Business Capital Supports Independent Sponsor in the Acquisition Financing of Educational Materials & Services Company
“Business Capital was incredibly helpful with our recent acquisition. I turned to them after the initial financing structure failed and, within a matter of weeks, they were able to coordinate a rigorous process resulting in successful financing. The Business Capital team was always responsive and highly professional and the Managing Director, Chuck Doyle, remained personally involved and accessible throughout the transaction. Overall, their knowledge and domain expertise shaved months off of the process and, most likely, saved the deal. I have no hesitation in strongly recommending Business Capital and hope to work with them again on my next deal which is already in process.” – David Cumberbatch, President & CEO, ECS Learning Systems
Our Client, a private equity investor with over 20 years of experience in the education technology space, had identified a strategic opportunity to acquire one of the largest family owned test-prep publishers in the state of Texas via his platform entity, Asteria Education. The target, ECS Learning Systems, a family owned test-prep business founded in 1982, publishes proprietary, integrated materials of state-specific examinations for the K-12 market, primarily throughout Texas. It has successfully developed a diverse portfolio of test-prep materials and software for reading, writing, mathematics, science and critical thinking skills which includes thousands off activity books, workbooks and practice tests both in written and digital format. With the acquisition of smaller publishing businesses and new product launches, as well as expansion into 11 additional states, it has continued to grow.
The K-12 sector is the largest in the education space, and investments in the test taking market are expected to grow at a rapid pace fueled by the standardized testing mandated after the “No Child Left Behind Act” was passed in 2001, as well as the move from physical reading materials to online web-based platforms. In order to take advantage of a new wave of technology and other cutting edge market developments, the Company founders plan to retire and pave the way for a strategic transition, modernization and expansion process with a new management team led by our Client and supported by the existing management team. A critical part of the plan included the acquisition roll-up of additional test-prep businesses which encompass research based services, custom-made resources and materials to address Common Core State Standards.
Our Client had made an initial offering to acquire the Company, but fell short on its financing contingency due to a bad experience with efforts to acquire an SBA loan. To salvage the acquisition, our Client (the Sponsor) hired Business Capital to run a competitive process. Business Capital worked diligently and quickly to secure an acquisition loan which allowed our Client to acquire the Company, implement their new management, digitization and sales strategies, as well as allow for add-on acquisition financing.