The leading learning platform, Instructure Holdings, Inc. (NYSE: INST), recently announced that it has signed an acquisition deal with Parchment. With this transaction, Instructure will add the world’s largest academic credentialing platform and network to the Instructure Learning Platform. Parchment has over 15,000 customers and has exchanged more than 165 million credentials over two decades. This deal is expected to significantly expand Instructure’s existing customer base and unlock exciting new growth opportunities.
Canvas has earned the trust of thousands of institutions worldwide to support their students’ learning experiences in degree and non-degree programmes. With the proposed acquisition of Parchment, Instructure expands its institutional relationships, broadens its platform footprint, and opens an estimated $2 billion in Total Addressable Market (TAM) across several high-growth categories that can only be served by the combined efforts of two market and category leaders.
Parchment, the most comprehensive academic credential management platform and network, helps learners, educational institutions, and employers in the easy and trustworthy request, verification, and sharing of transcripts, diplomas, and other credentials. Through Digitary by Parchment, state education agencies, and receivers (including university admissions offices, background check companies, employers, college application services, Online Programme Managers, and certification and licencing boards), the platform has supported millions of learners, over 13,000 districts, university registrar offices, institutions in five additional countries outside of the US, and certification and licencing boards in exchanging transcripts, diplomas, certificates, comprehensive learner records and other credentials globally.
Speaking on the deal, Chief Executive Officer of Instructure, Steve Daly, said:
This acquisition represents an important next step for Instructure to serve all learners, beginning in K-12 and continuing throughout their lifelong learning journey. By adding Parchment to the Instructure Learning Platform, we will provide a verifiable and comprehensive digital passport of achievement records and outcomes for learners. Together, we expand the Instructure platform for existing customers, welcome new Parchment customers and open new pathways for growth with multiple new solution categories.
Learning is increasingly taking place through “non-traditional” channels, and Instructure believes this as a key strategic growth area. With Parchment, Instructure expects the platform to provide solutions that connect learners, institutions, and employers across a learner’s journey – from the first search for a course or programme to employment. Instructure customers can navigate skill mastery, transfer credits, provide proof of prior learning and much more.
Matthew Pittinsky, Ph.D., CEO of Parchment, added:
We’re thrilled to join Instructure, the world’s leading learning platform dedicated to amplifying the power of teaching and learning. Parchment’s mission is to help turn credentials into opportunities. With this combination, we will dramatically expand the credential to include rich data and more evidence of skills and learning. The seamless experience we envision for learners will provide more accessible, more equitable access to the educational and employment opportunities they seek as they build their lifelong record of learning.
The transaction is estimated to be worth $835 million. The net purchase price, including a tax benefit from the trade, is approximately $795 million, or about 16 times Parchment’s expected 2024 Adjusted EBITDA inclusive of anticipated run-rate cost synergies. In 2024, the company is expected to generate approximately $115 million in revenue.
Instructure is expected to benefit from Parchment’s highly stable and recurring revenue, with gross solid retention metrics in the mid-to-high 90s. It plans to finance the transaction with cash and incremental debt under its existing credit facility.
As part of the agreement, J.P. Morgan Securities LLC acted as financial advisor and Kirkland & Ellis LLP as legal advisor to Instructure. Macquarie Capital acted as lead financial advisor, Robert W. Baird & Co. also acted as financial advisor, and Latham & Watkins LLP acted as legal advisor to Parchment.
Instructure, set up in 2008 by two enterprising graduate students, is the parent company of Canvas LMS and the Instructure Learning Platform, which benefits millions of students and teachers worldwide every day. It aims to encourage everyone to learn together. The firm achieves this goal by focusing on openness, relationships, equality, ownership, and simplicity. These values apply to all aspects of the company, including its software and services, coworkers, customers, and partners, as well as its culture and work ethic.
