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User:WWB Too/EDMC (Growth and acquisitions)

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Growth and acquisitions[edit]

Foundation and early history[edit]

EDMC was incorporated in Pennsylvania in 1962 and acquired its first educational institution in 1969, when it purchased the nearly 50-year-old Art Institute of Pittsburgh.[1][2][3] By 1996 EDMC had grown to 14 schools. In October of the same year the company held an initial public offering, which brought in $45 million dollars.[4][5] By 1998, EDMC served 17,400 students at 15 Art Institutes and three additional schools.[1]

Expansion in the 2000s[edit]

In July 2001, EDMC reached an agreement to purchase Chicago-based Argosy Education Group, the operator of Argosy University campuses, for $78 million.. The acquisition allowed EDMC to offer programs in law, education and business.[4][6]

In 2003, the company again expanded, with the acquisition of the health sciences-focused South University in April[7][6] and 18 schools operated by the Ohio-based American Education Centers in June, which were rebranded a year later as Brown Mackie College.[8][5] In September 2003, former Maine governor John R. McKernan, Jr. became EDMC's chief executive officer.[9][10] He oversaw continued acquisitions of existing art and design schools in the U.S. and Canada, construction of new Art Institute locations and the establishment of online education programs.[6]

Goldman Sachs, Providence Equity Partners and Leeds Equity Partners acquired EDMC and its 70 schools for $3.4 billion in March 2006, taking it private once again.[11][12][13] At the time of the acquisition EDMC's schools were serving around 72,000 students, 4,000 of whom were enrolled in online programs.[12] The additional capital was used grow online enrollment to more than 40,000 students by the end of the decade, made possible in part by a 2006 Congressional revision to the "50 percent" rule, which formerly required accredited schools to enroll more than 50 percent of their students in campus-based programs in order to maintain federal loan eligibility.[14][12] In January 2007, Todd Nelson became the company's chief executive officer[9] and oversaw EDMC's second public offering in 2009, which brought in more than $330 million dollars when the company's stock was released for sale on the NASDAQ.[2][11][15] Following the public offering, Goldman Sachs retained a 40 percent ownership of the company.[16]

Recent history[edit]

In 2012, Edward West replaced Todd Nelson as chief executive officer, while Nelson replaced McKernan as the company's chairman.[9] After the growth in student numbers in the late 2000s, EDMC’s enrollment declined from around 160,000 students in 2011 to approximately 130,000 students at the end of 2012.[17] EDMC has attributed this to the economic downturn of the late 2000s and new federal restrictions on the Parent Loan for Undergraduate Students program.[18]

The decrease in enrollment, coupled with pending changes to the U.S. Department of Education's "gainful employment" rule, prompted EDMC to hold off on planned expansions in 2012,[19] and also led to several rounds of layoffs.[11][20] The company has announced plans to open only one new school in the 2013 fiscal year.[21] In February 2013, EDMC announced a tuition freeze through at least 2015, as part of a strategy to refocus on students.[22]

  1. ^ a b "Robert B. Knutson". The Wall Street Transcript. 18 May 1998. Retrieved 4 April 2013.
  2. ^ a b Chris Kirkham (24 October 2011). "With Goldman's Foray Into Higher Education, A Predatory Pursuit Of Students And Revenues". The Huffington Post. Retrieved 14 February 2013.
  3. ^ "Art Institute Provides Professional Training". The Pittsburgh Press. 15 August 1948. Retrieved 23 May 2013.
  4. ^ a b Eve Modzelewski (11 July 2001). "Education Management Buys Rival". Pittsburgh Post-Gazette. Retrieved 4 April 2013.
  5. ^ a b "EDMC History". EDMC.edu. Education Management Corporation. Retrieved 19 February 2013.
  6. ^ a b c May Reeves (19 May 2003). "Education Management Corp. Pittsburgh, Pennsylvania; Educator Does Its Homework On Hot Trends". Investor's Business Daily. Retrieved 4 April 2013.
  7. ^ "South University sold to education management company". Associated Press. 30 April 2003. Retrieved 14 February 2013.
  8. ^ "AEC to be sold to Pittsburgh company". Dallas Business Journal. 24 June 2003. Retrieved 19 March 2013.
  9. ^ a b c "Education Management chairman to step down". Associated Press. 27 July 2012. Retrieved 14 February 2013.
  10. ^ Matt Wickenheiser (5 October 2011). "Company chaired by former Gov. McKernan wants federal lawsuit thrown out". Bangor Daily News. Retrieved 20 May 2013.
  11. ^ a b c Charlie Dietch (24 October 2011). "For-profit educator EDMC gives employees a tough lesson in modern business". Pittsburgh City Paper. Retrieved 12 February 2012.
  12. ^ a b c Andrew Ross Sorkin (6 March 2006). "Education Management Said to Be Sold for $3.4 Billion". Pittsburgh City Paper. Retrieved 14 February 2013.
  13. ^ John Hechinger (5 August 2010). "Goldman Schools Students on Debt". Bloomberg Businessweek. Retrieved 8 February 2013.
  14. ^ Ann Belser (4 May 2012). "EDMC's enrollment at 'low water mark'". Pittsburgh Post-Gazette. Retrieved 18 April 2013.
  15. ^ "Education Management Corporation Stock Quote & Summary Data". nasdaq.com. NASDAQ. Retrieved 21 May 2013.
  16. ^ Tamar Lewin (2 May 2011). "U.S. to Join Suit Against For-Profit College Chain". The New York Times. Retrieved 20 March 2013.
  17. ^ Teresa F. Lindeman (31 January 2013). "EDMC profit drops in second quarter". Pittsburgh Post-Gazette. Retrieved 19 March 2013.
  18. ^ Ann Belser (8 February 2013). "EDMC's enrollment falls by 16.3 percent". Pittsburgh Post-Gazette. Retrieved 8 February 2013.
  19. ^ Ann Belser (29 March 2012). "EDMC puts plans to expand on hold". Pittsburgh Post-Gazette. Retrieved 24 February 2013.
  20. ^ Charlie Dietch (23 August 2012). "EDMC layoffs hit Art Institutes nationwide". Pittsburgh City Paper. Retrieved 4 April 2013.
  21. ^ Paul J. Gough (1 November 2012). "EDMC sees 'encouraging trends' in future". Pittsburgh Business Times. Retrieved 4 April 2013.
  22. ^ Andrew Conte (28 February 2013). "Education Management CEO praises back-to-basics strategy". Pittsburgh Tribune-Review. Retrieved 04 March 2013. {{cite news}}: Check date values in: |accessdate= (help)
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