JLL Kicks Off Education Rollup
Education Affiliates LLC, a new platform company started by New York private equity firm JLL Partners Inc. to acquire for-profit post-secondary schools, completed its first buyout, of Baltimore-based Marco Group, according to JLL vice president Frank Rodriguez.
Rodriguez said JLL put up the entire $52 million purchase price for Marco, which operates 10 vocational and professional training schools. JLL has earmarked up to $100 million of equity funding for the buildup, for which LaSalle Business Credit will supply debt financing.
JLL’s commitment is one of the largest ever by a private equity investor to post-high school career schooling. In 2001, New Mountain Capital sank $135 million into Strayer Education Inc., and between 2000 and 2003 Apollo Management LP invested about $125 million in Sylvan Learning Systems and in a successor to Sylvan called Educate Inc.
Both those investments generated rich returns. Rodriguez argued that for buyout sponsors, the industry still holds huge promise.
“The post-secondary space is highly fragmented, and it has been experiencing tremendous organic growth,” he said. “We identified it a couple of years ago as an industry we wanted to focus on.”
Fueling that growth, Rodriguez said, is rising demand for targeted career training on the part of high school graduates and a need of many older workers who have lost jobs to learn new skills.
“There is pricing growth, enrollment growth, program growth,” he said.
JLL is an old hand at consolidation plays, Rodriguez noted, having cobbled together big businesses from small operators in such fields as specialty chemicals, healthcare, broadcasting and building products.
“We’ll do what we’ve done may times — starting small and putting in the sweat equity to build up the company,” he said.
Duncan Anderson, the ex-chief executive of Global Knowledge Network, a corporate training company backed by Welsh, Carson, Anderson & Stowe, a New York private equity firm, is CEO of Education Affiliates.
Marco, which JLL purchased from its founder, Joe Marino, and from minority owner Palisade Capital Management LLC, a Fort Lee, N.J., private equity firm, runs schools under different names in Pennsylvania, Ohio, Maryland, Florida and New Jersey. Its annual revenues are about $35 million.
The schools focus on healthcare, offering certificates and degrees to aspiring medical technicians. Some campuses offer training in truck driving, business administration and information technology.
Thomas Flaherty, a managing director at Roundstone Group, an M&A boutique in Canton, Mass., advised JLL, as did Skadden, Arps, Slate, Meagher & Flom LLP’s Robert Pincus.
Marco had no outside financial adviser.
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