More acquisitional activity has occured in North America, with the International Language Institute (ILI) in Canada announcing that it has recently sold a controlling interest to Anterior Education Systems. Under management of new CEO Michael Hunter, the previously family-run business aims to expand significantly across Canada and the UK and go public by mid-2015.
The bold expansion model includes acquiring a network of centres to be taken under ILI branding that offers students a digitalised curriculum and opportunities to higher education pathways nationwide.
Anterior Education Systems is a Canadian-based technology company focused on developing ESL distance learning platforms.
Speaking with The PIE News, CEO Hunter said the regionalised Canadian market has created a fractured ESL lanscape for both students and providers. His focus is consolidation.
“We see a lot of profitability that’s being wasted in the market with the duplication of effort”
“We see a lot of profitability that’s being wasted in the market with the duplication of effort,” he said.
“Around 10% EBITDA [margin] is probably an industry standard and there’s no question that we’ve see an opportunity to drive that up to between 50-100%; I think 20% EBITDA is possible, certainly 17-18% is possible.”
Having a national chain and standardised curriculum also means greater access to higher education for ILI students, Hunter argued.
“Every university, every technical institute in Canada knows that if they get a student from ILI, whether its Halifax or Vancouver or anywhere in between there’s a particular proficiency that that student will graduate with.”
The acquisition was finalised at the end of September and last week ILI closed two tentative deals to acquire schools in Toronto and Calgary.
Hunter said discussions are underway to acquire two more schools in Vancouver and Oxford, England.
“We’re looking for schools that are already designated on the Canadian government’s list of approved providers,” he commented. “If you’re going to start up your own school you’re already two years out so in terms of a business model we’ve got that very clear.”
Founded 31 years ago, the school has been operated by the Musial family and has six British Council IELTS test centres in Canada.
“Around 10% EBITDA is probably an industry standard and there’s no question that we’ve see an opportunity to drive that up to between 50-100%”
Former CEO and founder, Tom Musial, will remain with the company on AES’s board of directors and as chair of the Education Committee.
The company plans to go public next year on the Canadian stock exchange to fund further expansion and the transition to an all digital curriculum– something marketing manager Chris Musial said wasn’t possible before the deal.
“I know what needs to be done in the market but as a mom and pop private company we didn’t have the reserves of cash to do it,” he told The PIE News.
“The access to capital allows us to be creative and go digital. We’re in the process of getting rid of textbooks and photocopier. It’s a tablet and it’s a download. That’s what our students want now.”
With last year’s Foreign Service Office strike and new regulatory mandates Canada’s ELT market has taken a beating. Languages Canada reported an almost 10% drop in student numbers for 2013 with few signs of recovery for this year after the exemption from co-op programmes came into effect June 1.
Hunter however is confident that now is the time to invest in the sector. “In every tough situation there’s going to be a challenge and an opportunity,” he said.
“When I look at Canada right now I see us ranked 3rd for ESL, 4th for higher education and I see that as a great match for students to come in and learn spectacularly good English from ILI and then have this opportunity to access Canada’s very highly regarded post secondary education system,” he added.
“If you start to combine those two you get away from the fractured market, the lack of profitability market, to a much more profitable and student outcome driven market.”
