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Comment: Education – the next big thing for private equity?

Improving the quality of education and its accessibility remains a key goal for Britain and the world. As population figures rise and governments strive to build highly skilled economies, the education sector can offer an attractive proposition for private equity investors. According to experts at international law firm Taylor Wessing, investors in the education sector have seen solid performance to date and, with the right deals, can continue to enjoy stable cash flows in a volatile economy. Robert Fenner, Partner in the Private Equity Group at Taylor Wessing, comments…

The provision of services into the education sector is an area that has been performing solidly over the past five years. 
 
In the area of adult training, the Government has recently changed the payment formula to reflect a results driven focus rather than emphasising pure turnover. This means that any person who goes through the system needs to find and retain employment for a certain period of time in order for the majority of payments to be made to the training provider. The immediate impact for providers is less cashflow certainty but stronger businesses will emerge as a result of the changes in the medium term and adult training still provides an avenue for a private provider to tap into a large market.
 
Regulatory risk is always going to be a significant issue in the space. Government tends to want to be seen as proactive and that can result in changes being made quickly, to which the private sector needs to adapt. However, the fact remains that if a private provider can reduce costs while providing a superior service to what is already in place then there should be the opportunity for that to be implemented and I believe the Government is encouraging that.

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