The rising uptake of AI and edtech by universities will make them attractive targets for M&A activity, according to a recent thematic intelligence report from data and analysis company GlobalData.
The edtech industry was first catapulted into the mainstream by global lockdowns in response to the Covid-19 pandemic.
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With AI becoming ubiquitous within education, GlobalData predicts that tech-informed universities will be an attractive acquisition for businesses with a campus-led business model.
GlobalData’s report references the Four Three Education’s ongoing acquisition of online specialist University of Phoenix, which is currently still some way from being completed with expectations of a completion date of mid 2024.
However, if successful, the acquisition would allow the University of Idaho, which is affiliated with Four Three Education, access to the University of Phoenix’s online infrastructure which would otherwise take years to replicate.
Generative AI originally posed a challenge to educators, with the 2022 release of ChatGPT raising concerns about plagiarism and cheating.
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By GlobalDataSince then, education companies like Chegg and Pearson have faced falling stock prices and revenue for failing to keep up with generative AI demand. Chegg has since released a generative AI tool, named CheggMate, to act as a student companion.
Generative AI can summarise large amounts of information and simplify it, making it ideal for creating student notes or revision materials.
“Covid-19 was the initial driving force for edtech, but the new growth engine will be AI,” stated GlobalData principal analyst David Bicknell.
“Use cases for generative AI in education include designing and organizing course materials, syllabi, lesson plans, and assessments. “It can also help personalize course material, such as practice problems or interactive exercises, based on students’ knowledge gaps, skills, and learning styles,” added Bicknell.
Falling enrolments have created pressure on universities and higher education colleges to expand into online courses in order to serve a growing niche of adult distant learners. By incorporating generative AI into their online infrastructure, universities and colleges can help bridge the support gap between distance learners and tutors.
GlobalData recognises that the University of Idaho’s acquisition could become a benchmark for other universities looking to serve this burgeoning student population. However, this deal has not been without scrutiny.
Multiple higher education organisations in the US cosigned an open letter to the University of Idaho’s board asking them to evaluate the efficacy of the possible acquisition, citing the University of Phoenix’s poor historical student grade outcomes.
