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E-Learning / Corporate Training Overview


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  • 1. PRIVATE AND CONFIDENTIALTECHNOLOGY FOCUS. BROAD REACH. OPTIMAL RESULTS.E-Learning / Corporate Training OverviewPeter FalveyManaging Directorpeter.falvey@falveypartners.comP. 1.617.598.0437Jason MylerManaging Directorjason.myler@falveypartners.comP. 1.617.598.0438Jeffrey CookVice Presidentjeffrey.cook@falveypartners.comP. 1.617.598.0439
  • 2. 2E-learning Industry TrendsE-learningcontinues to takemarket share fromILT The share of e-learning vs. traditional forms of training such as Instructor-led training (ILT) continues to grow with thedevelopment of multimedia technologies and increasing penetration of broadband internet According to IDC, e-learning grew to account for more than 30% of all training delivered. IDC expects organizations to increaseinvestments in learning management systems, assessment and evaluation technologies, and performance support technologiesas organizations seek to employ technology to improve their training and performance processes Per IDC, there is a heightened demand for learning, and e-learning delivers more efficient, scalable and consistent training thanother approaches, this combine with the ability to track standardized knowledge and the lower relative cost makes e-learningthe right solution to meet this demandConvergence oflearning and talentmanagementsolutions We see a rapid convergence between learning and Talent Management solutions towards an integrated product suite Solutions for Corporate Learning Management have traditionally been in silos, separate from Talent Management systems.Learning management has now emerged as one of the key pillars of Strategic Human Capital Management, alongsiderecruitment, performance management and compensation Learning Management Solution (LMS) leaders such as Cornerstone On-demand, Plateu Systems (SuccessFactors), Saba andSumTotal Systems have added performance management capabilities, while recruitment vendors like Taleo, Kenexa andStepStone have added skills assessment and compensation capabilities to offer a more rounded Talent Management offeringMarketconsolidation The growth in demand for e-learning and the convergence of learning and Talent Management solutions towards an integratedsuite has led to increased M&A activity, as vendors of point solutions have sought to acquire capabilities in order to offer abroader Talent Management offering Cash-rich Talent Management vendors like Taleo and SuccessFactors have been particularly active, with Taleo having recentlyacquired Vurv,, Cytiva Software and Jobpartners, while SuccessFactors acquired Plateau Systems. SuccessFactorswas then acquired by SAP in December 2011, while Taleo was acquired by Oracle in April 2012 In the e-learning content space, Skillsoft, the market leader, continues to consolidate and acquire market share, withacquisitions of competitors Element K and MindLeadersNew businessmodels andmarkets areevolving Employee usage of social media platforms like Google, Facebook, Twitter, LinkedIn, Yammer, etc. is growing rapidly, resultingin the emergence of new e-commerce business models that leverage the growth of social media networks Social media companies are themselves recognising the power of e-learning to drive their business in the social-networkedworld they are fostering With increased adoption of social media within enterprises, learning environments and training & compliance requirements areundergoing dramatic changes As these new business models and channels mature, they will create a significant opportunity for training and learning, and willrequire different learning approaches and content from those in use traditionallyIncreasedregulation andcompliancerequirements As regulations change and compliance requirements increase, this drives greater demand for learning and training, particularlyin compliance driven industries like Financial Services, Healthcare and Food Service Following the turbulence in financial markets and the recent economic downturn, most jurisdictions are moving towards stricterregulatory environmentsSource: IDC Reports, Wall Street Research
  • 3. 3Market SnapshotCORPORATE E-LEARNING REVENUE E-LEARNING CONTENT REVENUE05101520252008 2009 2010 2011 2012E 2013E 2014E 2015E$inBillions04812162008 2009 2010 2011 2012E 2013E 2014E 2015E$inBillionsCORPORATE E-LEARNING MARKET CONTINUES TO GROW DRIVERS INFLUENCING ADOPTION OF E-LEARNING IDC estimates that the corporate e-learning market reached over$18.7 billion in 2011, and forecasts the market to grow at a CAGR of~5% from 2010 to 2015 Companies are looking to e-learning solutions to address a widerange of business initiatives including regulatory compliance,employee orientation, channel/customer education, employeeproductivity, new product rollout, retail sales readiness, B2B saleseffectiveness, and business process improvement Content will represent the largest and fastest growing segmentwithin the e-learning market, accounting for over half of spending in2011. Content revenues are expected to grow at a 7.6% CAGR, with non-IT content growth outpacing content growth Efficient, scalable and consistent training: Ability to reach large, oftendispersed workforce with consistent content and minimal impact on time ortravel Heightened demand for training: Talent is a key differentiator for firmsand many are now prioritizing resources to train and retain employees Ability to track standardized and required knowledge: Adoption of an e-learning strategy allows organizations to standardize training practices andcontent in a way that is impractical using traditional training methods Help with compliance and regulatory issues: Companies are looking toe-learning in response to emerging government and industry regulations SaaS model makes e-learning more affordable: SaaS delivery modelhas enabled wide, scalable distribution across customers enablingdistributors to reach small businesses with no IT expertise required. Thiscreates a new SME market at affordable prices yet with still high marginsSource: IDC Reports, Wall Street Research
  • 4. 4Convergence of E-learning and Corporate Training SolutionsEMPLOYEE PERFORMANCE MANAGEMENT SYSTEMS EVOLUTION OF CORPORATE LEARNING SYSTEMSCONVERGENCE OF E-LEARNING AND TALENT MANAGEMENT MARKET ACTIVITY Corporates increasingly view Learning and Talent Management asessential elements in developing employee talent We see a rapid convergence between e-learning and TalentManagement software components towards an integrated productsuite To meet this need most leading Talent Management vendors nowinclude courses licensed from leading “off-the-shelf” contentproviders. Most vendors also have the ability to integrate custombuilt courses With Talent management solutions growing at over 20% CAGR,companies are racing to integrate e-learning solutions with this fastgrowing sector Under extreme evolutionary pressures including the race tointegrate HR processes across the organization, vendors oftraditional point solutions such as recruitment, LMS andcompensation, have been acquiring capabilities to emerge asvendors of a broader product offering called “Talent Management” SAP acquired SuccessFactors, a leading Talent Managementvendor in December 2011. Taleo, the largest Talent Management(TM) vendor, was acquired by Oracle in April 2012 Skillsoft, the leading e-learning content provider acquiredcompetitors Element K and MindLeaders While TM vendors have until now chosen to partner with multiplelearning content providers, it is likely that they may feel the need tostrategically own this critical learning contentSource: IDC Reports, Wall Street ResearchTalent Managementvendors dominate theemployeeperformancemanagement systemsspace, of whichcorporate learning is asubsetSource: Gartner Magic Quadrant forEmployee Performance Management,March, 2011 Source: Bersin & Associates
  • 5. 5Market MapBreadth of E-Learning OfferingPoint Solution Diverse PortfolioScaleSmallerLarger= PE/VC backed = Public company
  • 6. 6Target Date Amount InvestorsApr 2013 $65MApr 2013 $7MMar 2013 $8MFeb 2013 $2MJan 2013 $1MJan 2013 $103MJan 2013 N/AJan 2013 $9MJan 2013 $28MDec 2013 $20MNov 2012 $1MNov 2012 $4MOct 2012 $15MSep 2012 $80MRecent Market ActivityCONSOLIDATION ACROSS E-LEARNING / TALENT MANAGEMENT INVESTMENTS IN E-LEARNING ACROSS ALL STAGES OF PE/VCSource: SEC Filings, Company Press Releases, Wall Street Research, CapitalIQ, PitchBookTarget Acquirer DateMay 2013Apr 2013Feb 2013Dec 2012Nov 2012Nov 2012Nov 2012Nov 2012Oct 2012Oct 2012Sep 2012Aug 2012Apr 2012Mar 2012and
  • 7. 7MindLeaders is a leading provider of e-learning solutions with integrated talent managementcapability, and the number two vendor of “off-the-shelf” e-learning content globally.MindLeaders’ products and services include e-learning content, talent development, learningservices and social media e-learning courses. Its solutions are delivered over the web via aSoftware-as-a-Service (“SaaS”) model. MindLeaders’ heritage in the technology-enabledlearning space spans over 30 years, and over this period it has developed a library of over3,600 e-learning courses and built strong expertise in instructional design. MindLeaders hasover 1,150 direct customers across industry verticals such as care, hospitality, public sectorand financial services, amongst others. Headquartered in Ireland, it has established a strongpresence in the US and UK, and has been expanding its operations in the Middle East andAPAC.Client Situation Solutions Results Drove a highly competitive, focusedmarketing process to determineinterest and potential valuationparameters Worked with management team todevelop extensive marketingmaterials, determine appropriatebuyer outreach and build out a fulldata room to streamline the diligenceprocess Large international component to thetransaction which needed to beactively managed Founder/chairman looking to diversifyhis personal holdings and decided nowwas the appropriate time to sell theMindLeaders business Concurrently, the Company receivedan unsolicited offer from its closestcompetitor, the largest player in the e-learning segment - initial unsolicitedoffer was not satisfactory Confidentiality and sequencing ofinformation flow was extremelyimportant given the highly competitivenature of the segment Approached 47 potential buyers –both strategic and financial Held 11 management meetings in theUS, UK and Ireland Received four indications of interestfrom both strategic and financialbuyers Negotiated extensively with theeventual buyer and the buyer’s PEinvestors >100% valuation improvement fromunsolicited bid to final purchase priceCase Study: MindLeaders – Sale to SkillsoftHas been acquired byA portfolio company ofSeptember 2012
  • 8. 8MindLeaders Process OverviewNumber of Companies /Firms Reached Out ToCompanies Contacted47Number of ManagementMeetingsNumber of PartiesSubmitting Letters of Intent In order to maximize value andgenerate additional options forshareholders, the Falvey Partnersteam ran a focused process in atimely manner inclusive of bothfinancial and strategic buyers,resulting in 5 LOIs The team was able to identify andapproach highly relevant partiesand get to market quickly anddelivered LOIs in less than twomonths Streamlined an intense diligenceprocess which included workflowfrom the eventual buyer, theirboard, three private equity firmsand lenders to close in a timelymannerMeetings11LOIs5
  • 9. 9Falvey Partners OverviewFOCUS SELECT TRANSACTION EXPERIENCEDecember 2011Has acquiredJuly 2012Has beenacquired bySeptember 2011Series DConvertiblePreferred StockLed bySeptember 2012Has beenacquired byA portfolio company ofJuly 2011Has been acquiredby a portfoliocompany ofApril 2011Has beenacquired byJuly 2011Has beenacquired byFebruary 2011Growth equityinvestment fromJuly 2011Has beenacquired byMarch 2011Has divestedits diagnosticsolutions unitNovember 2010Has received aninvestment fromA portfolio company ofOctober 2010PGI Notify and Sendplatforms acquired byAugust 2010Two divisions have beenacquired by a portfoliocompany ofApril 2010Has beenacquired byAugust 2010Series CConvertiblePreferred StockLed bySERVICES Sell-side or buy-side M&A Growth capital raising Board and corporate advisorySECTOR Software / SaaS Tech-enabled business services IT services Internet / digital mediaCOMPANY TYPE $50M - $250M in enterprise value Growing, with established scale Profitable or near-term path to profitabilityFalvey Partners is a leading advisory firm servingmid-market clients across technology sectors Founded in 2012 by Peter Falvey and key members of the Morgan Keegan / Revolution Partners team Falvey Partners professionals have closed dozens of software transactions representing billions ofdollars in transaction value