Do the Math. Follow the Money. #3
Private Equity Ate the Textbook. Then It Ate the Classroom.

Private Equity Ate the Textbook. Then It Ate the Classroom.

Third in the series. Post 1 showed 50 years of spending that never reached the scores. Post 2 showed one product with no evidence and 90% renewal. This one shows what happened to the companies that write the books, and who ends up holding the bill.

I spent years in marketing helping M&A firms find and buy businesses. I watched the same play run over and over. A founder builds a company on relationships and reputation. A buyer arrives with a spreadsheet. The relationship becomes a revenue line, the reputation becomes a brand asset, and within a few years the thing the founder actually built is gone, replaced by a system that extracts value on schedule.

You have seen this in your own life. If you live in a retirement community, look at who services your air conditioner now. The local firms got bought. A repair visit that used to be a guy with a truck and a fair quote is now a "diagnostic," a fee just to look, and a multi-hundred-dollar commitment before any part is touched. The founders who sold usually regret it. The customers notice. The spreadsheet does not.

The same machine ran through American education. It just took longer, because the customer is a school district and the invoice goes to the taxpayer.

Start with the books.

In the 1980s, a wave of conglomerate takeovers cut the K-12 textbook field to five big houses: Macmillan, Harcourt Brace Jovanovich, Silver Burdett and Ginn, Houghton Mifflin, and Scott Foresman (Sewall and Cannon, 1991). By 2005, the industry literature counted four: Pearson, McGraw Hill, Reed Elsevier's Harcourt, and Houghton Mifflin (Sewall, 2005). In higher education, four publishers, Pearson, Cengage, McGraw-Hill, and Wiley, control 90 percent of market revenue.

Walk the chains. They read like a roll call of your school years being sold and resold.

Pearson. Bought Addison-Wesley in 1988. Bought Scott Foresman in 1996, the Dick and Jane publisher, which had already been through its own leveraged buyout, Time Inc., and HarperCollins before landing there. In 1998 it bought Simon & Schuster's education division, which carried Prentice Hall, Allyn and Bacon, and part of Macmillan, and merged the lot into Pearson Education. In 2000 it bought National Computer Systems to grab the testing market. Then in 2019, with print dying, Pearson sold its entire US K-12 business to the private equity firm Nexus Capital, which renamed it Savvas. The consolidator ate the independents, then discarded its own empire.

Houghton Mifflin. Bought McDougal Littell in 1994 for $138 million. Vivendi bought the whole company in 2001 for $2.2 billion. When Vivendi collapsed, a private equity trio, Thomas H. Lee Partners, Bain Capital, and Blackstone, bought it in 2002 for $1.66 billion. In 2006 Riverdeep, an Irish holding company registered in the Cayman Islands, took it over with $1.75 billion in cash plus $1.61 billion in assumed debt. In 2007 the combined company bought Harcourt from Reed Elsevier for $4 billion, becoming Houghton Mifflin Harcourt. Veritas Capital, another private equity firm, bought it in 2022. And in 2023 HMH bought NWEA, which had been a 501(c)(3) nonprofit assessing 16.2 million students.

Count the ownership changes: Vivendi to the PE trio to Riverdeep to the Harcourt-era holding structure to Veritas. Five owners in roughly twenty years, and in that time the classroom product that changed most was the logo.

McGraw Hill. Apollo Global Management bought the education division from the parent company in 2013 for $2.4 billion. Platinum Equity bought it in 2021 for $4.5 billion. In 2025 it rang the bell on the New York Stock Exchange. Bought at 2.4, sold at 4.5, floated to the public at the top of the cycle.

Renaissance. Public until 2011, then Permira, then Hellman and Friedman at $1.1 billion in 2014, then Francisco Partners in 2018, which stacked Nearpod and Flocabulary on top in 2021.

Why did the founders sell? Because a single basal textbook program costs $15 to $40 million and years to build, at margins around 10 percent. The independent publisher could not fight that math, so the founder who spent forty years building relationships with schools took the offer, and the buyer installed a dashboard.

Now the mechanism, because the price tags are only half the story.

A leveraged buyout typically finances 50 to 90 percent of the purchase price with debt. The collateral is the target's own assets and its own future cash flows. Read that again: the company pays for its own capture. The buyer controls the business with a minority of real money, and the debt is serviced by the revenue the company generates in the future. In education, that future revenue is school budgets. School budgets are taxes. The debt is serviced by children who are not in the room yet.

When the money is borrowed, the discipline is quarterly. When the money is earned, the discipline is generational. A founder answers to the superintendent who calls at night. A fund answers to its limited partners on a fund cycle. That is why the same acquisition keeps happening: not because the product improved, but because the structure demands an exit.

And the product did not improve. The research is blunt. Post-merger publishers moved from contracted authorship to in-house writing-for-hire teams to cut costs. Sewall's conclusion in 2005: the big four are "no longer involved in deciding the content of textbooks." The author was the soul of the book. The soul was a cost center.

That is the HVAC story with a textbook cover. The founder's phone number is replaced by a ticket number. The relationship is replaced by a renewal rate. Curriculum Associates' Stretch Growth metric, NWEA percentiles, i-Ready minutes: these are diagnostic fees and maintenance contracts, and the school district signs the multi-year agreement because everyone else did.

Here is the part where I lose some readers and gain the ones who were already suspicious.

None of this happens without cheap money. A leveraged buyout is a bet that tomorrow's cash flow will service today's created debt. The debt was not sitting in a vault before the deal. It was extended against the future, because the system permits exactly that. When the unit of account can be manufactured by credit, the buyer who leverages best wins, not the builder who serves best. Merit loses to leverage. The dollar aristocracy, as I have come to call it: those closest to the credit get to buy the real things, and everyone downstream pays through the thing they sold, or the thing they teach.

This is why we hold bitcoin. Not as a trade. As a refusal. When the money is honest, the incentives are honest, and time preference shifts back toward building things that last. A founder who knows money cannot be printed into his competitor's war chest builds for the customer. A buyer who cannot manufacture leverage must actually earn the business.

Education is downstream of the unit of account. We have watched the proof for fifty years: more spending, worse outcomes, and the middle of the market, the founders, the authors, the teachers who knew the children, consolidated into balance sheets.

The fix in the classroom mirrors the fix in the money. Own it yourself. That is what we are doing at Math Success: research-based math instruction built on how children actually learn, delivered to teachers and parents directly, no licensing ladder between the child and the person teaching them. And it is why the receipts series exists: because a system that runs on manufactured money will always manufacture a story about why it is working.

Do the math. Follow the money.

Sources

1. Sewall, G.T. and Cannon, J.F. (1991), in the ERIC literature review ED498713 (K-12 field reduced to five houses: Macmillan, Harcourt Brace Jovanovich, Silver Burdett and Ginn, Houghton Mifflin, Scott Foresman; basal program costs $15-35M+)
2. Sewall, S.T. (2005), in ERIC ED498713: four companies (Pearson, McGraw Hill, Reed Elsevier/Harcourt, Houghton Mifflin); "no longer involved in deciding the content of textbooks"; writing-for-hire shift
3. Wikipedia, Pearson plc; Addison-Wesley; Scott Foresman; Pearson Education (acquisition chain 1988-2019; Nexus Capital/Savvas 2019)
4. Wikipedia, Houghton Mifflin Harcourt (McDougal Littell $138M 1994; Vivendi $2.2B 2001; PE trio $1.66B 2002; Riverdeep $1.75B cash + $1.61B debt 2006; Harcourt $4B 2007; Veritas Capital 2022)
5. Wikipedia, NWEA (501(c)(3) through fiscal 2022; HMH acquisition completed 2023; 16.2M students)
6. Wikipedia, McGraw-Hill Education (Apollo $2.4B 2013; Platinum Equity $4.5B 2021; NYSE IPO July 2025, ticker MH)
7. Wikipedia, Renaissance Learning (Permira 2011; Hellman & Friedman $1.1B 2014; Francisco Partners 2018; Nearpod and Flocabulary 2021)
8. Wikipedia, Leveraged buyout (debt typically 50-90% of purchase price; target's assets and cash flows as collateral)
9. Wikipedia, Textbook (Pearson, Cengage, McGraw-Hill, Wiley control 90% of higher-ed market revenue)
10. NBC News, May 12, 2026 (Curriculum Associates/Berkshire Partners 2017); Epostasy i-Reckoning Part 1 (2026) for the $94B North American ed-tech market figure

Every deal price and ownership change above traces to a public record. Corrections with sources are welcome.