CHS: We have had a focus on education for the past 25 years. Sterling’s background is unique in that we have experience wearing two different hats. We have been educational entrepreneurs, as I spent my early years running and building education organisations. At the same time, we were also the capital resource for companies. We learned to be better partners to entrepreneurs due to our own operational and entrepreneurial experience.
The PIE: When did you start to see the international element become more important for the education industry?
CHS: It was early. In 1991 we started a business from scratch that was called Prometric – a company that is still around. This was a global business that disrupted the way standardised exams were taken by pioneering technology-enabled testing and assessment. We operated in about 120 countries and the company is now owned by Educational Testing Service, the largest non-profit testing company in the world.
While Prometric provided us a very interesting and transformational business in the area of testing and assessment, it also served as a conduit though which millions of people a year would flow into academic and professional pursuits.
“We learned to be better partners to entrepreneurs due to our own operational and entrepreneurial experience”
As such, we could quite literally watch the flow of people’s lives at key transition moments whether it was going to graduate school or making career choices. It provided this textured look at the entire education landscape on a very broad basis and in many different professional and academic categories. It gave us a perch from which to monitor and assess the international industry.
The PIE: Did having an international perspective change the direction of Sterling Partners?
CHS: At that time we were already building Sylvan Learning, a business focused on tutoring in the United States. Having that bird’s eye view of the worldwide education industry certainly helped us navigate the development of the business.
We also had built a business called Wall Street Institute, which was a source for English instruction for clients around the world, and started outside of the United States. Via these three early Sterling companies, we learned that we needed to cast a worldwide net when looking at education trends and evaluating investment opportunities.
The PIE: What is the relationship between Sterling and Laureate?
CHS: Sterling Partners is an investor in Laureate International Universities. The company was started within Sylvan Learning. In 1997, we acquired a university in Madrid forming the foundation for Laureate. For a period of time Laureate was publicly traded; roughly six years ago we led the process of taking it private. Today, Sterling is one of a number of Laureate shareholders.
The PIE: What do you look for in a potential investment?
CHS: We are looking for organisations that can partner with higher education institutions in areas as diverse as managing outsource functions to joint venturing to build online programs or campus capacity. Most universities have a sense of what needs to happen within their institution for continued growth and success, but have limited financial resources. Therefore, they will look for partners that can create a focused strategy with a sustainable financial base to help further them along.
“Most universities have a sense of what needs to happen within their institution for continued growth and success, but have limited financial resources”
Higher education is currently going through a fairly substantial transformation in the United States, one that I suspect might gradually spread throughout the world. If one looks back 30 years, the participation rate in higher education in the United States was about 40% of the population, now it’s about 70%. We’ve enjoyed a period of dramatic growth in enrolments, but of late growth has slowed down dramatically. Firstly, secondary education institutions have become more expensive in the US, and often not affordable for students. Secondly, the advent of online education over the last decade has caused a shift in the way higher education is consumed.
Given these trends, we think that higher education as we know it is going to change fairly dramatically over the next decade. As such, there are things that universities are going to have to improve, so we’re working to provide those support services for schools and are looking to invest in companies that provide them.
The PIE: Where do you think the US will stand in the international recruitment market in the next five years?