Providence Equity Is in Lead to Buy Blackboard, Bloomberg Says

June 15, 2011, 4:00 pm

Providence Equity is the leading candidate to buy Blackboard Inc., the dominant course-management software company in higher education, Bloomberg reported on Wednesday, citing an anonymous source. Blackboard announced in April that it was considering takeover offers from unnamed bidders.

Providence Equity is the part owner of Education Management Corporation, a for-profit college company that runs Argosy University and the Art Institutes, and it owns Edline, which offers course-management software for elementary and secondary schools. Blackboard is also considering a bid from Hellman & Friedman LLC, the owner of Datatel, Bloomberg said.

Michael Stanton, Blackboard’s senior vice president for corporate affairs, declined to comment on the report but told the Washington Business Journal that the company’s board “continues its evaluation process with an interest in moving as quickly and efficiently as possible.” Blackboard’s stock was trading roughly even late on Wednesday afternoon.

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richardtaborgreene

The MBA guys always err when buying technology. Here they buy Blackboard just past its peak as Open Source alternatives provide serious alternatives at 1/millionth the price with newer better interfaces. Here is a great Blackboard management team out-thinking a bunch of technology-dead-head MBA types—they snookered them good in all likelihood. Reminds me of Ross Perot selling EDS to GM for billions then buying it back for millions, then cashing out and setting up his own competitor to it, then selling EDS again to HP—Ross is a GREAT salesperson, really great, though in other respects he has all the traits of someone insecure about how tall he is, some say.
rwejd

Interesting. Boy, do I feel sorry for Blackboard employees if this happens. The first thing these private equity vultures will do is look for ways to rationalize the cost of their purchase. everything will be fine for a year until they figure out what corners can be cut – then, watch out! Remember, these buyouts are not meant as permanent holdings; they’re meant to be honed to the bone and resold at a premium.

This is also bad news for schools that use Blackboard, because there will be near-paralysis at the Board level once the buyout happens, until they can see an operational way forward that puts them on the path to a profitable resale.

Another thing: do you see what Education Management looks like, in terms of market stance? They are cutting corners left and right and trying to “centralize” everything.

Altogether, a poor deal for Blackboard employees and the current market that Blackboard serves. Blackboard is at the “top” right now, as richardtaborgreene so accurately points out. There is a lot of angst among Blackboard customers about looking for cheaper solutions. Guess what? They’re hear and there will be more of them.

There’s a sucker born every day.