30-Year-Old Ed Tech Company Lands $1.1 Billion Payday
Well, that was quick.
Less than a month ago, I spoke with Renaissance Learning CEO Jack Lynch about the company's recent $40 million round of funding from Google Capital, which valued Renaissance, a nearly 30-year-old company, at $1 billion. Now, it looks like Google's prediction was right on the money (pun intended).
On Thursday, Renaissance announced it was being acquired by the private equity firm Hellman & Friedman for a $1.1 billion, one of the largest exits in education technology history.
"I have to say it does look like it was staged, the Google investment and the acquisition, but I swear they were two separate transactions," Lynch said by phone Wednesday evening.
Founded in 1985, Renaissance makes student assessment software for K-12 schools to help teachers fine-tune their lessons to student needs. In 2011, its founders Judi and Terry Paul sold the company to Permira Holdings, and according to Lynch, the company has been approached about acquisitions ever since. "A company that has been as successful as this one has a pretty steady stream of interested parties to acquire it. We just haven't been for sale," Lynch said, noting that Renaissance's technology is currently being used by more than 20 million students across approximately one third of the country's schools.
The $1.1 billion price tag offered by Hellman & Friedman, however, was too good to pass up. "I think that helps a lot," Lynch admitted.
One question I'm wondering is whether or not the Pauls are kicking themselves for missing out on the billion-dollar payday. They sold the company for $455 million in 2011, and in a controversial move, did not take the highest bid for the company, instead selling to Permira, in a move that many believe the Pauls made because they wanted to ensure Renaissance's mission would be preserved. Now that Permira is passing the torch to Hellman & Friedman, it remains to be seen how the new owners will position the company going forward. Judi Paul has not yet responded to my request for comment, but I'll update this post if she does.
Lynch, however, says he expects the founders to be "very pleased with the outcome."
"They worked very hard with a number of the employees who will now get a nice payday," he said. "They founded a great company that's having a huge impact in education, and they were always focused on the mission and genuinely care about the impact."
Meanwhile, for other aspiring education entrepreneurs out there, Lynch anticipates this will be a watershed moment. "I think this will probably get a lot of entrepreneurs very excited, which is great," he said, adding, however, that aspiring entrepreneurs should know it takes a great deal of time to build a distribution footprint like Renaissance's.
"Those are things that are hard to replicate," he warned. "But there is room for innovation in education and there's a lot of investment going into it right now. I expect that to continue."