Why Pearson Wants to Sell PowerSchool

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On Feb. 12 we reported that Pearson was in “final talks” to sell PowerSchool, a widely-used student information system (SIS), to Blackboard. Now, it appears Pearson will also entertain offers from other potential buyers.

In its 2014 earnings released today, the company announced it has appointed investment banking firm, Evercore, to advise the sales of its student information businesses. PowerSchool, which serves nearly 13 million students in more than 70 countries, generated $97 million in revenues and $20 million in operating income in 2014.

In a letter sent to Pearson’s Independent Software Vendor (ISV) partners (many of whom offer a variety of applications that work with the PowerSchool SIS), the company announced:

“a decision to explore sale options for our Student Information System (SIS) businesses. The School Information System businesses include PowerSchool®, PowerSchool SMS, Gradespeed, and eSIS. In preparation for this sale, we have decided to reorganize the SIS businesses into an integrated, stand-alone unit.”

PowerSchool SMS is formerly known as Chancery SMS. Chancery was acquired by Pearson immediately after the company also bought PowerSchool from Apple in 2006. Pearson also got eSIS as the result of its acquisition of The Administrative Assistants, Ltd. in 2010. Gradespeed is an online gradebook that was rumored to be discontinued in 2014.

The note, sent by Bryan MacDonald, managing director of Pearson’s School Systems division, assured more than 100 ISV partners that “During this transition period, your relationship with us will remain the same—nothing changes.”

Pearson’s SIS division, which has an estimated 200 full-time employees, was notified of the move at an all-hands meeting this morning.

Since taking over as Pearson’s CEO, John Fallon has insisted that the company will intensify its focus on demonstrating learning outcomes and efficacy for its digital products. Storing and managing students’ data records, which is more of an ongoing services business, does not appear to be part of the company’s future.

In an email to division employees, Fallon said: "After careful consideration, we decided that these systems do not align with Pearson’s stated commitment to focus on products and services that shape student outcomes in a way we can directly measure and improve."

Here's the letter sent to the ISV partners:

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