In the first three months of 2022, 19 mergers and acquisitions were registered in the education sector in Brazil. The number represents an increase of 72.7% compared to the same period in 2021, according to a report by consultancy KPMG .
The increase in business in the sector takes place on top of a previous base of growth. According to the same consultancy, in 2021, there were 52 mergers and acquisitions operations in the education sector , 93% more compared to 2020.
One of the main deals in the education sector in 2022 took place between Eleva and Cogna , the largest education group in the country. Confirmation of the agreement, which involves basic education , came out in February. With the negotiation, Eleva agreed to pay R$964 million for 51 schools operated by Cogna. Cogna disbursed R$ 580 million for the acquisition of Eleva’s education system.
Also according to the KPMG report, of the 19 mergers and acquisitions carried out in the first quarter of the year, 14 were between Brazilian companies, while 5 involved foreign companies.
Basic education: a market of opportunities
Investors are aware of a market with great opportunities. The education sector globally is expected to receive more than $10 trillion in investment from governments, businesses and consumers by 2030, according to data from market intelligence firm HolonIQ. In Brazil, in particular, with more than 48 million students, the opportunities are wide and include improving the quality of education, eradicating illiteracy and reducing school dropout, among others. Today, only about 16% of students in Early Childhood, Elementary and Secondary Education are in the private sector , a rate that reaches 80% in Higher Education. This is one of the reasons for the movement observed mainly in Basic Education.
A report by RGS Partners , an M&A consultancy focused on medium-sized companies, points out that the basic education segment has been attractive for a few reasons, such as the increase in the amount invested by families per child – putting education as a priority. According to the analysis, basic education in Brazil still has a high potential for consolidation and unexplored opportunities in all regions of the country. Schools that showed agility in adapting to remote teaching during the pandemic have strengthened.
Data from the consultancy show that the country has 9 million students in private Basic Education alone, with a turnover of R$ 80 billion per year. The main players in this market today are Bahema, Eleva, Grupo Seb, Inspira and Rede Decision.
The Southeast region is the one that holds more than half of basic education transactions (53.1%), according to the consultancy. Then come the South (24.7%), the Northeast (9.9%), the North (7.4%) and the Center-West (4.9%).
Higher Education: consolidated market?
Over the last few years, the Higher Education sector has been consolidating, before Basic Education, and today, according to experts, there seem to be fewer opportunities.
In an analysis by KPMG , mergers and acquisitions in the education sector in Brazil began to become more structured in 2008, the year following the segment’s first IPO processes. With the pandemic, the agreements were impacted, but in 2021 the negotiations returned with vigor, mainly involving kindergarten, elementary and high schools.
Even so, the area of Higher Education in Health is attractive and has been generating mergers and acquisitions. According to an analysis by the Desafios da Educação portal , undergraduate medical courses have motivated relevant M&A businesses in the education sector in recent years.
In 2020, for example, vacancies in medical courses would have motivated Ânima to buy the higher education institutions of Laureate, UniFG from Bahia and Faseh from Minas Gerais. They would also have led Ser Educacional to acquire Unifasb, from Bahia, after having already purchased Unifacimed and Unesc, both in Rondônia. It was also medicine that drove Afya’s purchase of Unigranrio.
The reasons for so much interest in medical courses are the average undergraduate ticket – the most expensive in Brazil – and the profitability they provide to educational institutions. In addition, it is a college with low dropout rates and low default rates. These reasons lead large teaching groups to pay R$ 1.4 million for each place in a medical school in Brazil in M&A negotiations, according to a study by Ondina Investimentos.
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In addition to the education sector, several others are experiencing major movements such as the agribusiness market , HR Techs and the technology sector . Follow our blog to stay up to date with all the M&A news. Also subscribe to our newsletter at the bottom of this page!
