Former Kaplan CEO Making Big Moves in Education Market
Dealmaking in the digital education space is occurring at a furious pace, as is investment by companies that see the promise of strong returns as schools become more reliant on technology. A pair of recent investments stand out partly because of the involvement of one key player in particular.
Jonathan Grayer, the former CEO of the education company Kaplan, announced earlier this month that the investment firm he now leads, Weld North LLC, would be acquiring a pair of K-12 businesses.
Weld North announced that it would buy a 100 percent interest in Imagine Learning, a company that develops language and literacy software for struggling readers, English-language learners, and others; and in Truenorthlogic, a developer of "talent management" solutions in the growing area of judging educator effectiveness. Truenorthlogic says it currently provides its technology and services to more than 1,500 districts around the country.
A source familiar with the deal put the collective value of the acquisitions at roughly $150 million.
While Grayer said in an interview he and his investors are looking for a fair return, they also have a "long-term focus" and want to help companies they believe have the power to improve schools.
Weld North's portfolio also includes Edgenuity, a creator of courseware and online instruction, and Generation Ready, a professional development provider, among other companies.
"Our interest is in building a broad-scale and multi-faceted digital platform," said Grayer, meaning one that extends across elementary and secondary grade levels.
Imagine Learning's acquisition, in particular, will help Weld North expand its portfolio to work with younger students, and an important, targeted market for ELLs, he added.
"We immediately knew [the company] would be right for us," Grayer said. "We really wanted to own it."
Both of the acquired companies happen to be based in Utah, which the Weld North official described as having a "deep and rapidly expanding pool of technology talent," in a statement announcing the deal.
Grayer served as Kaplan's chief executive from 1994 to 2008. Kaplan's test-prep business was struggling when Grayer, a recent Harvard business school graduate, took over the CEO job at the age of 29. He led the company through a period of rapid growth and aggressive acquisition, ultimately giving it a much broader and more diverse presence as a global education service company, with $2 billion in revenue and a presence in businesses that included for-profit education. When Grayer resigned from the post, he said he wanted to focus on entrepreneurship, investment, and philanthropy.
Today, Weld North, where Grayer is chairman and CEO, puts money into areas that include not only education, but also health and wellness and consumer services. It partners with KKR, a global investment company.
Weld North's name isn't a mash-up of company executives' names, but rather a reference to a dorm at Harvard where Grayer lived as an undergraduate and met Steven Berger, his proctor at the time. Berger now also works at Weld North.
State and district spending has only recently begun to improve after weathering the severe recession, noted Grayer. Now that some of that burden is easing, Grayer, like others, said he sees a renewed interest brewing in schools trying to figure out new ways to use data as well as opportunities around personalized learning and the expansion of tech-based content in many forms.
"[Digital curricula is] not just an afterthought to a textbook cycle," Grayer said. "It's becoming more likely that standardized, core curriculum will be purchased in digital form."