There has been much talk lately about the state of the labor market in light of the coronavirus pandemic, but even before 2020 analysts had been forecasting dramatic shifts. According to a report released by the McKinsey Global Institute, in 2019 almost 40 percent of U.S. jobs were in occupations that were likely to shrink by 2030, and COVID-19 only served to further accelerate these trends.

Although private equity firms have been hesitant about investing in post-secondary education companies in the past, today there are those who see this changing economy as an opportunity to support companies that are training people in soft and technical skills. The Great Recession and the introduction of the Gainful Employment Rule by Obama in 2010 may have previously made private equity firms wary, but as the world shifts and higher education is reworked to better support employers' and students' needs, the outlook for the post-secondary sector continues to brighten. 

One such firm is Hauser Private Equity, a hybrid private equity fund manager based in Cincinnati. Founded by Mark Hauser who currently serves as co-managing partner, Hauser Private Equity looks to directly co-invest alongside funds with investment models that are strategic in nature, adding operating leadership to the companies within their portfolios. Their partners tend to be funds between $200 million and $2 billion that are based in North America. They seek out teams that have a track record of investing together, and funds that are focused on operations, which allows them to create clearly defined target strategies and add value. They also consider a history of successful exits as a desirable quality in co-investors, and do not invest in trendy sectors such as venture capital, real estate or emerging technology. 

Instead, areas such as education and healthcare are what capture the attention of Mark Hauser and Hauser Private Equity. Partnering with Renovus Capital Partners, a Philadelphia-based private equity firm that specializes in the knowledge and talent sectors, in 2019 Hauser Private Equity co-invested in Rasmussen College. One of the largest providers of pre-licensure nursing programs in the United States, Rasmussen is regionally accredited by the Higher Learning Commission (HLC), an institutional accreditation agency recognized by the U.S. Department of Education. Offering degree programs in nursing, health sciences, business, technology, design, education and justice studies, they provide both traditional and competency-based programs online and through its 24 on-ground campuses across six states. 

In the year following the co-investment with Hauser Private Equity, Renovus Capital Partners assisted in growing Rasmussen's best-in-class nursing and high-end healthcare programs and improving Rasmussen's operating results through an emphasis on affordability and student outcomes with a strong connectedness to the employment market. It was this strategy that saw American Public Education, Inc. announce in October 2020 that it had entered into a definitive agreement to acquire Rasmussen. 

The parent company of the online learning provider American Public University System and on-ground, pre-licensure Hondros College of Nursing, American Public Education, Inc. is a leading provider of career-focused higher education and training that provides pathways to employment and career advancement. American Public University System, which operates through American Military University and American Public University, is the leading educator to active-duty military and veteran students and is regularly cited as one of the most affordable universities in the United States. Hondros College of Nursing "creates new nurses" by educating pre-licensure nursing students at its six campuses in Ohio and one in Indiana, and is the largest educator of ADN (RN) and PN (LPN) Nurses in the state of Ohio. 

The acquisition was completed in September 2021, and saw American Public Education, Inc. nearly double in revenue to approximately $600 million in addition to significantly diversifying its revenue streams to approximately one-third military and veteran students, one-third nursing students, and one-third online adult learners. Combined, the entity will serve over 110,000 students and is expected to generate approximately $90 million in adjusted EBITDA before synergies. On a trailing 12-month basis as of the end of the second quarter of 2021 nursing represented $200 million of revenue and almost a third of American Public Education, Inc.'s total revenue. Rasmussen adds approximately 8,500 nursing students to the 2,300 nursing students already served by Hondros, creating a collective powerhouse in nursing education that will serve nearly 11,000 students total. 

Rasmussen is expected to generate approximately $275 million of revenue for the full year of 2021, and the transaction itself is expected to generate cost savings in excess of $5 million in the first 12 months post-close and at least $10 million in the second and third years after closing. The change in ownership will not mean a change in leadership, as Rasmussen will continue to be led by Tom Slagle who has been chief executive officer since 2010, and will also continue to operate as a separately accredited institution. American Public Education, Inc.'s brand promise is to provide its students with a higher education return on investment, and the scale and diversification created by the acquisition of Rasmussen serves to make it possible. 

After the successful completion of the Rasmussen acquisition, Hauser Private Equity and Renovus Capital Partners have recently co-invested in another company within the higher education sector. Announced in October 2021, Renovus Capital Partners acquired EducationDynamics, a market leader in higher education marketing, enrollment management and student success coaching. The industry leader in helping colleges and universities achieve their enrollment goals, EducationDynamics has a unique ability to find the highest-quality adult student prospects. With a reputation for providing the resources and expertise required to meet a broad range of industry challenges, the company has become a trusted partner to more than 500 higher educational institutions, delivering inquiry generation and agency of record marketing such as paid digital, organic search and awareness, enrollment management, retention and technology solutions to universities across the country. 

As with Rasmussen, Renovus Capital Partners will be focusing on improving operations, investing in services and capabilities that will strengthen the company's partnership with colleges and universities by furthering its mission of improving student enrollment and retention. Hauser Private Equity's well-placed partnerships will continue to support funds such as Renovus Capital Partners in their efforts to create value in the higher education sector.