An acquisition story: New capital fuels ESL school expansion

Editor’s note: We are updating our video channels and the videos linked below are temporarily unavailable.

Canada is one of the world’s top destinations for English-language study and home to an estimated 750 ESL schools, many of which are privately held, stand-alone language centres. They operate in a mature global industry where schools are increasingly challenged to differentiate and diversify programmes and services, and where competition continues to intensify.

For some schools, the key to a more sustainable competitive position lies in attracting capital to fuel expansion and develop new economies of scale. This was the case, for example, for ILSC Education Group, a Vancouver-based provider with schools in eight cities in North America, Australia, and India. Late last year, the company announced a new partnership with the private equity firm Quad Partners. A company statement at the time explained, “ILSC has been searching for a partner to bring additional resources – strategic, advisory and financial in nature – to enable us to bring the ILSC experience to even more international students in both existing and new locations.”

The rationale for such investments is found in the greater operating efficiencies, profitability, and market reach that an expanded school network could afford. This was part of the business case as well for entrepreneur Michael Hunter’s recent acquisition of another Canadian ESL school, the International Language Institute (ILI). ILI is a long-standing, award-winning school with established pathway links to several Canadian universities, including Dalhousie University, Mount Allison University, and the Nova Scotia College of Art and Design.

Mr Hunter acquired ILI in 2014 as part of a planned programme of acquisition and consolidation in the industry, and now serves as President and CEO. The expanded company aims to achieve greater scale, improved profitability (by reducing, for example, some redundant administration and back office costs across the schools in the network), and to attract additional investor capital to fuel further expansion in Canada and abroad.

We recently sat down with Mr Hunter to learn more about the acquisition process and are pleased to present a video excerpt from our conversation below. In it, he shares his vision for an expanded network of ILI centres in the future and explains some of the thinking behind the company’s strategy.

Mr Hunter points out that increased competition and operating costs in the ESL sector have combined to strengthen the business case for growth through acquiring existing schools:

“What was a very easy start-up 20 years ago has become [an increasingly difficult proposition] to maintain, so what we see right now is this very fractured environment that is truly ready for a consolidation initiative.”

He also emphasises the value of such consolidation for agents in saying, “Here is a chance to work with one company that can offer not just 200 student spaces in one school but thousands of spaces across the country…” There are also benefits for students such as “the ability to mix different cultures to ensure you have a broad mix of nationalities and skills in the classroom.”

The market factors that are helping to drive interest in consolidation are of course hardly unique to Canada. The same patterns are playing out in markets around the world, including both major destination markets as well as those that have traditionally been important sources of ESL students, such as China.

There are an estimated 2,400 ESL centres worldwide serving 1.3 million students. There are schools and networks of all sizes within this large field, ranging from large, multinational chains offering programmes in many countries to single-school centres operated by owner-founders.

As the industry continues to mature, and as new competitors emerge – notably in the form of online programming, larger school networks, and increasing teaching capacity in traditional source countries – we can expect to see more consolidation activity as providers seek to strengthen their competitive position and expand their reach by operating at a larger scale.



Did you enjoy this article? Then don't miss the next one!
Sign up for free daily and/or weekly e-alerts today.

St. George\\\
Start here. Go anywhere. https://www.studyqueensland.qld.gov.au/

Featured Posts

Popular

Recent