California public company PowerSchool has acquired Baltimore education finance firm Allovue in a deal aimed at expanding its financial management tools for school districts.
Allovue's products help K-12 school districts keep track of their budgets and manage financial resources, and PowerSchool (NYSE: PWSC) plans to integrate them into its suite of edtech products. As part of the deal, Allovue CEO Jess Gartner will join the over 3,000-person company as group vice president of ERP, or enterprise resource planning. The financial terms of the deal were not disclosed in a Monday announcement about the deal from PowerSchool.
One of the reasons PowerSchool pursued the acquisition was the chance to use the Baltimore company's financial tools to help schools navigate the end of the massive federal Covid-19 stimulus funds. The federal government gave billions of additional money to schools through several bills such as the American Rescue Plan Act during the pandemic. The federal grants amounted to around a 5% or 6% bump in an average school’s budget to help cover the costs of rising inflation, the need for new technology during remote learning and Covid-19 protective measures.
Many of the federal grants to K-12 schools will expire by next year though, putting schools in a financial bind as they have to find ways to spend any remaining federal money and shift any positions that were being funded by pandemic aid into the regular budget. The turmoil could provide an opportunity for PowerSchool to get a larger customer base for Allovue's budget management technology.
“As federal stimulus funding winds down, budget management, impact analytics, and budget transparency become even more critical in K-12,” Hardeep Gulati, CEO of PowerSchool, said in a release.
Allovue benefited from the boom in edtech caused by the initial grants as schools needed more tools to communicate with the public and management tools to deal with an influx of new cash. The increase in demand for a way to keep track of budgets and communicate complex financial information to the public caused Allovue's staff to grow from 25 people in 2019 to 42 people by early 2023.
The deal will build off that growth to instantly multiply the reach of the Baltimore firm's products. PowerSchool supports over 50 million students in more than 90 countries and works with more than 90 of the 100 largest school districts in the United States. Locally, it works with Baltimore County and Anne Arundel County.
The increased scope and resources PowerSchool could offer is a key reason why Gartner went ahead with the acquisition, according to a LinkedIn post by the founder. The education field is facing several crises, including rising rates of youth mental health issues, challenges with teacher recruitment and fiscal issues as the federal Covid-19 pandemic grants end. The acquisition of Allovue by PowerSchool could create a stronger platform to address the upcoming crises in education.
“We’re teaming up with PowerSchool because I know our combined resources and partnership will meet the needs of education leaders and students better than we can alone,” Gartner said on LinkedIn.
Allovue has played an important role in the local entrepreneurship scene as one of the first companies to achieve success out of the Emerging Technologies Center AccelerateBaltimore program. Gartner also helped lead the transition team for Baltimore City Comptroller Bill Henry when he won election in 2020. The CEO relocated to Seattle at the end of last year after a year working remotely while taking a road trip across the country.
PowerSchool is active in the acquisition market and made 20 deals between 2015 and 2023. The firm acquired School Messenger for $300 million in October 2023. Gartner is also no stranger to M&A. Allovue acquired fellow tech firm Equiday in 2019.
