We saw a 43% increase in deals in 2021 in the Learning and Development sector and analysts anticipate even further acquisition activity here in 2022-2023. The increased interest in this market is being driven by the increase in adoption of learning management solutions (LMS) and learning experience platforms (LXP) as companies look to both address the shortage of skilled resources they are facing as a result of "The Great Resignation", and to keep employees, many of whom continue to work remotely, more engaged.
The line between LMS and LXP solutions is blurring as providers recognize that the ability for users to have some control over the content they are seeing or can access, is important to help keep the learning process fresh and interesting. LMS systems are typically used in situations where employees are required to maintain certifications or upskill for their position, and in traditional LMS systems the Admin controls what kind of content can be shown on the platform and mandatory compliance courses can be tracked and managed. LXP solutions provide users with the ability to find interesting content, often offered through sources outside the company, in addition to company videos, blogs, and other items. Newer LXP solutions are incorporating the use of Artificial Intelligence and Chatbots to suggest possible relevant content to users based on their activity and platform interactions. Newer solutions are of interest to companies whose technology may be lagging or those in adjacent markets looking to expand their offerings and market share.
Recent Training Industry research projects the total spend on learning technologies will reach $7.4B in 2022. In 2020, spend in this segment increased approximately 23%, to $6.5B. Rapid growth in this market spells opportunity for investors and strategic buyers and is likely to lead to an increase in M&A activity among both Private Equity firms who still have massive amounts of dry powder and strategic buyers who will seek out targets that further their non-organic growth strategy.
Increased interest from strategics and PE firms is likely to have an impact on founders who wish to exit in the next 5 years and are carefully weighing the risk the economic landscape might pose over the next few years vs exploring an exit now while interest in this market is strong.
Download the M&A Trends in Learning & Development Tech HERE