The Deal:

Mid-market Private Equity firm identified an asset for their business services and technology portfolio. This company is a leading K12 online education platform with key resources in the US and India.

Key pre-close concerns included: Risks associated with divestiture of asset from larger EdTech parent company as well as the ability to scale and adopt new products / services.

 

Deal Thesis:

  • Carveout the company from a larger India-based parent company

  • Generate organic growth to increase overall market penetration and the geographical services footprint

  • Enhance sales/marketing capabilities, sales channels, and the ability to add complementary products/services

  • Enhance the ability to effectively recruit, onboard, and offboard staff to accommodate expected growth of the business

Sabio Results:

Sabio conducted a comprehensive assessment of the operational and commercial technology ecosystem for both the India and US operation. We identified and analyzed 132 software applications, components and technology-related services, performed non-intrusive cybersecurity analysis and developed a high-level functional value chain in order to properly understand the level of shared services with the parent company and the complexity of the carveout.

Sabio identified significant internal deficiencies related to cybersecurity and DR/BCP that presented outsized risk for a company whose primary users are minors - the impact of this discovery was a significant concern to the buyer that resulted in extended discussions/negotiation related to risk mitigation and required investment.

Investor opted to not pursue the transaction - Sabio's cybersecurity and DR/BCP findings during diligence presented significant risk to the buyer, which were not able to be sufficiently resolved during negotiations.