'For-Profit' Education Industry Currently $70 Billion-a-Year Business in U.S.,
Growing 13 Percent Annually
NEW YORK, April 27 /PRNewswire/ -- The stage is set for a boom in the
demand for education and training, creating "significant opportunities" in the
"for-profit" education and training industry, says Michael Moe, director of
global growth stock research at Merrill Lynch.
"We estimate that the for-profit component of this sector in the U.S. is
now $70 billion, growing at 13 percent a year," he said in his 193-page
special report "The Book of Knowledge: Investing in the Growing Education and
Training Industry."
Overall, in the United States, the education and training industry, both
for-profit and not-for-profit, reached $740 billion in 1998 and is growing at
6% a year. Globally, the industry already tops $2 trillion annually he said.
In addition, since 1994, education and training companies have raised more
than $3.4 billion of equity capital through more than 38 initial public
offerings and 30 follow-on offerings.
Knowledge-Based Economy, Megatrends Driving Growth
The transformation to a knowledge-based economy, driven by and coupled
with six megatrends, is creating a fertile environment in the for-profit
education and training industry and a significant opportunity for investors in
the foreseeable future, Mr. Moe wrote.
Moreover, he said, the educational needs of the knowledge economy,
contrasted with the current system's inability to fill those needs, provide
innovative companies with open-ended opportunities for growth.
Mr. Moe singled out as mega-trends demographics, the internet,
globalization, branding, consolidation, and outsourcing. These six factors
"are propelling growth and change in the industry," he said.
In sum, "we think the investment potential in this sector is tremendous,"
he said.
"Big" Ideas Also Seen Rapidly Evolving in Education and Training
Mr. Moe emphasized five "big ideas in education and training" which he
believes will "rapidly evolve," creating additional opportunity in the
industry for for-profit companies.
These ideas center on technology-based delivery of education --
distributed learning -- which Mr. Moe believes will "democratize" education,
providing greater access to more at a lower cost; educational portals creating
an education-focused gateway to the internet available to all from
kindergarten to adults; accountability and assessment in the nation's schools;
growth of private school management and charter schools in the face of choice,
competition and greater accountability; and increased teacher training for the
estimated two million new teachers to be hired over the next 10 years.
Mr. Moe labeled educational portals as "a big opportunity." He also noted
accountability and assessment "will lead to growth for enterprise software for
schools." In addition, he projected that 10 percent of the public dollars
funding kindergarten through the 12th grade will be privately managed 10 years
from now, "implying a market of over $30 billion." Lastly, he expects
"significant opportunities" in the market for increased teacher training.
Merrill Lynch Global Securities Research and Economics has more than
700 analysts in 26 countries. Merrill Lynch is the only firm to place first
in five of the six Institutional Investor research team surveys (U.S. Equity,
U.S. Fixed Income, Latin America, Europe and Asia.) In addition the firm
ranked first in The Wall Street Journal 1998 All-Star Analysts Survey, and the
Financial News' "Poll of Polls," a summary of nine equity research surveys
from around the world.
SOURCE Merrill Lynch & Co., Inc.
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CONTACT:
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