Folsom-based education software company PowerSchool Holdings Inc. has agreed to be acquired by Bain Capital LP in a deal that values the company at $5.6 billion.
PowerSchool (NYSE: PWSC) shareholders will get $22.80 per share at the close of the proposed transaction, expected in the second half of the year.
“PowerSchool’s innovative software solutions in and out of the classroom provide a strong foundation for K-12 academic success. Their products are highly respected by administrators, educators, students and parents because they foster active collaboration and offer actionable insights needed to support positive learning outcomes,” said David Humphrey, a partner at Bain Capital, in a news release.
PowerSchool is the largest locally based public company.
The $22.80-per-share price is a premium of 37% over PowerSchool’s share price of $16.64 on May 7, the last trading day before media reports disclosed the potential transaction.
PowerSchool supports over 55 million students and over 17,000 customers in more than 90 countries. Bain said it will remain a stand-alone company, and its business operations and customer service will continue as they are without interruption.
Vista Equity Partners and Onex Partners, the previous owners of PowerSchool before it went public in 2021, will continue to have minority investments in PowerSchool, Bain said. Even after the initial public offering, the two private equity firms continued to own significant stakes in PowerSchool.
Max de Groen, also a partner at Bain, said providing technology platforms to support schools and students offers opportunities for growth around the world.
“We look forward to working with PowerSchool to accelerate the company’s growth while strengthening its commitment to help educators and students realize their full potential,” de Groen said, in a news release.
“With Bain Capital’s support, PowerSchool will have access to additional resources and the flexibility to deliver even more growth and innovation, particularly with PowerBuddy, our generative AI platform, and scale our global reach in helping schools personalize education for every student journey,” said PowerSchool CEO Hardeep Gulati, in a news release. “PowerSchool is a leader in K-12 SaaS technology in North America and is uniquely positioned to provide differentiated, mission-critical solutions that drive better education outcomes, empower educators and help district operations run more efficiently."
PowerSchool had recently been the target of New York-based short-seller investor Spruce Point Capital Management LLC, which published a critical report about PowerSchool in April. Spruce Point's report forecast that PowerSchool shares could fall 30% to 60% from their then-closing price of $19.73.
Shares of PowerSchool dropped nearly 10% in April following the release of the report by Spruce Point, which said PowerSchool faced financial headwinds and potential state privacy law violation concerns. Without directly referencing the Spruce Point report, Gulati said on a May 7 conference call with investors and analysts that he expected demand for PowerSchool's products to remain strong and that they comply with privacy laws.
PowerSchool shares recovered May 8 when The Wall Street Journal reported that Bain was interested in taking PowerSchool private.
PowerSchool launched in Folsom in 1997, offering online tracking of grades and attendance. Over the years it's added more functionality and modules to support school administrators, teachers, parents and students on a cloud-based platform. PowerSchool has been owned by a succession of different companies over the years, including Apple Inc. (Nasdaq: AAPL) and London-based educational publisher Pearson PLC. In 2016, Pearson (NYSE: PSO) sold PowerSchool to private equity firm Vista Equity.
In 2018, Canadian private equity firm Onex invested alongside Vista, and they took the company public.
