A mid-market private equity house has entered exclusive talks to acquire a minority stake in National Education Group (NEG), with an offer that values the company north of £70 million, EducationInvestor Global can reveal.

This publication has learnt that Synova is working to finalise a deal to take an undisclosed minority stake in NEG, a provider of online continuing professional development training to schools and education institutions.

Following a period of robust growth since its incorporation in 2017, NEG’s shareholders in June hired advisors from Grant Thornton to explore an equity raise to fund its next phase of expansion, as reported.

NEG, which had grown its revenues by 20% year-over-year, piqued the interest of private equity groups and strategics, sources said, which were presented a prospectus that run-rated annual EBITDA to £4 million.

As reported in the early stages of the process, NEG was open to both majority and minority offers – however, the organisation ultimately opted to pursue a minority transaction, giving private equity suitors the upper hand over strategics, which tend to take controlling positions.

One source privy to the bidding process told EIG that Grant Thornton had been targeting a valuation “in the region” of £70 million – equal to more than 17-times marketed EBITDA.

However, NEG’s enterprise value is understood to be “materially north of £70 million”, said another source, who noted that NEG has grown since its equity raise was launched before summer.

The terms of the deal with Synova, which also backs Chatsworth Schools, are unclear.

Grant Thornton offered no comment when contacted by EIG. Synova and NEG had not responded to requests for comment at the time of publication.  
NEG has three shareholders: Neil Gamewell (co-founder and chief executive); James Southworth (co-founder); and Joseph Stoney (commercial director).

Capital provided under a deal with Synova will be used to fund expansions in the UK and internationally, a source familiar with NEG’s strategy said earlier this year.

NEG was awarded the ‘company of the year (more than £3 million turnover)’ title at this year’s BETT Awards.

NEG’s offering at present encompasses three programmes – Essential CPD, The National College and National Online Safety.

Essential CPD provides video-based CPD courses delivered by industry experts that help schools meet their statutory training requirements. The National College monitors policy, practice and research developments and condenses them into concise video-based CPD products designed to save school leaders “time and money”. National Online Safety, meanwhile, sells accredited courses and resources that educate school communities on online safety.

Founded in 2007, Synova is a growth-focused investment house with £750 million in assets under management. The firm invests in UK- and Ireland-based companies operating in the education, healthcare, technology, and business services sectors with enterprise values between £30 million and £750 million.

Synova backs Chatsworth Schools, a for-profit private school group launched in 2018 that it has since grown via a buy-and-build strategy.

Date published: 11 October 2021

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