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Pearson Buys Connections: What it Means

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Pearson announced today that it acquired Connections Education, a leading national online learning provider. I know both companies well and think this is a great combination.

Connections is another success story for Sterling Partners, backers of Laureate, Sylvan. Peter Cohen, President of Pearson's School Group, came from Sterling/Sylvan and was on the board at Connections before joining Pearson about three years ago.

The company was built on a super capital efficient strategy of licensing content and selectively adding targeted learning objects. They focused instead on building a great school management platform (discussed yesterday) which is now being marketed separately as Connexus.

Under Barbara Dreyer's leadership, Connections has been very thoughtful and transparent about the formation and relationship with nonprofit boards and in contracting relationships with district partners.

I've had the good fortune to serve on the iNACOL board with Connections EVP Mickey Revenaugh for three years and she just flat knows more about online learning in American than anyone else. Barb, Mickey and their partner Steve Guttentag have built a high growth, high performance, high trust and respect culture that more people will learn about after today.

For Pearson, this transaction signals a more rapid move into school management that was anticipated. Historically, the line between supporting and operating schools has been one they did not want to cross given the special venom for private enterprise when it takes outcome responsibility. I suspect when they considered accelerating rate (see my forecast) of adoption of learning online, it made the decision easy.

In the transaction, Pearson gets a very good online learning operator and a comprehensive school management platform. The combination with America's Choice, a school improvement provider, gives them scaled ability to take on dozens of blended restarts simultaneously.

The combination adds to Pearson's integration challenges, but they already operate as a portfolio company and this just presents new possibilities.

The shift to personal digital learning is happening faster than most observers suggest--we're riding an exponential curve not a straight line. Pearson gets that and has been very thoughtful about managing the Innovator's Dilemma.

There are few mid-sized companies in education; Connections is one of a growing handful of companies to crack the $100m revenue barrier. Like the Wireless Generation acquisition, the Connections acquisition adds to the list of successful exits and will accelerate investment in learning innovation by private and philanthropic investors and by governments.

This transaction is good for Pearson, Connections, and education.

Disclosure: Connections is an online learning advocacy partner. Learn Capital, where I'm a partner, has a commercial relationship with Pearson.