Bain Capital Goes Big In EdTech: PowerSchool Acquisition Valued At $5.6B

Zinger Key Points
  • PowerSchool Holdings to be acquired by Bain Capital for $5.6 billion, offering $22.80 per share in cash.
  • The transaction is set to close in H2 2024, with PowerSchool becoming privately held and delisting from NYSE.

Private equity firm Bain Capital is buying PowerSchool Holdings PWSC for $5.6 billion.

PowerSchool’s stockholders will receive $22.80 per share in cash — a 37% premium over the unaffected share price of $16.64 on May 7 (the last trading day before news broke of the deal).

Vista Equity Partners and Onex Partners will retain minority investments in PowerSchool.

Upon completion of the transaction, PowerSchool’s common stock will be delisted from the New York Stock Exchange.

PowerSchool’s tax receivable agreement was subsequently amended to ensure that no payments will be made related to or following the transaction. These payments were estimated to be worth approximately $450 million, or more than $2.00 per share.

PowerSchool is known for its generative AI platform called “PowerBuddy.”

David Humphrey, a partner at Bain Capital, praised PowerSchool’s products as “best-in-class”.

Hardeep Gulati, CEO of PowerSchool, says Bain Capital’s ownership will grant PowerSchool “access to additional resources” and help it expand globally.

But, as is often the case with private equity ownership, target companies are typically saddled with debt and workers are laid off as transparency is reduced. According to Bloomberg, private credit lenders provided debt financing for Bain’s acquisition of PowerSchool. Traditional banks also competed to finance the deal.

Price Action: PWSC shares are up 0.16% at $22.41 at the last check Friday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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