Bain Capital to acquire edtech firm PowerSchool Holdings for $5.6bn

In a landmark deal in the education technology sector, PowerSchool Holdings, Inc. (NYSE: PWSC), a preeminent provider of cloud-based software for K-12 education, announced its acquisition by Bain Capital. The transaction, valuing PowerSchool at an impressive $5.6 billion, is set to redefine the landscape of educational technology with significant implications for digital learning.

Acquisition Details and Financial Implications

Under the definitive agreement, PowerSchool shareholders are poised to receive $22.80 per share in cash, which represents a 37% premium over the company’s unaffected share price of $16.64 as of May 7, 2024. This substantial premium highlights the strategic value Bain Capital sees in PowerSchool’s robust platform and extensive market reach.

Strategic Enhancements and Continued Operations

Post-acquisition, PowerSchool will continue to operate as a standalone entity, maintaining its commitment to supporting the educational journey from the classroom to the central office. Hardeep Gulati, CEO of PowerSchool, emphasized the acquisition’s role in accelerating innovation, particularly through PowerBuddy, their generative AI platform. This move is expected to significantly scale PowerSchool’s global impact and enhance personalized education solutions.

David Humphrey and Max de Groen, Partners at Bain Capital, praised PowerSchool’s innovative solutions and their foundational role in academic success. They expressed enthusiasm about expanding access to PowerSchool’s acclaimed product suite globally, recognizing the growing demand for advanced educational technology.

Continued Support from Minority Investors

Vista Equity Partners and Onex Partners, previous investors in PowerSchool, will retain minority stakes, underscoring their ongoing confidence in PowerSchool’s strategic direction and market potential. Monti Saroya and Laurence Goldberg, co-chairmen of PowerSchool’s board, highlighted the company’s pivotal role in driving digital transformation in education—a sentiment that reinforces the strategic nature of this acquisition.

Transaction Terms and Anticipated Closure

The merger, recommended by a special committee of independent directors and already approved by a majority of PowerSchool shareholders, is expected to finalize in the second half of 2024. Following closure, PowerSchool will delist from the New York Stock Exchange and transition to a privately held company structure.

Advisory Roles and Legal Aspects

Goldman Sachs & Co. LLC and Kirkland & Ellis LLP advised PowerSchool, while Centerview Partners LLC and Freshfields Bruckhaus Deringer LLP advised the special committee. Bain Capital’s legal proceedings were handled by Ropes & Gray LLP. Additionally, debt financing is set to be provided by several major firms, including Ares Capital Management and Blackstone Alternative Credit Advisors.

This acquisition marks a significant milestone for PowerSchool, reflecting its established leadership in the K-12 educational software market and its potential for future growth and innovation. As PowerSchool transitions to private ownership, its focus on enhancing educational outcomes through technology remains more pertinent than ever.