Market Watch: Leveraged Buyouts Enable Steady Growth for n2y, a Leading Special Education Provider

Throughout the year, Exbo Group utilizes Pitchbook to track companies in the EdTech vertical with whom we are not directly affiliated. In doing so, we gain insights into major deals that are happening in the market and are able to gauge how those deals might impact our clients. In this case study, we’ll be looking into n2y, a special education software company.

n2y is a pioneering provider of specialized instructional solutions for K-12 students with disabilities. Founded in 1997, the Ohio-based company developed a unique curriculum, software, and tools tailored to improve outcomes for special needs learners. The company’s SaaS platform for special education currently serves millions of students from pre-K to 12th grade and beyond.

n2y has had a number of Private Equity investors in the past that have allowed it to grow and expand within the EdTech space. For example, it received growth investment from private equity firm The Riverside Company in 2016. Then, in 2019, Riverside sold n2y to Providence Equity Partners while maintaining a minority stake [13].

Providence likely saw the strong potential to accelerate n2y's growth through past capital injections for R&D, sales and acquisitions. However, structural constraints like fragmented K-12 budgets and slow tech adoption also challenged the company’s growth prospects. 

In May 2023, Providence sold its stake to Five Arrows in a $1 billion LBO deal. This provided funds for n2y to continue gradual expansion. However, the additional debt from the buyouts may limit the company’s flexibility.  

Overall, these deals enabled n2y to incrementally build on its leadership through moderate growth investments. But, due to market constraints and competition, it was always clear these deals were not meant to trigger transformative acceleration or explosive growth. Instead, n2y has always followed  a path of steady, sustainable growth. The buyouts succeeded in maintaining the company’s differentiated position and, even as the company continues to expand, rapid scale would likely remain challenging without fundamental market shifts [14].

Exbo Group Research, BuyOut/LBO, Corporate and M&A Deals. Source: PitchBook Data, Inc.; Data has not been reviewed by PitchBook analysts.