Friday, June 8, 2007

Private Equity in Education?

Laureate Education accepted a $3.5+ bln offer from an investor group that includes KKR.

With regard to Laureate, I am curious to see if and how private equity begins to creep into the public education arena - private equity is already purchasing mega-sized infrastructure projects such as toll roads and bridges. It is not much of a stretch to think that the private equity model of efficiency gains and increased organizational effectiveness would be a solution to attritting school performance acorss the US. The demands of taxpayers are constantly increasing. The competition for entrance to colleges and universities is cutthroat. Creeping into the for-profit education sector could be the first step into a foray to public education sector.


Scott Sambucci said...

Following this initial posting, I read an article in the June 9th publication of The Economist regarding a fight for school vouchers in New Jersey. This provided additional fodder to the idea that private equity may well creep into the public education system. If approved in NJ, a voucher system would provide families with a choice of public or private schools at which to apply their voucher credits. Should this legislative action take hold, a currency would be created that would allow private equity groups to begin modeling revenue/costs in this area, and perhaps offer a takeover of education operations in selected districts. This could conceivably apply to poorly performing districts in historically minority areas (i.e. Newark N.J.) or in high income suburbs where the pressure of college entrance competition will cause parents to actively seek options from government administered education.

Economists and educators out there may recall that Milton Friedman was a strong advocate of education reform.

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