As Expected, Corporate Training Market Continues to Consolidate

We  view corporate training as being part of the broader Human Resources Outsourcing (HRO) category. It shares a unique space in the HRO market where hundreds of services and technology vendors are vying to provide clients end-to-end, holistic solutions to recruiting, training, retaining and compensating employees, ultimately with the goal of driving overall staff performance.

Businesses in the United States spend on average over $60 billion per year in corporate training that includes hundreds of thousands of training professionals, content and tools providers, and technologies. Since recovering from the 2008/2009 period, spending on corporate training has exploded, growing 12% in 2012 and 10% in 2011. Given the highly fragmented nature of the industry, coupled with its renewed growth prospects, strategic buyers and private equity firms have increasingly shown interest in the space over the last 12-24 months. The subject areas garnering the bulk of attention today are sales, leadership, compliance and IT training. The companies that are best positioned are those that approach the market through a technology-enabled offering or  content-led approach, often times being delivered on a subscription or other recurring-revenue model.

In looking at recent M&A activity it is clear to see that Providence Equity (through Miller Heiman, which it acquired earlier this year) is vying to be the consolidator in the space. Providence also recently acquired the corporate training assets from Informa for total consideration of $160 million. While the acquisition will certainly add scale to the Miller Heiman platform, many questions remain around how these businesses will fit together from a cultural and methodology standpoint. Other recent deals in the space include Argosys Capital’s acquisition of Linkage, Evolution Capital’s acquisition of Axiom Sales Force Development, Korn Ferry’s acquisition of Personnel Decisions and Global Novations, and GP Strategies acquisition of BlessingWhite, among a slew of other smaller, more industry specialized deals. While we fully expect the consolidation to continue, we expect most acquisitions to be done by private equity-backed companies or non-competitive organizations looking to beyond the scope of their offerings.