Director: Daniel C. Levy

Laureate Education is the Target of a Private Take-over

(Entry by Kevin Kinser)

PROPHE Summary:

The publicly traded for-profit corporation, Laureate Education, is being purchased by private investors, led by the company's current chief executive officer, Douglas Becker. The price of US$3.8 billion surpasses the US$3.4 billion sale of Education Management Corporation last year, and indicates a continuing interest in converting shareholder-owned education corporations into independently owned firms. Laureate owns for-profit universities in 15 countries. Recent expansion into Turkey suggests plans for further expansion. As a private company, Laureate may find it easier to expand without encountering as much scrutiny from Wall Street and government regulators. Other publicly traded corporations may see takeover bids as investors examine the potential of companies with good regulatory records.

For the full story, see Inside Higher Ed, January 30, 2007, "Another Move from Public to Private." By Doug Lederman

http://www.insidehighered.com/news/2007/01/30/laureate

PROPHE Observation:

Publicly traded higher education was on the rise a few years ago, with booming stock prices and optimistic forecasts for future growth. A series of regulatory investigations, however, struck some of the major players. Revelations of enrollment and admission schemes, financial aid fraud, and sketchy program quality caused the industry as a whole to be seen in a much more skeptical light and caused a sector-wide plunge in market-values. Laureate largely escaped the criticism that plagued many of its competitors, and as it operated primarily outside the United States, it avoided the growth-constraining influences of the saturated domestic market. This buy-out suggests that the gloss formerly associated with Wall Street investment has dulled. Increasing regulatory attention and the corresponding requirements for disclosure may have become too high of a price to pay for the access to capital provided by public markets.