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Present is Prologue

Tag: Blackboard-Inc.

  • The Blackboard Acquisition: Two Views

    As busy as I have been lately, I have tried to keep up on the various analyses of Blackboard’s acquisition by Providence Equity Partners, Inc. There seem to be two schools of thought. The first school, which seems to be getting the most play, is moderately negative for higher education. The second school, which I’ve seen gestured to in a few places here and there but never fully and clearly articulated, is neutral to positive for education.

    I honestly don’t know which of these analyses is more accurate. Both are grounded in the known behaviors and motivations of private equity firms like Providence. Neither is supported by a lot of publicly available information specific to this deal. But the facts will come. My goal with this post is to provide a framework through which the facts we learn in the future can be interpreted by comparing them to one hypothesis or the other.

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  • More Blackboard Acquisition Coverage Coming

    Jim Farmer tells me that I really should write at least one analysis post on the Blackboard acquisition myself. Since it’s Jim doing the asking, I’m going to do that. But I still don’t feel like I’m going to be able to do justice to an event of this magnitude. As a result, I will be pulling in some guest posters to get a range of opinions and analysis. Jim says he has another blog post in mind for the topic. We also will be hearing from Phil Hill of the Delta Initiative, and I’m working on lining up a couple of more people, although I don’t have anything to announce in that regard just yet.

    As always, I’m carefully hand-picking guest bloggers who I consistently learn from every time I talk to them. I’m not picking anybody based on what opinion I think I’ll get from them–in fact, in some cases I don’t know what opinion I’ll get from them–and I don’t censor my guests or require them to toe any editorial line. I just want to know what they’re thinking, so I’m giving them space to tell us. If this strategy works well and doesn’t eat up too much of my time, I may start doing it on a more regular basis.

    Anyway, stay tuned.

  • Investment Bankers and Blackboard’s Future, Part One: If …

    This is a guest post by Jim Farmer, Chairman of Sigma Group Inc.

    On Friday July 1,st after this was written, Blackboard Inc. was acquired by “affiliates of Providence Equity Partners” for $1.64 billion. They will also assume approximately $130 million in net debt. Providence will pay $45 per share; it closed Thursday at $43.38.

    The Washington Business Journal reported:

    The transaction is anticipated to close during the fourth quarter of 2011. Upon closing Blackboard will become a privately held company, remain headquartered in Washington and continue to be led by its existing senior management team.

    This suggests a more complex deal than the publicly available information suggests.

    Blackboard’s April 19, 2011 press release reads; “Blackboard (NASDAQ: BBBB) today announced that it has retained Barclay’s Capital as its financial advisor in response to receiving unsolicited, non-binding proposals to acquire the company.” On Thursday, June 23, The Chronicle of Higher Education, citing the Wall Street Journal, reported: “Providence Equity could announce a deal to buy Blackboard, Inc. as early as next week [the week of June 27 – July 1].”

    If this acquisition is completed, ((Editor’s Note: While Blackboard and Providence have agreed on the acquisition, the deal doesn’t close until the fourth quarter of 2011. Acquisition agreements sometimes do fall apart before they close, although there is no particular reason to think that this one will.)) the question then turns to the impact it will have on higher education.

    From the Wall Street perspective Blackboard is a very successful and well managed company. The founders’ goal at Cornell University was to save faculty time by automating typical faculty communications with students, and making the administrative tasks of a lecture more convenient for students. Since then, through software development and recent acquisitions, Blackboard has a suite of complementary learning applications. Blackboard’s learning management products have become a successful source of revenue. Some acquisitions products, such as Blackboard Connect, seem to be leading in their market segment.

    However, the expectation of private equity firms for earnings exceeds Blackboard’s 2010 earnings. A combination of higher prices for annual software licenses and reduction of staff and lower services will, in the short run, be needed to achieve this higher profitability.

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  • Blackboard Has Been Acquired

    You may or may not have heard the news that Blackboard has agreed to be acquired by a private equity firm called Providence Equity for a total of $1.64 billion. Ray Henderson has a blog post about the acquisition here. I’m still completely overwhelmed trying to get up to speed on my new job, so I won’t have time to write an analysis of the deal. Lucky for you, Jim Farmer has offered to write one—in two parts, no less. I’m always interested to learn Jim’s perspective, particularly on financial and legal analysis. His first post will be up shortly.

  • The Blackboard/Moodle FOIA Requests

    Vicki Tambellini is reporting that a number of colleges who moved from Blackboard to Moodle are getting hit with Freedom of Information Act requests:

    Last week a number of institutions received FOIA requests from a law firm in Columbia, South Carolina.  The firm requests everything related to individual LMS procurements from the RFP process through the implementation.According to the letter I read,  Schmidt Copeland wants information that includes everything from procurement notes and evaluation materials to RFP responses in procurements where Blackboard was replaced by Moodle solutions.  The firm leaves no request unmentioned:  communications with vendors, consultants and recordings.  They want post-selection operating information including staffing, budgets and communications including trouble tickets.

    The request includes system loss, performance and up-time data requests.  Oh, and they’d like it in 10 days, please.  And in a less than subtle statement, the firm reminds the institution that if they don’t comply, it’s a misdemeanor, punishable by a fine of up to $750!

    I can confirm that at least one school in my area has received such a request.

    So what is this about?

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  • The Changing Dynamics of the Educational Technology Markets

    Phil Hill has two good blog posts up in response to Blackboard’s announcement that it has received at least two “unsolicited non-binding proposals” for the company to be acquired. In his first post, Phil argues that, whatever the outcome of the bidding, Blackboard’s brand value will be hurt:

    In one dramatic shift, Blackboard has gone from the known to the unknown.  For years, one of Blackboard’s greatest sales strength was the message that it was here to stay.  Unlike that pesky Desire2Learn, who might succumb to lawyer’s bills and the patent fight, Blackboard was a solid investment with the corporate muscle to be here for the long haul.  Unlike those pesky open source providers, who might disappear or stop developing, Blackboard presented “one throat to choke” and was reliable.  Now, can anyone reliably guess what’s going to happen to Blackboard, who will provide services, whether the roadmap will completely change?

    This sales advantage is now gone.

    I’m somewhat agonistic on this point. I see Phil’s argument, but the size of the impact may be significantly different depending on whether the acquirer somebody like McGraw Hill, somebody like News Corp., or if no acquisition comes through (which I think is the most likely scenario). I don’t have a strong gut feeling about how much this changes the sales conversation.

    In his second post, Phil takes issue with one of my previous posts:

    Michael is right and you should read the whole post and its second part, but I have a different opinion on the conclusions.  I agree with the conclusions that…

    by 2014 we may see it beginning to change the whole picture for educational technology infrastructure in some fundamental ways. Buckle up, folks. It’s going to be an interesting ride.,

    but I am less inclined to rely on straight-line projections of market data to look ahead, and am more inclined to think the market changes we are seeing are driven by outside forces with potentially nonlinear effects.  Rome may have been weakened from within, but when real change happened, the Visigoths made it happen….

    Today, there is a flood of new money into the educational technology market.  In addition to the potential acquisition of Blackboard, Instructure just raised $8M in venture funding and vying for the role of Alaric in their marketing position, Pearson has been heavily investing in Learning Studio (eCollege for you old-timers), and Moodlerooms raised $7+M in venture funding.  Publishing companies, ERP vendors, private equity, venture funding – these are major disruptive forces.  And there is still significant moves being made by technology companies such as Google.

    Whatever happens with the potential acquisition of Blackboard, expect to see a different market emerge, with new dynamics.  For higher education institutions – is your academic technology strategy ready to handle the changes in the market?

    I’m not sure that we actually disagree. I also believe that there are some pretty massive changes taking place in the educational technology markets. The only question I would raise is whether those changes will hit quickly enough to substantially change the likely outcome of the evaluations that WebCT and ANGEL customers are going to have to complete in the next 24 months.

    Let’s dig into the details a little and see what we can figure out.

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  • Desire2Learn Enters the Mobile Portal Business

    This is interesting. I have previously argued that, of Blackboard’s two mobile businesses, their LMS mobile business (a.k.a. Mobile Learn) is going to come under lots of pressure to get bundled with the platform as the competition does just that, while their mobile portal business (a.k.a. Mobile Central) is likely to be a viable business for at least the next few years. Desire2Learn apparently agrees, because they have just entered the mobile portal business. Their Campus Life product appears to be a direct competitor with Blackboard Mobile Central. Details are somewhat sparse (on both products, actually, but particularly on D2L’s), but I’ll write more about this as I learn more.