PowerSchool, a provider of cloud-based software for K-12 education, has entered into a definitive agreement to be acquired by Bain Capital in a transaction valuing the company at $5.6 billion.
Under the terms of the agreement, PowerSchool stockholders will receive $22.80 per share in cash upon completion of the proposed transaction. The per share purchase price represents a premium of 37% over PowerSchool’s unaffected share price of $16.64 as of May 7, 2024, the last trading day prior to media reports regarding a potential transaction.
“PowerSchool is a leader in K-12 SaaS technology in North America and is uniquely positioned to provide differentiated, mission-critical solutions that drive better education outcomes, empower educators and help district operations run more efficiently,” Hardeep Gulati, CEO of PowerSchool, said. “With Bain Capital’s support, PowerSchool will have access to additional resources and the flexibility to deliver even more growth and innovation—particularly with PowerBuddy, our generative AI platform—and scale our global reach in helping schools personalize education for every student journey.”
“PowerSchool’s innovative software solutions in and out of the classroom provide a strong foundation for K-12 academic success,” David Humphrey, a partner at Bain Capital, said. “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.”
“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,” Max de Groen, a Partner at Bain Capital, said. “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.”
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,” Monti Saroya, co-chairman of PowerSchool’s board of directors, co-head of Vista’s flagship fund and senior managing director, said. “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,” Laurence Goldberg, co-chairman of PowerSchool’s board of directors and managing director at Onex Partners, said. “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 $450 million, which corresponds to an estimated per share value in excess of $2.00 per share. The transaction is expected to close in the second half of 2024, subject to customary closing conditions, including receipt of regulatory approvals.
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 is acting as the exclusive financial advisor, and Kirkland & Ellis is serving as legal advisor to PowerSchool. Centerview Partners is acting as the exclusive financial advisor, and Freshfields Bruckhaus Deringer is serving as legal advisor to the special committee of the PowerSchool board of directors. Ropes & Gray 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.
