Private Equity in Education
McGuireWoods gets high grades from private equity clients seeking to invest in an industry with strong growth prospects. The firm’s education team includes professionals who wrote the borrower defense to repayment and financial responsibility regulations and other regulations governing private equity transactions in higher education — an invaluable asset enabling the team to assess risks and propose solutions quickly. The firm is a one-stop shop for any transaction concerning education where private equity attorneys and education regulatory attorneys work seamlessly together to craft advantageous deals that minimize liability and maximize profit.
Private equity firms, institutional investors, independent sponsors, family offices, investment advisers, lenders and portfolio companies face an uncertain regulatory environment, resulting in market volatility for investment in schools. In addition, these entities are concerned about the Department of Education’s decision, in certain circumstances, to hold individuals representing corporations or other legal entities personally liable for a school’s actions.
McGuireWoods’ education team, in collaboration with our private equity lawyers, guides clients through these and other challenges. The team focuses on due diligence in education-related transactions and provides regulatory counsel to assist with approvals required by states, accreditors and the Federal Student Aid Office. Our lawyers draft and negotiate representations and warranties, covenants, indemnities, working capital adjustments and escrows included in purchase agreements to ensure clients comply with applicable education regulations prior to sale, at closing and post-closing.
McGuireWoods concentrates on private equity deals in the middle market, where most higher education institutions sit. The team’s clients primarily invest in for-profit schools and education technology (edtech) companies — which are increasingly attractive — but private, nonprofit schools also are investment targets.
- Successfully represented a proprietary institution and private equity firm before the Federal Student Aid Office in a recertification of its program participation agreement such that the fund was not required to assume joint and several liability for the institution.
- Represented a buyer in a purchase of a proprietary school with representations and warranties as well as an indemnification clause to successfully address and minimize all liability concerning Title IV federal financial student aid, including borrower defense to repayment claims.
- Represented a private equity firm in the successful sale of a cosmetology school to a newly formed company without two years of financial statements and without an abbreviated pre-acquisition review.
- Represented a lender in a credit agreement to finance an education services company, relying on the bundled services exception to the ban on incentive compensation.
McGuireWoods’ education team includes professionals who wrote the regulations that representations and warranties address and that govern private equity transactions in higher education — an invaluable asset enabling the team to assess risks and propose solutions quickly.