PowerSchool to be Acquired by Bain Capital in $5.6 Billion Transaction
PowerSchool Holdings (NYSE: PWSC), a leading provider of cloud-based software for K-12 education, has agreed to be acquired by Bain Capital for $5.6 billion.
Stockholders will receive $22.80 per share in cash, a 37% premium over PowerSchool's pre-announcement share price of $16.64.
The acquisition will see PowerSchool becoming a privately held company, with no interruption in its business operations and customer service. The deal is expected to close in the second half of 2024, pending regulatory approvals.
Bain Capital aims to leverage PowerSchool's innovative solutions, including its AI platform, PowerBuddy, to drive growth and global reach. Existing investors Vista Equity Partners and Onex Partners will retain minority stakes.
PowerSchool’s tax receivable agreement was amended to cancel payments worth approximately $450 million.
- Acquisition valued at $5.6 billion.
- Shareholders to receive $22.80 per share, a 37% premium.
- Continued operations with no service interruptions.
- Bain Capital to leverage AI platform PowerBuddy for growth.
- Existing investors retain minority stakes, showing confidence.
- PowerSchool will be delisted from the NYSE.
- Becoming privately held may reduce stock liquidity for investors.
- Cancellation of $450 million tax receivable payments.
- Pending regulatory approvals could delay the transaction.
Insights
The acquisition of PowerSchool by Bain Capital at a valuation of
From a financial perspective, Bain Capital's acquisition presents immediate liquidity for current shareholders, providing them with a clear exit strategy at an attractive premium. However, the transition from a publicly-traded to a privately-held company means that future performance data will be less accessible, potentially limiting transparency for stakeholders. On the positive side, access to Bain Capital's resources could accelerate growth initiatives and product innovations, such as the PowerBuddy generative AI platform, enhancing PowerSchool's market position.
A key consideration is the debt financing involved in the transaction, provided by multiple firms. While leveraging can amplify returns, it also introduces risk, particularly if PowerSchool's performance does not meet expectations. The elimination of the tax receivable agreement, valued at approximately
The K-12 education technology market is experiencing rapid growth, driven by increased demand for digital learning solutions. PowerSchool, with its comprehensive suite of cloud-based tools, is well-positioned to capitalize on this trend. By becoming a private entity under Bain Capital, PowerSchool might gain the strategic agility needed to speed up its innovation cycles and respond dynamically to market needs.
In addition, Bain Capital's experience in scaling technology companies could enhance PowerSchool's international expansion efforts. The mention of scaling global reach and personalizing education for every student journey highlights the potential for market penetration beyond North America, which is a significant growth avenue.
It's important to note that the education technology landscape is competitive, with numerous players vying for market share. PowerSchool's ability to maintain and expand its customer base, particularly with the support of its minority investors like Vista Equity Partners and Onex Partners, will be important in sustaining its competitive edge.
Under the terms of the agreement, PowerSchool stockholders will receive
PowerSchool is a global education technology company supporting over 55 million students and over 17,000 customers in more than 90 countries. The Company brings together the best of K-12 educational and operational technology to support every step of the learning journey. PowerSchool will remain a standalone company, and its business operations and customer service will continue without interruption.
“PowerSchool is a leader in K-12 SaaS technology in
“PowerSchool’s innovative software solutions in and out of the classroom provide a strong foundation for K-12 academic success. Their products are highly respected by administrators, educators, students, and parents because they foster active collaboration and offer actionable insights needed to support positive learning outcomes,” said David Humphrey, a Partner at Bain Capital. “As demand for K-12 educational technology grows, we believe there are significant opportunities to expand access to PowerSchool’s best-in-class product suite around the world. We look forward to working with PowerSchool to accelerate the Company’s growth while strengthening its commitment to help educators and students realize their full potential,” added Max de Groen, a Partner at Bain Capital.
Vista Equity Partners and Onex Partners will continue to have minority investments in PowerSchool.
“Vista’s continued investment in PowerSchool reflects our conviction that software will remain a fundamental component of a future educational ecosystem being dramatically reshaped by digital transformation,” said Monti Saroya, Co-Chairman of PowerSchool’s Board of Directors, Co-Head of Vista’s Flagship Fund and Senior Managing Director. “From helping to meet the unprecedented challenges of remote learning to being a leader in developing responsible, personalized approaches to AI-assisted learning tools, we are proud of the innovation and growth achieved during our partnership with PowerSchool.”
“Since the beginning of our partnership, we have been proud to support Hardeep and PowerSchool on the mission to drive digital transformation in K-12 education, enhancing the experience and outcomes for students, educators, administrators and parents,” said Laurence Goldberg, Co-Chairman of PowerSchool’s Board of Directors and Managing Director at Onex Partners. “We are committed to and excited about fueling the next phase of PowerSchool’s technology leadership and global impact.”
Certain Terms, Approvals and Timing
Following the recommendation of a Special Committee composed entirely of independent and disinterested directors, the PowerSchool Board of Directors approved the merger agreement. In addition to approval by the PowerSchool Board of Directors, PowerSchool stockholders holding a majority of the outstanding voting securities of PowerSchool have approved the transaction by written consent. No further action by other PowerSchool stockholders is required to approve the transaction. In connection with the transaction, PowerSchool’s tax receivable agreement was amended to provide that no payments will be made in respect of or following the transaction; these payments would have had an estimated value of approximately
Upon completion of the transaction, PowerSchool’s common stock will no longer be publicly listed on the New York Stock Exchange, and PowerSchool will become a privately held company.
The foregoing description of the merger agreement and the transactions contemplated thereby is subject to, and is qualified in its entirety by reference to, the full terms of the merger agreement, for which PowerSchool will file a Form 8-K.
Advisors
Goldman Sachs & Co. LLC is acting as the exclusive financial advisor, and Kirkland & Ellis LLP is serving as legal advisor to PowerSchool. Centerview Partners LLC is acting as the exclusive financial advisor, and Freshfields Bruckhaus Deringer LLP is serving as legal advisor to the Special Committee of the PowerSchool Board of Directors. Ropes & Gray LLP is acting as legal advisor to Bain Capital.
Debt financing for the transaction will be provided by Ares Capital Management, HPS Investment Partners, Blackstone Alternative Credit Advisors, Blue Owl Credit Advisors, Sixth Street Partners, and Golub Capital.
About PowerSchool
PowerSchool (NYSE: PWSC) is a leading provider of cloud-based software for K-12 education in
© PowerSchool. PowerSchool and other PowerSchool marks are trademarks of PowerSchool Holdings, Inc. or its subsidiaries. Other names and brands may be claimed as the property of others.
About Bain Capital
Bain Capital, LP is one of the world’s leading private multi-asset alternative investment firms that creates lasting impact for our investors, teams, businesses, and the communities in which we live. Since our founding in 1984, we’ve applied our insight and experience to organically expand into numerous asset classes including private equity, credit, public equity, venture capital, real estate, life sciences, insurance and other strategic areas of focus. The firm has offices on four continents, more than 1,750 employees and approximately
About Vista Equity Partners
Vista is a leading global investment firm with more than
About Onex Corporation
Onex is an investor and asset manager that invests capital on behalf of Onex shareholders and clients across the globe. Formed in 1984, we have a long track record of creating value for our clients and shareholders. Our investors include a broad range of global clients, including public and private pension plans, sovereign wealth funds, insurance companies, family offices, and high net-worth individuals. In total, Onex has
Onex is listed on the Toronto Stock Exchange under the symbol ONEX. For more information on Onex, visit its website at www.onex.com. Onex’ security filings can also be accessed at www.sedarplus.ca.
Forward-Looking Statements
This press release contains “forward-looking statements.” Any statements made in this press release that are not statements of historical fact, including statements about the proposed acquisition of PowerSchool by Bain Capital, our beliefs and expectations, are forward-looking statements and should be evaluated as such. Forward-looking statements are not assurances of future performance and may include information concerning possible or assumed future results of operations, including our financial outlook and descriptions of our business plan and strategies. Forward-looking statements are based on PowerSchool management’s beliefs, as well as assumptions made by, and information currently available to, them. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “can have,” “likely,” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected. Factors which may cause actual results to differ materially from current expectations include, but are not limited to: uncertainties associated with the proposed acquisition of PowerSchool by Bain Capital; the occurrence of any event, change or other circumstances that could give rise to the termination of the related merger agreement; the inability to complete the proposed acquisition due to the failure to satisfy conditions to completion of the proposed acquisition, including the receipt of applicable approvals and clearances by government authorities; risks related to disruption of management’s attention from our ongoing business operations due to the proposed acquisition; the effect of the announcement of the proposed acquisition on our relationships with our customers, operating results and business generally; the risk that the proposed acquisition will not be consummated in a timely manner or at all; the costs of the proposed acquisition if the proposed acquisition is not consummated; restrictions imposed on our business during the pendency of the proposed acquisition; our ability to recruit, retain and develop key employees and management personnel, including in light of the proposed acquisition; our history of cumulative losses; competition; our ability to attract new customers on a cost-effective basis and the extent to which existing customers renew and upgrade their subscriptions; our ability to sustain and expand revenues, maintain profitability, and to effectively manage our anticipated growth; our ability to retain, hire, and integrate skilled personnel including our senior management team; our ability to identify acquisition targets and to successfully integrate and operate acquired businesses; our ability to maintain and expand our strategic relationships with third parties, including with state and local government entities; the seasonality of our sales and customer growth; our reliance on third-party software and intellectual property licenses; our ability to obtain, maintain, protect, and enforce intellectual property protection for our current and future solutions; the impact of potential information technology or data security breaches or other cyber-attacks or other disruptions; and the other factors described under the heading “Risk Factors” in PowerSchool’s Annual Report on Form 10-K for the year ended December 31, 2023 (the "Annual Report"), filed with the Securities Exchange Commission (“SEC”). Copies of the Annual Report may be obtained from PowerSchool or the SEC. We caution you that the factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our operations in the way we expect. All forward-looking statements reflect our beliefs and assumptions only as of the date of this press release. We undertake no obligation to publicly update forward-looking statements, whether written or oral, to reflect future events, future developments or circumstances, or new information.
Additional Information and Where to Find It
This communication is being made in respect of the pending merger involving PowerSchool and Bain Capital. PowerSchool will file with the SEC an information statement on Schedule 14C and may file or furnish other documents with the SEC regarding the pending merger. When completed, a definitive information statement will be mailed to PowerSchool’s stockholders. INVESTORS ARE URGED TO CAREFULLY READ THE INFORMATION STATEMENT REGARDING THE PENDING MERGER AND ANY OTHER RELEVANT DOCUMENTS IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PENDING MERGER.
PowerSchool’s stockholders may obtain free copies of the documents PowerSchool files with the SEC from the SEC’s website at www.sec.gov or through the Investors portion of PowerSchool’s website at investors.powerschool.com under the link “Financials” and then under the link “SEC Filings” or by contacting PowerSchool’s Investor Relations by e-mail at investor.relations@PowerSchool.com.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240607770171/en/
For PowerSchool:
Investor Relations
Shane Harrison
investor.relations@PowerSchool.com
855-707-5100
Media Relations
Beth Keebler
public.relations@powerschool.com
503-702-4230
For Bain Capital:
Charlyn Lusk/Scott Lessne
646-502-3549/646-502-3569
clusk@stantonprm.com/slessne@stantonprm.com
For Vista Equity Partners:
Brian W. Steel
media@vistaequitypartners.com
212-804-9170
For Onex Corporation:
Jill Homenuk
shareholderrelations@onex.com
416-362-7711
Source: PowerSchool Holdings, Inc.
FAQ
What is the acquisition value of PowerSchool by Bain Capital?
How much will PowerSchool shareholders receive per share?
What is the premium of the acquisition price over PowerSchool's pre-announcement share price?
Will PowerSchool continue its operations after the acquisition?
When is the PowerSchool acquisition expected to close?
Will PowerSchool remain a publicly listed company after the acquisition?
