With the deal, Sylvan Learning will remain based in Baltimore County’s Hunt Valley, and its 100 corporate employees will remain with the company. The existing brand, management team and tech talent played a key role in Delaware, Ohio-based Franchise Group’s assessment of the business.
“The addition of Sylvan provides Franchise Group another growing franchise concept and further diversification into consumer services. Sylvan has been a leader in the educational services industry for decades and offers attractive unit economics to its growing franchisee base,” said Franchise Group CEO Brian Kahn in a statement. “We look forward to partnering with Sylvan’s outstanding management team to accelerate their expansion plans while leveraging Franchise Group’s best practices to drive incremental efficiencies.”
Founded in 1979, Sylvan Learning’s centers offer tutoring for K-12 students, both at in-person locations and virtually. It has 700 locations, in 49 states, including more than 560 physical centers. All but six of those centers are operated on a franchise model, in which a third party can operate using the business’ name. The Franchise Group, which is publicly traded on the Nasdaq, specializes in these types of businesses. It also owns Pet Supplies Plus, American Freight and The Vitamin Shoppe, among others.
With this move, the company is entering the educational services industry, a market which it says is valued at $20 billion. Kahn said the acquisition is “expected to be immediately accretive to earnings and is expected to expand our discretionary cash flow generation,” Kahn said. For Franchise Group’s FY2021, Sylvan Learning is estimating that it will bring in $169 million in total systemwide revenue. It is also estimating company revenue of approximately $30 million and adjusted EBITDA of approximately $12 million.
Known for tutoring centers, Sylvan Learning has also been an important part of the edtech ecosystem in Baltimore. From a longtime base in the city’s Harbor East, the company mixed digital and distance learning offerings with in-person tutoring.
Leaders of Sylvan also started new companies. Entrepreneurs Douglas L. Becker and R. Christopher Hoehn-Saric acquired the company in 1993. In 2004, its college-focused business spun out to form Laureate Education, the publicly traded operator of universities that continues to be based in Harbor East. It has also since been active in Baltimore’s startup community, acquiring edtech startup Citelighter and supporting the Potential of Edtech meetup.
Willkie Farr & Gallagher LLP and DLA Piper LLP served as legal counsel to Franchise Group. Tyton Partners served as financial advisors to Sylvan Learning and Miles & Stockbridge as legal advisor.