The Growing Education Technology Sector

Technology is changing the education landscape in fundamental ways. Education is moving away from the traditional teacher-centered, classroom-based model based on a standardized, subject-specific curriculum that emphasizes lectures, textbooks, and standardized testing. Today’s education environment is moving toward a more-technology-assisted model where innovative digital tools are used to create more personalized, accessible, and interactive learning experiences. For example, technology allows for lessons to be tailored to individual student needs and learning styles. It also gives students access to a wider range of resources. It enhances collaborative learning, enabling students to work together on group projects regardless of each student's physical location. And it makes learning more interesting and fun by presenting students with a combination of media, including text, audio, and video, educational games, and even immersive experiences such as virtual reality and augmented reality

As the education landscape evolves, there is a growing demand for technology-based education solutions across all levels of education, from K-12, to higher level education, to professional training. And that demand has stimulated significant growth in the education technology (Edtech) market. According to market research service Statista, the global Edtech market was valued at an estimated $142.37 billion in 2023 and is projected to reach $348.41 billion by 2030, a compound annual growth rate (CAGR) of 13.6%.

M&A activity in the Edtech sector is also growing.  Over the last ten years, the number of deals in the sector has increased continuously and is poised to set a new record in 2025, significantly exceeding the previous record of 116 deals in 2024.The average value of deals in the sector is growing too driven by megadeals of over $1 billion. 

There are a number of factors stimulating the growth of the Edtech sector and the steady increase in M&A deals. Here are some of them. 

Artificial Intelligence 

Artificial intelligence (AI) is powering significant changes in education both for students and teachers. For instance, AI can analyze a student's performance and learning style to create a customized educational path, providing support where it’s needed and allowing students to learn at their own pace. For the teacher, AI can automate repetitive tasks like grading and scheduling, freeing up teachers to focus on teaching, engaging with students, and mentoring.

There are many examples of Edtech companies that provide innovative AI education tools. For example, online education provider Khan Academy offers an AI-powered tool set called Khanmigo that assists educators in lesson planning, content creation, and tailoring lessons to meet diverse student needs. Language learning company Duolingo uses AI to personalize language learning paths by adapting lessons to a user's skill level. It also offers conversation practice through interactive text and video calls with AI-based characters.

Companies that offer these innovative Edtech solutions are attractive targets for acquisition by strategic buyers looking to fill product gaps or create a more comprehensive educational offering, and by financial buyers looking for Edtech companies with strong and predictable financials. For instance, Sana Labs, an AI company that develops enterprise knowledge tools including an AI-powered learning platform called Sana Learn, was purchased for $1.1 billion by Workday, a provider of an enterprise AI platform for managing people, money, and agents. With the acquisition, Workday will be able to create a more personalized and intelligent experience for employee training and development. 

And in the largest deal in the Edtech sector in 2025, K-12 software provider PowerSchool was taken private by PE firm Bain Capital for $5.6 billion. PowerSchool's strong current and projected financial performance was a significant factor in the acquisition.

Data analytics

Data analytics, especially those bolstered by AI,  provide insights into student performance and learning patterns, helping educators make more informed decisions.  Teachers are taking advantage of a variety of data analytics software tools that that tailor content to individual student needs. They are also using these tools to gain insights that enable targeted feedback and to help identify students at risk of falling behind. In addition, education administrators are using data analytics software to streamline administrative tasks such as resource allocation.

One example of a software tool that provides data analytics features for educators is Canvas, a learning management system (LMS) for teachers. Canvas provides built-in analytics to track assignment submissions, discussion participation, and quiz performance. Another example is Dropout Detective, a predictive analytics tool that uses machine learning to identify students who are at risk of dropping out and provides alerts and recommendations. And DMSchedules is a software tool that helps administrators build strategic, student-centered schedules in a fraction of the time it takes to do it manually. 

Strategic and financial buyers are actively acquiring Edtech companies that provide data analytics tools. For example, in 2025, Swedish buy-and-hold company Vitec Software Group acquired Dutch software company Intergrip, which specializes in software that helps schools monitor student learning and identify at-risk students. And PE firm Leeds Equity Partners acquired Learnosity, an Ireland-based company that provides assessment software solutions to K-12, higher education, and corporate learning environments.

Consolidation

The Edtech sector is undergoing consolidation as larger, more stable companies acquire smaller, niche companies to achieve economies of scale, expand their market presence, and offer a more comprehensive suite of educational tools. For example,  in 2025, Archer Review, a company that provides online test preparation courses, resources, and tools for nursing and medical students to help them pass certification exams, acquired three Edtech companies: OnlineMedEd, a provider of medical education curriculum and supplemental solutions for medical students and schools; PulsedIn Technology, a social community-focused education company; and Core Anesthesia, an educational resource for nurse anesthetist education. These acquisitions expand Archer's offerings to include medical education curriculum, technology for collaborative healthcare education, and advanced practice nursing education. Also, Instructure, the company that publishes the Canvas LMS, acquired Parchment, a digital credential company, for $835 million. This deal combines Instructure's LMS with Parchment's  credentialing platform, to create a more complete ecosystem for educational institutions. 

Consolidation in the sector is expected to continue in the future as the Edtech market matures and as educational institutions look for more integrated, comprehensive solutions to meet their needs. Another factor is declining venture capital funding which has made it difficult for many Edtech startups to sustain independent growth. As a result, many are looking to be acquired by larger, better-capitalized companies. And finally, the growing impact of AI is impelling larger companies to acquire smaller companies that offer AI capabilities which the buyers can integrate into their platforms.

The positive future of Edtech

The future of Edtech is positive, driven by significant market growth, increasing demand for personalized and flexible learning, and the integration of technologies such as AI. While challenges exist, such as ensuring content quality and equitable access, the overall outlook is excellent due to Edtech's expanding role in K-12 and higher education, as well as in corporate training.

That growth will be accompanied by sustained M&A activity in the Edtech sector, as acquisitions are increasingly focused on obtaining cutting-edge technology such as AI rather than building it from scratch, through active private equity participation, and as a result of market consolidation.