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PRIVATE AND CONFIDENTIAL TECHNOLOGY FOCUS. BROAD REACH. OPTIMAL RESULTS.
E-Learning / Corporate Training Overview
Peter Falvey
Managing Director
P. 1.617.598.0437
Jason Myler
Managing Director
P. 1.617.598.0438
Jeffrey Cook
Vice President
P. 1.617.598.0439
2
E-learning Industry Trends
E-learning
continues to take
market share from
ILT
The share of e-learning vs. traditional forms of training such as Instructor-led training (ILT) continues to grow with the
development of multimedia technologies and increasing penetration of broadband internet
According to IDC, e-learning grew to account for more than 30% of all training delivered. IDC expects organizations to increase
investments in learning management systems, assessment and evaluation technologies, and performance support technologies
as organizations seek to employ technology to improve their training and performance processes
Per IDC, there is a heightened demand for learning, and e-learning delivers more efficient, scalable and consistent training than
other approaches, this combine with the ability to track standardized knowledge and the lower relative cost makes e-learning
the right solution to meet this demand
Convergence of
learning and talent
management
solutions
We see a rapid convergence between learning and Talent Management solutions towards an integrated product suite
Solutions for Corporate Learning Management have traditionally been in silos, separate from Talent Management systems.
Learning management has now emerged as one of the key pillars of Strategic Human Capital Management, alongside
recruitment, performance management and compensation
Learning Management Solution (LMS) leaders such as Cornerstone On-demand, Plateu Systems (SuccessFactors), Saba and
SumTotal Systems have added performance management capabilities, while recruitment vendors like Taleo, Kenexa and
StepStone have added skills assessment and compensation capabilities to offer a more rounded Talent Management offering
Market
consolidation
The growth in demand for e-learning and the convergence of learning and Talent Management solutions towards an integrated
suite has led to increased M&A activity, as vendors of point solutions have sought to acquire capabilities in order to offer a
broader Talent Management offering
Cash-rich Talent Management vendors like Taleo and SuccessFactors have been particularly active, with Taleo having recently
acquired Vurv, Learn.com, Cytiva Software and Jobpartners, while SuccessFactors acquired Plateau Systems. SuccessFactors
was then acquired by SAP in December 2011, while Taleo was acquired by Oracle in April 2012
In the e-learning content space, Skillsoft, the market leader, continues to consolidate and acquire market share, with
acquisitions of competitors Element K and MindLeaders
New business
models and
markets are
evolving
Employee usage of social media platforms like Google, Facebook, Twitter, LinkedIn, Yammer, etc. is growing rapidly, resulting
in the emergence of new e-commerce business models that leverage the growth of social media networks
Social media companies are themselves recognising the power of e-learning to drive their business in the social-networked
world they are fostering
With increased adoption of social media within enterprises, learning environments and training & compliance requirements are
undergoing dramatic changes
As these new business models and channels mature, they will create a significant opportunity for training and learning, and will
require different learning approaches and content from those in use traditionally
Increased
regulation and
compliance
requirements
As regulations change and compliance requirements increase, this drives greater demand for learning and training, particularly
in compliance driven industries like Financial Services, Healthcare and Food Service
Following the turbulence in financial markets and the recent economic downturn, most jurisdictions are moving towards stricter
regulatory environments
Source: IDC Reports, Wall Street Research
3
Market Snapshot
CORPORATE E-LEARNING REVENUE E-LEARNING CONTENT REVENUE
0
5
10
15
20
25
2008 2009 2010 2011 2012E 2013E 2014E 2015E
$ i
n B
illi
on
s
0
4
8
12
16
2008 2009 2010 2011 2012E 2013E 2014E 2015E
$ i
n B
illi
on
s
CORPORATE E-LEARNING MARKET CONTINUES TO GROW DRIVERS INFLUENCING ADOPTION OF E-LEARNING
IDC estimates that the corporate e-learning market reached over
$18.7 billion in 2011, and forecasts the market to grow at a CAGR of
~5% from 2010 to 2015
Companies are looking to e-learning solutions to address a wide
range of business initiatives including regulatory compliance,
employee orientation, channel/customer education, employee
productivity, new product rollout, retail sales readiness, B2B sales
effectiveness, and business process improvement
Content will represent the largest and fastest growing segment
within the e-learning market, accounting for over half of spending in
2011.
Content revenues are expected to grow at a 7.6% CAGR, with non-
IT content growth outpacing content growth
Efficient, scalable and consistent training: Ability to reach large, often
dispersed workforce with consistent content and minimal impact on time or
travel
Heightened demand for training: Talent is a key differentiator for firms
and many are now prioritizing resources to train and retain employees
Ability to track standardized and required knowledge: Adoption of an e-
learning strategy allows organizations to standardize training practices and
content in a way that is impractical using traditional training methods
Help with compliance and regulatory issues: Companies are looking to
e-learning in response to emerging government and industry regulations
SaaS model makes e-learning more affordable: SaaS delivery model
has enabled wide, scalable distribution across customers enabling
distributors to reach small businesses with no IT expertise required. This
creates a new SME market at affordable prices yet with still high margins
Source: IDC Reports, Wall Street Research
4
Convergence of E-learning and Corporate Training Solutions
EMPLOYEE PERFORMANCE MANAGEMENT SYSTEMS EVOLUTION OF CORPORATE LEARNING SYSTEMS
CONVERGENCE OF E-LEARNING AND TALENT MANAGEMENT MARKET ACTIVITY
Corporates increasingly view Learning and Talent Management as
essential elements in developing employee talent
We see a rapid convergence between e-learning and Talent
Management software components towards an integrated product
suite
To meet this need most leading Talent Management vendors now
include courses licensed from leading “off-the-shelf” content
providers. Most vendors also have the ability to integrate custom
built courses
With Talent management solutions growing at over 20% CAGR,
companies are racing to integrate e-learning solutions with this fast
growing sector
Under extreme evolutionary pressures including the race to
integrate HR processes across the organization, vendors of
traditional point solutions such as recruitment, LMS and
compensation, have been acquiring capabilities to emerge as
vendors of a broader product offering called “Talent Management”
SAP acquired SuccessFactors, a leading Talent Management
vendor in December 2011. Taleo, the largest Talent Management
(TM) vendor, was acquired by Oracle in April 2012
Skillsoft, the leading e-learning content provider acquired
competitors Element K and MindLeaders
While TM vendors have until now chosen to partner with multiple
learning content providers, it is likely that they may feel the need to
strategically own this critical learning content
Source: IDC Reports, Wall Street Research
Talent Management
vendors dominate the
employee
performance
management systems
space, of which
corporate learning is a
subset
Source: Gartner Magic Quadrant for
Employee Performance Management,
March, 2011 Source: Bersin & Associates
5
Market Map
Breadth of E-Learning Offering Point Solution Diverse Portfolio
Sca
le
Sm
all
er
Larg
er
= PE/VC backed = Public company
6
Target Date Amount Investors
Apr 2013 $65M
Apr 2013 $7M
Mar 2013 $8M
Feb 2013 $2M
Jan 2013 $1M
Jan 2013 $103M
Jan 2013 N/A
Jan 2013 $9M
Jan 2013 $28M
Dec 2013 $20M
Nov 2012 $1M
Nov 2012 $4M
Oct 2012 $15M
Sep 2012 $80M
Recent Market Activity
CONSOLIDATION ACROSS E-LEARNING / TALENT MANAGEMENT INVESTMENTS IN E-LEARNING ACROSS ALL STAGES OF PE/VC
Source: SEC Filings, Company Press Releases, Wall Street Research, CapitalIQ, PitchBook
Target Acquirer Date
May 2013
Apr 2013
Feb 2013
Dec 2012
Nov 2012
Nov 2012
Nov 2012
Nov 2012
Oct 2012
Oct 2012
Sep 2012
Aug 2012
Apr 2012
Mar 2012
and
7
MindLeaders is a leading provider of e-learning solutions with integrated talent management
capability, and the number two vendor of “off-the-shelf” e-learning content globally.
MindLeaders’ products and services include e-learning content, talent development, learning
services and social media e-learning courses. Its solutions are delivered over the web via a
Software-as-a-Service (“SaaS”) model. MindLeaders’ heritage in the technology-enabled
learning space spans over 30 years, and over this period it has developed a library of over
3,600 e-learning courses and built strong expertise in instructional design. MindLeaders has
over 1,150 direct customers across industry verticals such as care, hospitality, public sector
and financial services, amongst others. Headquartered in Ireland, it has established a strong
presence in the US and UK, and has been expanding its operations in the Middle East and
APAC.
Client Situation Solutions Results
Drove a highly competitive, focused
marketing process to determine
interest and potential valuation
parameters
Worked with management team to
develop extensive marketing
materials, determine appropriate
buyer outreach and build out a full
data room to streamline the diligence
process
Large international component to the
transaction which needed to be
actively managed
Founder/chairman looking to diversify
his personal holdings and decided now
was the appropriate time to sell the
MindLeaders business
Concurrently, the Company received
an unsolicited offer from its closest
competitor, the largest player in the e-
learning segment - initial unsolicited
offer was not satisfactory
Confidentiality and sequencing of
information flow was extremely
important given the highly competitive
nature of the segment
Approached 47 potential buyers –
both strategic and financial
Held 11 management meetings in the
US, UK and Ireland
Received four indications of interest
from both strategic and financial
buyers
Negotiated extensively with the
eventual buyer and the buyer’s PE
investors
>100% valuation improvement from
unsolicited bid to final purchase price
Case Study: MindLeaders – Sale to Skillsoft
Has been acquired by
A portfolio company of
September 2012
8
MindLeaders Process Overview
Number of Companies /
Firms Reached Out To
Companies Contacted
47
Number of Management
Meetings
Number of Parties
Submitting Letters of Intent
In order to maximize value and
generate additional options for
shareholders, the Falvey Partners
team ran a focused process in a
timely manner inclusive of both
financial and strategic buyers,
resulting in 5 LOIs
The team was able to identify and
approach highly relevant parties
and get to market quickly and
delivered LOIs in less than two
months
Streamlined an intense diligence
process which included workflow
from the eventual buyer, their
board, three private equity firms
and lenders to close in a timely
manner
Meetings
11
LOIs
5
9
Falvey Partners Overview
FOCUS SELECT TRANSACTION EXPERIENCE
December 2011
Has acquired
July 2012
Has been
acquired by
September 2011
Series D
Convertible
Preferred Stock
Led by
September 2012
Has been
acquired by
A portfolio company of
July 2011
Has been acquired
by a portfolio
company of
April 2011
Has been
acquired by
July 2011
Has been
acquired by
February 2011
Growth equity
investment from
July 2011
Has been
acquired by
March 2011
Has divested
its diagnostic
solutions unit
November 2010
Has received an
investment from
A portfolio company of
October 2010
PGI Notify and Send
platforms acquired by
August 2010
Two divisions have been
acquired by a portfolio
company of
April 2010
Has been
acquired by
August 2010
Series C
Convertible
Preferred Stock
Led by
SERVICES
Sell-side or buy-side M&A
Growth capital raising
Board and corporate advisory
SECTOR
Software / SaaS
Tech-enabled business services
IT services
Internet / digital media
COMPANY TYPE
$50M - $250M in enterprise value
Growing, with established scale
Profitable or near-term path to profitability
Falvey Partners is a leading advisory firm serving
mid-market clients across technology sectors
Founded in 2012 by Peter Falvey and key members of the Morgan Keegan / Revolution Partners team
Falvey Partners professionals have closed dozens of software transactions representing billions of
dollars in transaction value
