e-Literate

Present is Prologue

Tag: Reuters

  • Blackboard Potential Sale: Market timing, financials, and some thoughts on potential buyers

    With Reuters’ story last week that Blackboard is putting itself up for sale through an auction, one question to ask is ‘why now?’. As Michael has pointed out, Blackboard is in the midst of a significant, but incomplete and late, re-architecture of its product line.

    Bottom line: If you think that Ultra is all about playing catch-up with Instructure on usability, then the company’s late delivery, functionality gaps, and weird restrictions on where the product can and cannot be run look pretty terrible. But that’s probably not the right way to think about Ultra. The best analogy I can come up with is Apple’s Mac OS X. In both cases, we have a company that is trying to bring a large installed base of customers onto a substantially new architecture and new user experience without sending them running for the hills (or the competitors). This is a really hard challenge.

    Market Timing

    On the surface, it seems to be a high-risk move to try and sell a company before the changes are solidly in place and customers have demonstrated that they will move to new architecture rather than “running for the hills”.

    Assuming that the Reuters story is accurate, I believe the answer to the question on ‘why now’ is that this move is about market timing – Blackboard wants to ride the current ed tech investment wave, and Providence Equity Partners (their owners) believe they can get maximum value now. This consideration trumps the otherwise logical strategy of waiting until more of the risk from the new user experience and cloud platform roll-out is removed by getting real products into significant number of customers’ hands. VC investment and M&A activity are at high and potentially unsustainable levels. 2U has shown that ed tech companies can go public and be a success. Lynda.com has shown that relatively mature companies can be acquired for very high valuations. Instructure is likely to go public in early 2016. If you want to get a high price, sometimes it’s worth going on a hot market before addressing most of the re-architecture risk. (more…)

  • Reuters: Blackboard up for sale, seeking up to $3 billion in auction

    As I was writing a post about Blackboard’s key challenges, I get notice from Reuters (anonymous sources, so interpret accordingly) that the company is on the market, seeking up to $3 billion. From Reuters:

    Blackboard Inc, a U.S. software company that provides learning tools for high school and university classrooms, is exploring a sale that it hopes could value it at as much as $3 billion, including debt, according to people familiar with the matter.

    Blackboard’s majority owner, private equity firm Providence Equity Partners LLC, has hired Deutsche Bank AG and Bank of America Corp to run an auction for the company, the people said this week. [snip]

    Providence took Blackboard private in 2011 for $1.64 billion and also assumed $130 million in net debt.

    A pioneer in education management software, Blackboard has seen its growth slow in recent years as cheaper and faster software upstarts such as Instructure Inc have tried to encroach on its turf. Since its launch in 2011, Instructure has signed up 1,200 colleges and school districts, according to its website.

    This news makes the messaging from BbWorld as well as their ability to execute on strategy, particularly delivering the new Ultra user experience across all product lines – including the core LMS – much more important. I’ll get to that subject in the next post. (more…)