composition, and Public Comparable Company Data. 2019 to 2023.