Consolidation in the ELT market...

Following a hugely positive response to issue one of The School Report, here is issue two.

I have had requests for this Issue to report on Consolidation in the ELT market in the UK.

• What is it?

• Is it happening?

Does it matter to me as an owner of an ELT business?

A very tough ask because:

• The ELT industry does not like sharing what is happening to their businesses.

• They don’t issue Press Releases on sales or acquisitions.

• Some file accounts at Companies House as late as they possibly can, i.e. up to the full 9 months after their year-end

• Of course, most like keeping business things quiet and very private. This means I often only hear about Consolidation in the ELT Market by accident ie. when I ring somebody up; or I am out in the market. So, the rest of this issue must be treated with some caution!

Consolidation

Is the term that can be used to describe the process in any industry when lots of small businesses combine to form fewer bigger ones. (Another is Roll-up). It is most often triggered when organic and profit growth in a market slows down or stops. This is exactly what has happened in the Adult ELT market in the UK. This market is consolidating and rapidly.

The 3 Stages of Industry Consolidation

There are typically 3 Stages in any Consolidation process:

Stage 1: Fragmentation

Stage 2: Acquisition

Stage 3: Expansion

ELT for Adults in the UK is at Stage 2 in the typical Consolidation process:

The Acquisition Stage.

The Acquisition Stage typically shows a number of companies actively buying their competitors; and looking for more to buy. The biggest companies in a typical Acquisition Stage in any service industry will have market shares of between 8-15% maximum.

This means there remain lots of opportunities for further acquisitions in the Acquisition Stage of the Consolidation Process. This is the current position with ELT for Adults in the UK. (NB: The Young Learners market is very different and still at Fragmentation Stage, with lots of new start-ups, revenue growth and activity everywhere).

So What?

What does this mean for me, an ELT business owner in the Adult sector?

Answer:

It means that there is an active group of Buyers now for your business if you want to sell it.

Investors are looking to buy ELT businesses in the UK and Ireland and of all shapes and sizes.

It does not mean anything more than that.

And...

There is no guarantee that the market will not get even more active, nor that it might not

collapse altogether.

This Acquisition Stage in most service industries typically lasts from 4-10 years.

And if you do not want to sell now, that is fine, but focus hard on building your Turnover and

Profitability so that when you do want to sell, you are an even more attractive prospect for a

Buyer; and can negotiate the very best terms.

Remember...

If you are really interested in Buying an ELT school in the UK or Ireland, or Selling yours,

you are invited to call James Dixey, the specialist education broker for ELT Schools, on: 07841 646887 or contact via www.jamesdixey.co.uk

Note: The School Report is a new initiative by James Dixey Ltd.

The plan is to produce and publish a simple, short, easy-to-read, regular summary of the state of the market for ELT

Schools in the UK and Ireland; and issues arising on LinkedIn every 14 days. Issue 3 will be published on December 4

and so on. Questions, feedback and comments are all very welcome - especially ideas for future issues that you

would be interested in.

Current Plans for Future Issues

• Issue 3 will be focused on explaining all the jargon of the M&A business in ELT; debt-free, cash-free, multiples,

earn-outs, MBOs, MBIs etc etc.

• Issue 4 will examine the power and influence of Agents in the ELT marketplace; and how to try to control it.

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