Pearson Sells PowerSchool

This may not be the biggest news in the education world-- unless, like me, you teach at one of the gazillion of schools that uses PowerSchool as its electronic gradebook. But the giant edubiz conglomerate has sold the giant gradebook monstrosity to a huge investment firm.

First, a confession: I don't hate PowerSchool. I know some folks do, and a lot about what is hate-able about the big PS comes down to how well your local IT configures it and supports it. But for my district, it's the most recent in a string of electronic gradebooks and the previous software was just so deeply awful in its awfulness that PowerSchool seemed like a breath of fresh air when it arrived. I still find it relatively easy to use and it mostly does the things that I want it to. I still keep a paper gradebook as my primary records, but by and large I trust PowerSchool to do its job of recording, storing, computing, and making available to parents and students the grades from my class.

Why did Pearson sell this successful program? That is an excellent question. The company is profitable, though not hugely so, but Pearson's spokesperson indicated that it didn't exactly fit Pearson's mission of owning everything in the world having to do with teaching or testing.

The sale of PowerSchool, an administrative system rather than a tool for learning, teaching or assessment, will enable us to focus more directly on learning outcomes, and further simplify Pearson as we make our products more global, digital and scalable.

Who's buying the company? Well, that's not very encouraging. The happy new owners are Vista Equity Partners, "a leading private equity firm focused on investing in software and technology-enabled businesses." They are the kind of group that describes themselves with phrases like "with more than $14 billion in cumulative capital commitments."

Or hey-- here's their investment philosophy. The large picture is "to enable good businesses to achieve their full potential"-- not exactly groundbreaking, though better than "to squeeze money out quickly and then sell the husk." Can you be more specific, Vista?

This starts by selecting well-positioned companies with best-in-class software products and related services, referenceable customers, and attractive market dynamics. We seek to align the interests of management with those of shareholders and focus on the operational processes and best practices that are critical for long-term value creation.

Uh-oh. Demerits for "referenceable customers" and an ominous shudder for "align the interests of management with those of shareholders etc." So PowerSchool has just become a company whose primary purpose is to make money for investors-- providing a useful product is actually secondary, a means to the most important end which is making somebody rich(er).

Their investment portfolio includes a bunch of software companies that you have never heard of. Every single one of them is "a provider of solutions" for some industry, from real estate to healthcare to news media to sports stats. Vista also partners with a variety of regional do-gooding organizations, including the Atlanta Academy, Bay Area Discovery Museum, Chicago Children's Hospital, the Lincoln Hills Experience (fly fishing for young people) and Squash Drive (a non-profit that promotes academic, athletic and general life success through squash-- the game, not the vegetable). While their philanthropic work tilts toward youthy stuff, they don't have any of the reformy connections here that we've come to know and love.

They did win an award for 2007 Top Performing Domestic Buyout Fund as announced by Reuters Buyouts Magazine, which is a real thing. Apparently Vista is good at what it has been doing for the past fifteen years.

The company was started in 2000 by Brian Sheth, Steven Davis and Robert F. Smith, both previously employed by Goldman Sachs. Sheth was 24 at the time and started out as an associate; Davis has since moved on and Sheth has moved up. While the company has offices in San Francisco and Chicago, it is based in Austin, Texas. A Wall Street Journal profile last year called them one of the top ten private equity companies in the world.

So for now, users of PowerSchool will be waiting to see what changes will be coming as the company shifts to its new goal of Making Money for Investors. We'll also be watching for what Pearson does to replace this giant data-hoovering capabilities of PowerSchool. Stay tuned.