The Training Services Sector: Industry Overview
The training sector is fast-moving and fast-changing. The increasing training needs of corporations is driving demand and increasing spending on learning resources, while e-learning is rapidly on the rise.
Training services are more important than ever
The need for high quality and continuous training is crucial across all industries, and skills shortages and inadequate training can have a direct impact on a business’ bottom line and reputation.
Recently the Institution of Civil Engineers (ICE) voted to tighten regulation on continuing professional development, while 31% of manufacturing SMEs have cited concerns over skilled labour shortages limiting output, according to CBI’s quarterly SME Trends Survey.
Learning and development (L&D) is increasingly being recognised as essential for corporations’ productivity and overall performance.
Initiatives such as Learning at Work Week are driving this message home. Rapid advances in technology mean that digital skills are of particular importance to keep the existing workforce competitive.
A recent high-profile example of a company who recognises this is Marks and Spencer, who has opened a data science academy for staff in all functions, from board directors to store managers, to boost digital capability across the company.
Meanwhile, Edtech (education technology) is bringing more innovation into the training services industry, and expanding the learning solutions available.
With growing demand and pioneering, varied solutions continually being developed, the training services sector is a fruitful marketplace that looks ready to ripen for more M&A activity in the near future.
M&A in training services
Transaction volume in recent years has stayed fairly constant in the training services sector. Total transaction value tripled between 2017 and 2016, from $5.07 billion to $16.79 billion.
In 2017, education and healthcare specialist NCF recorded over 60 transactions in the education sector. Edtech and training services were the most significant categories for Education M&A, comprising 50% of all transactions.
Private equity has been the main driver for investments in the industry. Last year’s biggest deal was the acquisition of QA Training by CVC Capital Partners for £700 million.
Trends and advancements
Aside from the growing need for digital skills, across sectors, the demand for training services is particularly pronounced for professional education and English language skills.
The old one-size-fits-all classroom learning model is rapidly dying out while a wealth of new tools are under constant development, ready to take its place.
Most of these will be e-learning solutions, whose most obvious advantage is ease of scale, resulting in faster results and lower overheads.
The appeal of e-learning is obvious to large corporations looking to train or upskill hundreds or thousands of employees at a time.
A recent example is French company Groupe Auchan, which needed to roll out a global wellbeing course for 260,000 members of staff across 12 countries.
Rather than the traditional classroom approach, which would have taken years, they opted for a solution from Coorpacademy, a Swiss startup, which allowed employees to access the course via an app on their smartphones.
Half the workforce had completed the training within three months.
Edtech on the rise
Looking to the future, there are many exciting upcoming advancements in Edtech that will change the shape of the industry.
Bite-sized, on-demand learning, in the style of Netflix, is a growing trend, as general content consumption habits influence the development of e-learning platforms.
Studies in learning and brain science are also influencing the design of learning products, with AI tools to tailor the learning experience being the most significant.
Greater interactivity is also a potential development, with VR and AR technologies gaining traction in the Edtech sector.
With all of these potential avenues of growth, investment in Edtech will only rise, paving the way for more M&A in the training sector in future.
As in any sector, enlisting qualified M&A experts to assist with the M&A process will always be indispensable.
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