The parent company to the ClassesAndCareers Portal, One on One Marketing, has accomplished what few thought possible in this environment – securing an sizable investment / liquidity event from the private equity world.
Depending on one’s proximity to the investment world, it was no secret that many companies in the for-profit-education marketing space were looking for an exit. There were two very good reasons why. 1) Many of the companies had years of strong growth and attractive financials, and 2) they knew they faced an uncertain future ahead. If they didn’t exit now, there was a chance they might not exit for a quite some time.
Those within the space had a head start on understanding the uncertainty; that is, they were aware of the potential for significant change almost a year before the broader public. That “neg reg” had begun would mean little to any who didn’t live for-profit education. Even many who relied on for-profit education marketing for tens of millions of revenue didn’t understand the process or significance. There was no guarantee that regulation would impact their business, but smart money said it would be a good time to realize years of gains and hard work. (See our regulation recap.)
All of which makes the liquidity event by One on One that much more impressive. Were this to have occurred in March of this year, you could argue that the buyer didn’t know what was ahead. It would take all of 30 seconds of diligence to uncover some nice, big, bright warning flags. Therefore, in this case, the buyer was obviously keenly aware of the regulatory environment and potential hurdles faced by One on One and other marketing services firms. Either they really blew it, which I doubt, or they liked what they saw and felt strongly enough in the fundamentals and management.
I have not had the chance to meet Nick Greer, the CEO and founder of One on One Marketing, but I’ve heard that he’s built quite a business. Located in Utah, the company, not surprisingly, had initially relied on and specialized in call verified leads. That’s the practice of purchasing / generating generic or slightly less qualified data, sending it through a call center and then sending on to the schools only those leads who confirmed. The call verified business has surged overall, accounting I’d guess for at least 25% of all lead volume (if not more). What we heard is that One on One has managed to diversify, going from just call verified to a more well-rounded provider of leads. We didn’t have the chance to ask any of their lead buyers what they thought, but again, we suspect that the buyers did.
What will this mean for the other companies who have since pulled their offerings? I hear that One on One received a very fair valuation (they didn’t need the money), so I have to think deal size was a factor; in other words, were they looking for a full exit (as I understand the others to have been), they probably couldn’t get the desired amount given the smaller amounts of debt being given to private equity firms for buyouts. Thus, the other players will probably have to wait until the uncertainty clears. This is just my understanding / guess. None of that takes away from the One on One Marketing transaction.
Congratulations, Nick who I suspect is thanking Mike Lyon of Arbor Advisors for his and the team at Arbor’s ability to bring this deal to fruition.