EdTech Annual Report 2025

The EdTech industry is navigating a landscape marked by significant regulatory challenges, forcing it to adapt and evolve in response to new demands and opportunities – particularly in corporate training, professional development, and medical education. See the industry outlook in the EdTech Winter 2025 Report.

EDTECH ANNUAL REPORT

2025

Index

Macroeconomic Overview

Industry Overview

Market Breakdown

EdTech M&A Activity

Select FE International Transactions

EdTech Funding Activity

Looking Ahead

Behind this Report

About FE International

Macroeconomic Overview

A New Year, a New Hope

Real GDP Growth (% YoY)

Global economic outlook is more hopeful for 2025. Cabinet changes across several of the G20 and accommodative monetary policies signal greater potential for growth across markets and industries. The incoming US Presidential Administration heavily influences the global macroeconomic outlook for 2025. The election of Donald Trump in the US is widely expected to improve the economic and regulatory landscape for business owners. In the international arena, President-elect Trump’s trade policies will likely focus on attempting to solidify U.S. dominance in areas such as digital technology and artificial intelligence, broadly benefitting the tech industry as a role. US President-Elect Trump's generally pro-business stance is encouraging to global markets. The new administration's proposed tax policies could lead to substantial changes in the US economy and its partners. Tax cuts, particularly for corporations and high-income earners, might stimulate investment and economic activity. While global financial markets are especially poised for a potentially transformative period, across- the-board tariffs from the US would be unusual — the impact on the global economy could be considerable. However, the potential imposition of tariffs is more likely the starting point of negotiations. Worldwide GDP is forecast to expand 3.0% next year, slightly below prior estimates. The UK and EU are expected to continue to struggle with growth but could be impacted positively by events in the U.S. In China, growth is expected below the official 5% target for the year. For the U.S., there is no consensus, and forecasts are being reconsidered at this writing. Goldman Sachs and UBS forecast 2025 U.S. GDP growth at 2.7-2.9%. The U.S. economy could initially grow slightly faster under Trump's plans to cut corporate taxes, but that impact could quickly fade depending on the effects of a tariff conflict. The Conference Board’s Consumer Confidence Index rose to 111.7 in November 2024, an increase of 2.1 points from October and the highest level since July 2023. This likely reflects increased consumer optimism following the U.S. presidential election and more positive assessments of the current labor market.

4.8%

4.1%

3.3%

3.0%

2.9%

2.7%

1.5%

1.2%

0.9%

0.8%

24E 25E

24E 25E Euro Zone

24E 25E

China

World

Consumer Confidence Index (%)

Index, 1985 = 100

140

Recent uptick in Consumer Confidence

130

120

111.7

110

100

2020

2021

2022

2023

2024

2025

Source: S&P Global Economic Research and The Conference Board.

The Lower Middle Market: A Hidden Gem for M&A Central banks worldwide have continued a gradual reduction in policy rates, which is expected to greatly benefit M&A activity through 2025. The lower-interest-rate environment benefits sellers by making deals more affordable and attractive. Lower borrowing costs translate to reduced debt, quicker deal timelines, and less complex financing structures. Sellers may be able to negotiate for larger upfront payments and fewer deferred payments or earn-outs, as lower borrowing costs reduce the need for such complex arrangements.

The recent interest rate cuts are encouraging for buyers and sellers alike, especially as capital deployment becomes a priority at year end. The [US] Fed didn’t commit to a timeline for the next cut, possibly a signal of caution with policy shifts from the new US administration. Inflation is still “somewhat elevated," so they are walking a tightrope. Powell’s challenge? Balancing a cooling labor market with inflation control. For business owners, this could mean opportunity in the months ahead.

Thomas Smale CEO of FE International

The underlying technology and platform primarily drive lower middle market deals. Lower middle market deals valued under $100 million often require less financing, making them less sensitive to interest rate fluctuations, but lower rates can lead to even more favorable terms and increased deal activity. Importantly, overall economic optimism and a pro-business environment can lead to increased deal activity, especially in the lower middle market. For instance, the US President- elect has expressed plans to deregulate the financial industry and emphasizes technology solutions for financial transactions, which portends well for increased deal activity.

Interest Rate (%)

Rate cuts by Central banks

Quote from Randal The true driver of success in lower middle market technology deals lies in the underlying technology. In sectors like FinTech, where innovation is paramount, the ability to acquire and deploy transformative technologies will ultimately determine deal outcomes. Additionally, a pro-business environment can, on the margin, prompt more transactions to be considered and pursued.

4.38% 3.40% 4.75%

1.00%

Randal Stephenson Head of Investment Banking of FE International & CEO of FE Capital Markets LLC 1

Jan-22

Sep-22

Jun-23

Mar-24

Dec-24

US (Fed)

Euro Area (ECB)

United Kingdom (BoE)

Switzerland (SNB policy rate)

Source: Interest rates as per central bank data of respective regions. Note: ECB = European Central Bank, BoE = Bank of England, SNB = Swiss National Bank. (1) Securities transactions offered and managed through FE Capital Markets LLC, Member FINRA/SIPC (FINRA CRD# 314943).

Venture Capital & Private Equity Investment Outlook

VC Dry Powder ($B) by Vintage

PE Dry Powder ($B) by Vintage

$800 B

$1,800 B

$1,600 B

$700 B

$1,400 B

2024 2023 2022 2021 2020 2019 2018 2017 2016

$600 B

2024 2023 2022 2021 2020 2019 2018 2017 2016

$1,200 B

$500 B

$1,000 B

$400 B

$800 B

$300 B

$600 B

$200 B

$400 B

$100 B

$200 B

$0 B

2014 2015 2016 2017 2018 2019 2020 2021

2022 2023 2024

2014 2015 2016 2017 2018 2019 2020 2021

2022 2023 2024

• Venture capital fundraising in 2024 exceeded 2023 levels. Private equity fundraising, while anticipated to be lower due to higher interest rates, still surpassed $500 billion. • VC and PE firms hold approximately $650 billion and $1.4 trillion of dry powder, respectively. Favorable market conditions should create a favorable environment for robust M&A activity across sectors.

• M&A activity could surpass 10-year averages as US President-elect Donald Trump's pro-growth policies, lower corporate taxes, and expected deregulation are anticipated to create a deal-making surge in 2025, according to Goldman Sachs CEO David Solomon.

Source: Pitchbook Q3 2024 Global Private Market Fundraising Report and NY Post, 10 December 2024.

EdTech Industry Overview

The State of EdTech The EdTech industry is currently navigating a landscape marked by both saturation and significant regulatory challenges, forcing it to adapt and evolve in response to new demands and opportunities. One of the key areas where this transformation is most visible is in corporate training, professional development, and medical education, sectors that are now playing a crucial role in reshaping the industry. A fundamental shift is occurring in the workforce, as companies increasingly prioritize employees with diverse skill sets. This trend has surged the demand for corporate training, with the market projected to reach $44.6 billion by 2028. The rapid pace of change in industries and technology means that continuous learning is no longer optional but a necessity and therefore EdTech industry has a new niche, professional development. Furthermore, COVID-19 acted as a catalyst for the digitalization of education, particularly in the medical sector. Many traditional educational institutions have transitioned to digital platforms to provide more accessible training in medical knowledge, resulting in a fast-growing medical EdTech market. Practical training, essential in the medical field, has also opened the door for innovations in artificial intelligence (AI) and virtual reality (VR), offering immersive learning experiences. The EdTech industry has significantly evolved beyond its traditional focus on K-12 and higher education. By encompassing concepts like AI, VR, data analytics, big data and blockchain, EdTech is increasingly a niche worth watching. With large companies viewing upskilled employees as a necessity, major EdTech players partnering for scale and profitability and anticipated influx of capital, the EdTech industry is well positioned for growth.

Sources: Exploding Topics, GetStream, ElifTech, McKinsey

EdTech Industry Outlook

(In $USD Billions) Market Valuation Outlook

Growth Enablers in the EdTech Market

New Generation of EdTech Startups – Many industry professionals have recognized the immense growth potential of the EdTech sector. Both new and seasoned talent from leading technology companies are now launching EdTech startups, which will contribute to the continued expansion of the industry. Measuring Impact – Measuring impact is of key importance for a successful EdTech business. Entrepreneurs must achieve this by scaling the business for larger market share, fostering diversity for greater acceptance by society, and tailoring outcomes for customer satisfaction. Chatbots and AI Assistants – Chatbots and AI assistants create a virtual classroom experience for students, making it an ideal environment for developing learnings modules. Unconventional Learning Platforms – With technological advancements, the world has shifted from traditional classroom learning to unconventional platforms such as Instagram, YouTube, TikTok, etc. These social media platforms provide an effective way to engage the attention of younger generations. Higher Cost of Traditional Education – Traditional education demands significant capital investment due to its offline nature. This enables the transition towards online alternatives.

$433

$366

$309

$262

$221

$187

$158

$134

2023A 2024E 2025E 2026E 2027E 2028E 2029E 2030E

The global EdTech market is projected to reach $158 billion in 2024 and surpass $433 billion by 2030 , representing a CAGR of 18.3% (2023A – 2030E) . Deployment of accumulated Private Equity dry powder could increase in 2025 as inflation slows and interest rates begin to normalize. Reduction in the cost of providing online education and the rise of opportunities in the space are expected to drive this growth further.

Source: Fortune Business Insights

Opportunities in EdTech

Growth in Gamification and Immersive Learning Experiences The growth of the EdTech market is expected to be driven by advancements in AI, wearables, and virtual reality, such as virtual teachers. The primary focus will be on delivering personalized and efficient learning experiences with consistent engagement.

59%

74%

Use social media for health awareness purposes

Companies rate leadership development as a top priority

Upskilling of Professionals with AI Developments AI is transforming the job market as many tasks are replaced by automation technology. This shift creates a niche for individuals with specialized skills to work alongside AI, driving a growing demand for upskilling.

Adoption of Hybrid Learning Models Traditional classroom education, or offline learning, still plays a crucial role in the industry. Therefore, adopting a well-balanced hybrid approach between the two is essential.

99%

41%

EdTech usage in schools has increased since 2020

Training professionals plan to invest in learning management systems (LMS) over the next year

Micro Learning The upcoming generation, Gen Z, has different learning expectations due to their shorter attention spans. Offering bite-sized modules tailored to the preferences of EdTech audiences will help ensure greater engagement and outreach. Remote Training With the digitization of education skilled professionals like engineers, doctors, lawyers, and financial consultants can access updates in their fields of expertise. Technology has enabled continuous education on a remote basis.

Employees say they’re more likely to stay with employers who offer upskilling opportunities 3/4

Source: Exploding Topics, Educate Me

EdTech Market Breakdown

EdTech Subsector Breakdown

Application Cases for EdTech

Sectors

Overview

▪ Targets students from kindergarten to 12th grade, encompassing subjects like math, science, language arts, and test preparation. This includes platforms for personalized learning, interactive games, educational software, and virtual tutoring. ▪ Focuses on college and university students, offering online courses, degree programs, professional certifications, and tools for academic research and collaboration. This includes Coursera, edX, and other online learning platforms offered by universities. ▪ Focuses on professional development, upskilling, and reskilling for employees. This includes areas like online courses, corporate training platforms, leadership development programs, and skills assessments. ▪ Targets individual learners seeking personal enrichment, skill development, or hobby-based learning. This includes language learning platforms (Duolingo), music learning apps (Fender Play), online coding courses (Codecademy), and general knowledge platforms. ▪ Rapid technological advancements have enabled the integration of technology into medical education. Key components include personalized learning for each branch, simulation-based practical training, accessibility, and collaboration.

K-12

• Increased Collaboration • 24/7 Access To Learning • Tailored Learning

Students

Higher Education

• Automated Grading • Classroom Management Tools

Corporate

• Paperless Classrooms • Eliminating Guesswork

Teachers

B2C

• Digital Training • Skillset Mapping • E-Learning Courses

Medical Education

Corporate

Source: Global Edutech Snapshot, Acquisdata, December 2024

EdTech M&A Activity

EdTech M&A Activity Lower Middle Market

EdTech M&A by Year – Lower Middle Market (In Millions of USD)

Total Deal Size in ($M) # of Deals

The total deal value of EdTech M&A transactions in the lower middle market exceeded 2023 levels in 2024. Additionally, the number of deals closed has also surpassed the previous year's figures. Despite challenging global economic conditions, the EdTech sector has shown resilience and positive M&A activity in 2024. Key trends: • AI as a Catalyst: EdTech firms are prioritizing the integration of AI into their solutions to accelerate innovation and enhance learning experiences. These AI- powered EdTech companies are viewed as attractive investment opportunities by both traditional and strategic investors. • Focus on Learner Lifetime Value: The industry trend of extending learner lifetime value, from early childhood to continuing professional education, will drive revenue growth and M&A activity in 2025, regardless of economic conditions. • Corporate Focus on Upskilling: Large corporations are prioritizing employee reskilling and upskilling to address talent shortages and boost productivity, leading to increased demand for enterprise-focused online education solutions. The global nature of education presents significant opportunities for expansion. Education is a universal need, allowing businesses to tap into international markets and build a global customer base. Coupled with favorable economic conditions, such as low interest rates, these factors have encouraged investors and businesses to capitalize on the growth potential of the education sector.

425

331

239

238

227

$1,628

$1,881

$1,158

$509

$534

2020

2021

2022

2023

2024

M&A Volume by Quarter – Lower Middle Market (In Millions of USD)

Total Deal Size in ($M) # of Deals

121

115

108

104

73 73

48 44 44

Source: Pitchbook as of 31 December 2024. Deal size consists of transactions where deal value was disclosed. Note: Companies valued between $5 - $150 million were considered lower middle market. Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2020 2021 2022 2023 2024

Distribution of Lower Middle Market EdTech M&A Deals Sub-$25M deals drive lower middle market M&A despite rise of larger transactions.

M&A Deals by Sector

71% of M&A deals were valued under $25M

68% of M&A deals were valued over $25M

B2C

Higher Education

<1%5%

6% 2%

12%

26%

K-12

38%

12%

2023

2024

Medical EdTech

27%

2024

68%

71%

28%

Corporate

$5 - $25M $25 - $75M $75 - $100M $100M+

• Strategic acquirers continued to lead M&A activity, accounting for 12 of the top 20 deals of 2024 till date. • Financial buyers adopted a more conservative investment strategy. • Larger deals ($75M+) increased significantly in 2024, constituting 18% of all transactions compared to just 5% in 2023. Deals valued under $25 million remained the primary driver of M&A activity, contributing a substantial 71% to the overall volume.

• K-12 continues to remain the sector of focus for deal activity with approximately 50% of the deal volume in 2024. – Increased investment in PreK and K-12 services was driven by the need for digital transformation, government initiatives, and community-building tools. • The demand for corporate activity is focused on reskilling, upskilling, and regulatory training. • Medical EdTech buyers primarily seek solutions that enhance training beyond the classroom by ensuring compliance and upholding practice standards.

Source: Pitchbook as of 31 December 2024. Data consists of transactions where deal value was disclosed. 1. FED allocated $14.2 billion for special education needs in 2023 and will grant additional $2.1 billion in 2024.

Top EdTech M&A Deals in 2024 Lower Middle Market

Deal Size ($M)

Deal Type

Deal Size ($M)

Deal Type

Date

Target

Buyer

Date

EdTech Sector

Target

Buyer

EdTech Sector

May 2024

135

Strategic

K-12

Jun 2024

Strategic

Corporate

Private Equity

Jan 2024

Corporate

Jun 2024

Corporate

Private Equity

Jul 2024

Corporate

Mar 2024

Strategic

Corporate

Private Equity

Oct 2024

Strategic

Corporate

Mar 2024

B2C

Feb 2024

Strategic

Corporate

Sep 2024

Strategic

K-12

Private Equity

Oct 2024

K-12

Nov 2024

Strategic

K-12

Private Equity

Jul 2024

Strategic

K-12

Apr 2024

Higher Ed

Early Childhood

Jun 2024

Strategic

Jan 2024

Strategic

Corporate

Feb 2024

Strategic

K-12

May 2024

Strategic

Corporate

Source: Pitchbook as of 31 December 2024. Note: NA represents undisclosed data; NM represents not meaningful (multiples >50x).

Active EdTech Buyers Lower Middle Market

Financial Buyers

Strategic Buyers

Source: Pitchbook as of 31 December 2024.

Select FE International EdTech Transactions

Value Positively Exceeds Expectations FE International helped Positive Psychology sign an offer that exceeded seller's valuation expectations by 20%

Company Overview:

Sold to

Positive Psychology offers a comprehensive suite of online materials, encompassing courses, workshops, and insightful blog content, catering primarily to the B2C sector. The company has empowered over 20,000 individuals to enhance their well-being and flourish in their personal and professional lives. FE International was referred to Positive Psychology after completing a similar psychology-related business transaction as the sellers were looking for experts in creating partnerships within niche sectors. The firm was able to find 5 competitive offers and facilitated a cross-border transaction with remarkable efficiency. Plus, the outcome exceeded the seller's expectations by 20%.

Health & Wellness

Key Value Drivers:

Buyer Interest:

Process Results:

• Strong combined pro-forma financial profile with lucrative EBITDA margins • Ability to cross-sell into respective product offerings and capitalize on operating synergies • A leading education, training, and certification platform in the healthcare sector

• 100 Private Equity firms and 100 Strategic investors in healthcare/mental health space contacted • FE was able to leverage its presence in the sector to identify an opportunity for a larger overarching merger, which was accretive to shareholder value

• Broad auction process with significant private equity and strategic interest resulting in 5 bids for the Company • Ability to leverage industry relationships to identify a merger opportunity which would yield the highest valuation outcome for client and exceed their valuation expectations by 20%

Competitive, Curated Process for GenAI Smodin receives 10 competitive offers and a successful exit

Company Overview:

Sold to

Smodin is an AI-powered writing tool that pioneers innovative solutions for students, teachers, writers, and businesses across the globe. With over 10 million users and a presence in over 180 countries, the company integrates cutting-edge AI tools to enhance productivity and creativity in content creation. Smodin came to FE International because it created a unique language-learning AI model (LLM) and wanted as competitive deal process as possible amid increased volumes of AI transactions due to the rise in popularity of other models, like Gemini. They received 10 competitive offers throughout the process.

Private Equity Firm Private Buyer

Gen AI SaaS (Content Creation)

Key Value Drivers:

Buyer Interest:

Process Results:

• Garnered 71 million website sessions in the last 12 months, demonstrating extensive user engagement and robust platform appeal • Realized compound monthly growth rates of 4% for ARPU and 3% for lifetime value • Impressive 4.6 out of 5.0 stars on Trustpilot

• 1,100+ Parties Contacted • Multiple offers received

• Smodin received 10 competitive offers for the business, meeting the owner’s expectations with a buyer able to execute seamlessly and at the right price

Broad Sale Process Lands Right Buyer FE International contacted over 400 buyers across multiple countries for Focus On Force

Company Overview:

Sold to

Focus on Force is a market-leading online platform supporting learning and certifications in the Salesforce ecosystem. The company has served more than 100,000 individuals and a comprehensive network of corporate clients with some of the largest names in consulting, banking, and accounting. FE International contacted K2 as a potential acquirer given its global presence in the career development industry, leading to a highly efficient transaction process with the seller retaining equity in Focus on Force.

Digital Training Products Cloud Computing Professional Certifications

Key Value Drivers:

Buyer Interest:

Process Results:

• 400+ parties contacted • Notable parties included: Palladium Equity, Morgan Stanley Private Equity, LinkedIn, CloudAcademy, CourseHero, Pluralsight

• The business attracted 3.3M visitors/year contributing towards its revenue with impressive 60% EBITDA margins • The business was well positioned to capitalize on favorable macroeconomic tailwinds due to the growing Cloud Computing & CRM software market

• The seller's valuation was exceeded through a lucrative offering due to a direct offer from a leading strategic buyer • Founders retained equity in the business post-sale

EdTech Funding Activity

EdTech Funding Lower Middle Market

EdTech Funding by Year – Lower Middle Market (In millions of USD)

733

Total Deal Size in ($M) # of Deals

In 2024, EdTech companies raised approximately $800 million in funding across 167 deals. The challenging market conditions of high interest rates and the cost of capital influenced investor sentiment, leading to a cautious approach. Renewed optimism due to changing market conditions is likely to result in a rebound on par with recent M&A activity in the industry. Key trends: • Investor Focus on Profitability: Investors are exercising increased scrutiny, favoring companies that demonstrate stronger profitability profiles. • AI-Driven Innovation: AI remains a key driver of innovation in EdTech, with investors eager to explore and support AI-powered solutions that demonstrate real-world educational impact and address evolving assessment needs. • Evolving Skills Training: EdTech companies embracing innovative approaches such as bite-sized learning, modular course design, and simulation-based training to cater to the evolving needs of learners attracted investor interest. Although the current funding environment is more challenging than recent years, EdTech continues to offer significant investment potential. The demand for better learning experiences, coupled with the emergence of innovative tools and platforms, will drive continued growth in the sector. Moreover, the significant room for improvement within the education system itself will continue to incentivize entrepreneurs and drive innovation in the sector.

570

482

280

167

$1,613

$2,919

$1,775

$968

$792

2020

2021

2022

2023

2024

EdTech Funding Volume by Quarter – Lower Middle Market

(In millions of USD)

Total Deal Size in ($M) # of Deals

192 186

164

161 172

149

138

137

120 120

119

97 88

73 67

47 49 43

Source: Pitchbook as of 31 December 2024. Data consists of transactions where deal value was disclosed. Note: Companies valued below $150 million were considered as lower middle market. Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2020 2021 2022 2023 2024

Distribution of Funding Rounds by Volume Deals in the $10-$25M range suggests a maturing market with a demand for new business

Funding Deals by EdTech Sector

17% of funding deals were over $25M, highest level since 2020

97% of funding deals were under $25M

Medical EdTech

15%

Higher Education

17%

40%

31%

Corporate

2023

2024

49%

2024

57%

34%

19%

B2C

28%

K-12

$5 - $10M $10 - $25M $25 - $50M $50M+

• While the overall number and value of EdTech deals have decreased in 2024, the average funding size has increased to $4.7 million, compared to $3.4 million in 2023. • Corporate EdTech, with its focus on subscription models, attracted a significant share (37%) of funding, driven by the promise of sustained revenue growth and enhanced profitability. • The K-12 and Higher Education sectors remained prominent investment targets, as investors recognize the value of EdTech solutions that personalize learning experiences and provide AI-powered support for both learners and educators.

Source: Pitchbook as of 31 December 2024. Data consists of transactions where deal value was disclosed.

Select EdTech Funding Deals in 2024 Lower Middle Market

Deal Size ($M)

Company

Date

Funding Type

EdTech Sector

Company

Date

Funding Type

EdTech Sector

Dec 2024

77.7

Later Stage VC

B2C

Jan 2024

12.7

Early-Stage VC

Corporate

Dec 2024

42.4

Later Stage VC

Corporate

Nov 2024

12.5

Seed Round

Higher Education

Feb 2024

40.0

Early-Stage VC

K-12

Feb 2024

12.0

Seed Round

Corporate

Feb 2024

30.0

Later Stage VC Higher Education

Feb 2024

11.8

Early-Stage VC Higher Education

May 2024

28.2

Seed Round

Corporate

Sep 2024

11.1

Seed Round

K-12

Jan 2024

25.3

Later Stage VC

Corporate

Jul 2024

11.0

Seed Round

B2C

Apr 2024

25.0

Seed Round

Corporate

May 2024

10.7

PE Growth/Expansion

B2C

Feb 2024

22.5

Later Stage VC Higher Education

Jul 2024

10.0

Seed Round

Corporate

Apr 2024

19.5

Seed Round

B2C

Apr 2024

10.0

Seed Round

B2C

Mar 2024

17.1

Seed Round

Higher Education

Dec 2024

9.5

Later Stage VC

B2C

Jul 2024

14.7

Early-Stage VC

B2C

Feb 2024

9.1

Early-Stage VC

Corporate

Nov 2024

13.0

Early-Stage VC

K-12

Mar 2024

9.0

Later Stage VC

K-12

25 Source: Pitchbook as of 31 December 2024. Note: Data includes funding rounds exceeding $5 million for companies with a valuation under $150 million.

Active EdTech Investors Lower Middle Market

# of EdTech Investments in 2024

Investor

Select Current & Historical EdTech Investments

Source: Pitchbook as of 31 December 2024.

Looking Ahead

Looking Ahead The future of the EdTech industry is marked by transformative advancements in technology and education delivery, heralding a new era of opportunity and growth. AI continues to revolutionize the sector, driving personalized learning experiences and immersive technologies. Notably, generative AI is poised to catalyze a significant boom, with projections suggesting it could contribute $200 billion to the global education sector by 2025. EdTech companies are uniquely positioned to capitalize on generative AI's potential. The imperative for reskilling and retraining, driven by evolving workforce demands, is also creating substantial opportunities. By 2025, an estimated $6 billion will be needed to address these demands, with EdTech companies playing a pivotal role. The shift toward consumer-centric education models, including SaaS and modular digital formats, is further democratizing learning, enabling individuals to access knowledge rapidly, cost-effectively, and conveniently. The resurgence of EdTech company valuations to pre-COVID levels underscores the sector’s resilience and attractiveness to investors. Strategic M&A activity and robust capital-raising efforts are expected to continue, with particular interest in AI-driven solutions, workforce training tools, and global education accessibility initiatives. Larger strategic players will likely pursue acquisitions to consolidate market presence, while VC investors will target innovative start-ups addressing emerging needs. As EdTech redefines education on a global scale, its role in bridging digital divides, fostering lifelong learning, and addressing critical workforce needs is becoming increasingly clear. The outlook for dealmaking in the industry, particularly within the lower middle market, remains highly positive. With decades of experience, FE International can provide the expertise and guidance your business needs to achieve its goals. The firm helps you prepare for a successful exit by conducting a thorough valuation, suggesting optimizations for operations and profitability, identifying areas for potential growth, and crafting a compelling story for investors. Reach out for a free valuation today.

Behind this Report