Last December, Pluralsight announced that Vista Equity Partners would acquire it for $3.5 billion — by our calculations, the largest reported sale of a training company in industry history (although, notably, Coursera’s recent initial public offering valued the company at over $7 billion). In March, the company announced a revised agreement with an 11% increase over the original agreement: $22.50 per share instead of $20.26 per share (about $3.8 billion).

Pluralsight, which describes itself as a “technology workforce development company,” offers technical skills development and engineering management solutions. The company has also recently announced a couple acquisitions of its own: DevelopIntelligence, provider of skills consulting and virtual instructor-led training (VILT) for information technology (IT), software development and engineering teams, and Next Tech, a cloud-based computing environment provider that enables the authoring and hosting of labs for hands-on software development, data science and machine learning training.

A Perfect Storm

As a TechCrunch article pointed out, the demand for skilled technical professionals was high even before the pandemic, but the shift of many teams to remote work last year drove online learning consumption through the roof. Individual learners, looking for ways to boost their careers in a challenging economy or simply looking for something to do with new free time, searched for eLearning opportunities like the ones Pluralsight offers through its individual course offerings. Companies, looking to pivot from in-person training to remote learning, searched for partners that would make it easier for them to do so through enterprise offerings — again, positioning Pluralsight to gain even greater market share.

Technical skills gaps, meanwhile, proved to be even more troublesome in a remote workplace, where difficulties with connectivity, remote collaboration and cybersecurity were exacerbated by distance and home networks. In fact, Training Industry research found that the technology industry increased its use of virtual instructor-led training from 29% to 39% and self-paced eLearning from 29% to 34% of their training after the start of the pandemic.

“We have seen firsthand that the demand for skilled software engineers continues to outstrip supply, and we expect this trend to persist as we move into a hybrid online-offline world across all industries and interactions,” said Monti Saroya, co-head of the Vista Flagship Fund and senior managing director at Vista, in the initial press release announcing the acquisition.

Why So Much?

With a 2020 revenue of just $391.9 million, why did Vista Equity Partners invest so much in Pluralsight? Ken Taylor, president of Training Industry, Inc., believes it’s because Pluralsight has the potential to be “more than just a collection of courses” and to become a “delivery platform.” The company grew by 24% last year, so Vista Equity Partners is “paying a high multiple for a high growth rate company” that it likely believes will enter more markets, he says. Plus, $391.9 million is nothing to sneeze at in the training industry, particularly in such a niche market.

“Pluralsight has good margins because they primarily sell digital learning,” Taylor adds, though with a cautionary note: Skillsoft, another online learning company, filed for Chapter 11 bankruptcy last year before being acquired by Churchill Capital Corp II and merged with IT training company Global Knowledge. What’s to stop the same thing from happening to Pluralsight? “Why won’t the cost of maintaining the catalog become so big and so unruly and so difficult to manage that they end up with the same kind of problems?”

Taylor points out that we’ll have to wait to find out, but with the future of learning shifting ever more toward digital, Pluralsight seems to be well aligned with what’s to come.