The professional education market in the United States has a total market size of around US$60 billion, and covers all areas such as education for healthcare and education professionals, engineers, architects and lawyers. The market is broadly divided into the following main segments: traditional training, which is valued at around US$26 billion and typically takes place in person, via lectures and seminars, and E-learning, which is valued at US$13 billion and is growing rapidly. Regular series, journals and others smaller segments areas account for the rest of the market.

Various key trends are driving the development of the industry:

• Online platforms are increasingly being adopted for education and training, due to their flexibility and their easy accessibility for both learners and providers. The COVID-19 pandemic accelerated this trend. However, key challenges remain, such as the lack of digital access for some consumers and the need to enhance the quality of the service provided in some instances.

• Rapid technological progress is driving demand for upskilling and reskilling. Companies are keen to enhance existing workers’ skills, given the worldwide labor shortages affecting many key sectors.

• The regulatory environment is constantly evolving, and the need for employers and employees to remain compliant is creating significant demand for training that allows clients to keep abreast of the latest regulatory developments.

• Demand for personalised learning is growing, and suppliers – aided by technological advances – are increasingly able to deliver customised training that best matches an individual’s needs.

• The market has seen the rise of microcredentials: professional qualifications designed to help individuals master in-demand career skills and prepare for work in rapidly growing industries. Microcredentials pose a challenge to traditional degrees by providing access to knowledge and skills quickly and efficiently, without the same time commitment.

The industry also faces some key challenges – principally intensifying competition as the number of online education providers, and the variety and availability of online courses, increases.

However, there are significant barriers to entry. Regulation, for example, is complex, and securing accreditation and meeting high quality standards is challenging. Strong branding is also a feature of the market, particularly in relation to critical professional and educational exams, where clients will seek out suppliers with the best reputations. Successful participants in the sector also need a strong technological offering. A robust digital platform that can engage clients with effective content and meet regulatory requirements is vital. In the business sectors, established players also have strong relationships with institutional clients. Overcoming these barriers often involves considerable investment and is time-consuming.

Other key trends include the advance of artificial intelligence (AI), which will reduce the time and cost involved in entering the market. However, deploying AI also requires significant investment, which may only be available to existing scaled players. Moreover, the barriers of brand reputation and market expertise will still have to be surmounted.

The slow growth of the labor pool has a mixed effect on the professional education market. The reduction in the number of new entrants to the labor market slows demand for career training but more positively, the growth of alternative credentials is an increasingly attractive way for workers to enhance their skills and potential earnings.

Finding the right deal

At Petiole Asset Management AG, we believe there are significant opportunities for private-market investors in the dynamic professional education sector. We are using our knowledge and understanding of the market to identify the best opportunities for clients in this fast-growing industry that has high barriers to entry.

Key takeaways

• The key drivers behind the US$60 billion professional education market in the US include constantly evolving regulatory environment, and an increased need of upskilling/reskilling in the current job market.

• The sector benefits from high barriers to entry, including the need for hefty investment in technology and robust regulation.

• A global shortage of skilled labor and rapid technological progress are driving demand from employers.