On Monday, Pluralsight, a Utah-based startup that sells software development courses to enterprises, announced that it has been acquired by Vista for $3.5 billion.
The deal, yet to close, is one of the largest enterprise buys of the year: Vista is getting an online training company that helps retrain techies with in-demand skills through online courses in the midst of a booming edtech market. Additionally, the sector is losing one of its few publicly traded companies just two years after it debuted on the stock market.
The Pluralsight acquisition is largely a positive signal that shows the strength of edtech’s capital options as the pandemic continues.
Investors and founders told Techcrunch that the Pluralsight acquisition is largely a positive signal that shows the strength of edtech’s capital options as the pandemic continues.
“What’s happening in edtech is that capital markets are liquidating,” said Deborah Quazzo, managing partner of GSV Advisors.
Quazzo, a seed investor in Pluralsight, said the ability to move fluidly between privately held and publicly held companies is a characteristic of tech sectors with deep capital markets, which is different from edtech’s “old days, where the options to exit were very narrow.”
Pluralsight’s acquisition demonstrates that all options are open for edtech companies, said Quazzo, ranging from private equity, IPO, acquisition, venture capital and even SPACs. For example, digital learning and management platform Skillsoft and Global Knowledge went public this year through a SPAC led by Churchill Capital Corp in a deal valued at about $1.3 billion.
Prosus Ventures, which invested $100 million in SPAC Churchill Capital Corp II, declined to comment on the Pluralsight news. A spokesperson said the firm invested a further $400 million in November for “future consolidation and growth” in the edtech sector, a harbinger of more movement to come in subsequent quarters.
Pluralsight’s circuitous route from venture-backed private startup, to public company and back to the world of private is similar to learning management system Blackboard. Blackboard co-founder Michael Chasen, currently working on creating a Zoom experience tailored to schools, said the deal value shows how much Pluralsight’s business is set to boom.
“The private equity sector usually makes three- to five-year plays, so they have to be saying that we think this company is going to skyrocket in three to five years so let’s take it private, put more money into it, and then maybe merge it with other companies or resell it,” he said. “They’re willing to pay a 25% premium, which means they think this company is going to grow by more than that in the next year.”
Indeed, the $3.5 billion sale price is a healthy bump from Pluralsight’s last valuation at time of publication, which is $2.97 billion.
“It’s certainly not that the public markets aren’t ready for edtech because all the edtech companies are doing well, private and public,” Chasen said, noting higher valuations than ever before in the private edtech market. Quazzo said the secondary market for edtech companies has never been busier as well. (Pluralsight’s stock performance has been stagnant in recent years, which may have painted a target on its back for the right acquirer.)
Today Pluralsight is trading at $20.42 per share, up nearly double from its early pandemic lows. But despite those gains, the company has not recovered its pre-pandemic value, which fell sharply after an earnings report in August of 2019. Since then, the company’s stock price has remained sharply depressed from the low-$30s where it spent much of last year.
Naturally, edtech investors and founders are still optimistic about the upcoming IPO pipeline. Chip Paucek, co-founder and CEO of 2U, a publicly traded edtech company, said the next three to five years will see more education startups head for the stock market.
“When it comes to the broader edtech sector, we are still in the early stages of the digital transformation of higher education globally,” Paucek said in a statement.
“Like so many other sectors, edtech needs to mature as an industry to a point where it has a healthy mix of both public and private companies that are adapting and innovating to serve the needs of both universities and adult learners around the world.”