Less than a year after purchasing the struggling textbook, reference, and professional business of McGraw-Hill (now known as McGraw-Hill Financial), the private equity firm Apollo Global Management (AGM) may be looking to slim down its purchase. Reports indicate the management group is shopping the professional components of McGraw-Hill Educational (MHE), which focuses on publications and digital resources for workers looking to improve their skills and continue their education.
Earlier this year, AGM purchased MHE, which was formed in 2012 when the publisher decided to build a fence between its educational division, which publishes textbooks and other educational resources for kindergartners and college students alike, and its financial information arm. Securities & Exchange Commission (SEC) filings regarding the decoupling of the companies suggested the educational portion of McGraw-Hill’s business had been struggling in recent years. The company posted a $200 million profit in 2010; by the end of 2012, it represented a $62 million loss for the company. Separating the textbook business from the company’s financial information arms, which include the credit-rating agency Standard & Poors, set the stage for MHE to be acquired by AGM early this year, for around $2.5 billion. As part of the deal, the original company changed its name to McGraw-Hill Financial.
The move marked a refocusing of both businesses, allowing MHE to drill down on educational services, said spokesperson Brian Belardi. “One hundred percent of the investment in the company now goes to education,” Belardi said. Since the sale, MHE has set up a new research and development hub in Boston and acquired the e-learning resource company ALEKS in June, moves Belardi said the company wouldn’t have been able to make while dividing its attention between education and financial services.
A potential sale of McGraw-Hill Professional–which focuses on learning tools for mid-career professionals looking to hone their job skills or garner new certifications, rather than traditional textbooks and school resources—would likely include the subscription-based medical reference service AccessMedicine, which provides medical students and doctors around the world with access to resources like Harrrison’s Principles of Internal Medicine, as well as annual publications like Current Medical Diagnosis and Treatment. The professional wing also produces both print and digital study guides for tests like the GRE and SAT, as well as language resources and some of the company’s textbooks for subjects like engineering and business.
According to the company, the potential sale of McGraw-Hill Professional was brought about less by a desire to shed the properties, than as a response to some interested suitors. In a statement on the company’s website, Belardi said in part:
“Over the past few months, we have received strong interest from companies interested in acquiring McGraw-Hill Professional. We are currently in the process of evaluating the extent and nature of this interest, though it’s important to note that we may ultimately decide not to proceed with a transaction.”
MHE isn’t the only textbook provider testing market waters at the moment. Publisher Houghton Mifflin Harcourt (HMH) filed plans to go public with the SEC earlier this year. But the state of the industry is by no means rosy, as was demonstrated earlier this year when textbook and education resource publisher Cengage went into bankruptcy. State governments and universities alike have taken aim at rising textbook prices, with open source and digital alternatives have putting traditional publishers under increasing pressure to provide more value in their products. California has created an open source textbook library to control costs for the 50 most popular courses at state colleges, while Washington State has introduced digital open source textbooks for community colleges.