Thoma Bravo Instructure Acquisition

Learner II
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A space where news and reactions to the proposed Thoma Bravo acquisition can be gathered that would be of interest to the community. Please add additional resources, questions or concerns in the comments.

3/25/2020 Update

It is a done deal! 

Instructure Closes Deal with Thoma Bravo

Some of you might be wondering, will we see dramatic changes in the business? The answer is simple: no. When TB started this process, they were excited about the involved, collaborative, and strong community that is the foundation of Canvas. To them and to us, this acquisition only strengthens opportunities for growth of our community.

Sale of Instructure to Thoma Bravo Now Complete

While this story of the Instructure sale has taken a back seat to the COVID-19 transition, this sale will have a real impact on EdTech markets moving forward. It has been remarkable how much the Instructure executive team has changed since Goldsmith’s departure. Quite honestly it’s been night-and-day in terms of being open with analysts and with with proactive communication. I doubt the company can fully repair the damage to reputation that’s occurred over the past year – it will need to be a new company with new standards.

News and Reactions

  1. What’s Next for Instructure? (2/19/20 — eLiterate)
    "My position has always been neutral-positive on Instructure being acquired by a private equity company in general and neutral on being acquired by Thoma Bravo in particular. Instructure needs some time to move past its current growth plateau. There is a reasonable argument to be made that they could focus on doing that with fewer distractions that could harm their core work for customers if they were under private ownership rather than under the quarter-by-quarter performance pressures of the public stock market. Instructure's acquisition could be good or bad for education, depending on two major factors."
  2. Instructure CEO Dan Goldsmith Resigns and New Approach for Bravo Acquisition (2/18/20 — Phil Hill)
    "For those who have not followed corporate acquisitions before: No, this is not typical. I’ve talked to several people in the investment community who have noted that they have never seen a sales process like this before. And there will be much more to the story as the new tender offer comes out."
  3. Corporate Leadership Changes and Acquisition Updates (2/18/20 — Canvas blog)
    "First, today we announced that Dan Goldsmith has informed us of his intent to step down as CEO... As an executive team, we realize some of this can seem overwhelming, but we will continue building products and helping this community to create the best educational experiences possible. We also promise to continue to be as transparent as possible."
  4. To Our Customers (1/20/20 — Dan Goldsmith, Instructure CEO)
    "In December, we announced that Instructure had reached an agreement to be acquired by Thoma Bravo, LLC, a private equity investment firm. Our board has always had a financial responsibility to the shareholders of Instructure, but as you all know, key components of the financial health of any organization are ensuring that customers’ needs are being addressed and that innovation is continuing at a healthy pace. Financial health, customer commitment, and innovation are inextricably intertwined and must remain balanced. Thoma Bravo also appreciates this balance and shares our commitment to customer success."
  5. Insights From Instructure Preliminary Proxy Statement (1/1/20 — Phil Hill)
    "I realize that the proxy statement is primarily driven by SEC rules, but Instructure is harming its brand by its consistent focus on monetization and shareholder value with no meaningful communication to customers or prospects (I do not consider the letter above meaningful). The academic LMS market deserves better from its market leader."
  6. Instructure’s Better Possible Future (1/19/20 — eLiterate)
    "Instructure's brand has, until now, been its primary and best product. It is still one of the best in the sector, even if it is getting a little ragged around the edges. Because the brand is still good, the company can still build the relationships it needs to make good acquisitions, evangelize those acquisitions to its customers, and work with its customers on even the most sensitive (and important) product research and development efforts."
  7. Instructure’s Proposed Acquisition is a Bad Risk for Everyone (1/6/20 — eLiterate)
    "Has Instructure provided customers with a detailed and credible enough strategic roadmap to inspire confidence that they have a more compelling alternative for growth? No, they have not. Has Dan Goldsmith thus far proven, lacking such a roadmap, that his reputation for performance alone is worth betting the company on? No, he has not. No smart PE company would make an attractive counter-offer under these circumstances. There is no sound investment thesis until Instructure is able to regain its footing as a product-led company."
  8. Letter to Instructure (12/26/19 — Ethical EdTech)
    "While debate continues regarding fair market price for the company (Hill, 2019b), there is much speculation within the Community and amongst stakeholders about the role being played in the sale by the student data Instructure has spent years collecting and harvesting to inform the company’s innovations."
  9. What’s the LMS Worth? (12/9/19 — EconProph)
    "Underlying the valuation question though, is the real concern. Can we discern the plans and future for Canvas (and thereby schools, instructors, students, the higher ed system, pedagogy, etc) from this transaction? "
  10. Private Equity Firm Thoma Bravo to Acquire Instructure for $2 Billion (12/4/19 — Phil Hill)
    "Obviously this is big news for the LMS market, and it is worth noting that in the press release Thoma Bravo specifically mentions Canvas but not Bridge, which should give a hint about future plans. And perhaps more importantly, the press release explicitly mentions future growth that will or could include M&A – Instructure buying other companies."
  11. New Ownership for an LMS Giant: Private Equity Firm to Buy Instructure for $2 Billion (12/4/19 — EdSurge)
    "But whether the sale is good news for colleges and other education customers remains to be seen, Hill added. “It’s now a waiting game to see how their strategy changes,” he said. 'Don’t expect it to be the same.'"
  12. Canvas parent Instructure to go private in $2B deal (12/4/19 — EducationDive)
    "How private equity will influence Instructure's operations largely remains to be seen. And as part of the deal, the company has 35 days to entertain other offers.'"
  13. Instructure—Creator of Canvas LMS—Acquired by Private Equity Firm for $2 Billion in Cash (12/4/19 — EdWeek Market Brief)
    "Brian Jaffee, a principal at Thoma Bravo said, 'We’ve followed the impressive Instructure growth story for many years and believe Canvas is a highly unique vertical market SaaS leader with exciting scale and future growth potential.'"
  14. Seven Things We Mostly Know About the Planned Instructure Acquisition and Three We Don’t (12/4/19 — Phil Hill)
    "What does this mean for Instructure’s future? One guess is to expect the Bridge separation with increased focus on the Canvas / academic business to happen quickly. Another guess is to expect Instructure to ramp up their corporate acquisitions starting in 2020."
  15. Letter from Dan (12/4/19)
    "Working with Thoma Bravo over the past weeks, it is apparent that they support our strategy for focus on continued investment in Canvas LMS, expanding our impact in education, positioning Bridge to be more successful, and being a well-run business. As a private company, we will be able to better control our future and execute on these strategic imperatives."
  16. Instructure Enters Into a Definitive Agreement to be Acquired by Thoma Bravo (12/4/19 — Instructure Press Release)
    "The Instructure management team, led by CEO Dan Goldsmith, will continue to lead the Company in their current roles. Thoma Bravo will support Instructure as it increases investment in education technology innovation and expands internationally."

Background Information

  1. Thomas Bravo Website
    "We are a leading private equity investment firm building on a 40-year history of providing capital and strategic support to experienced management teams and growing technology companies."
  2. Instructure Considering Sale Options (Phil Hill)
    "For academic community, it is worth noting that much of the investor-based pressure is for Instructure to focus more on supporting Canvas, not less. Instructure management has made it a point to say that they are increasing investment in Canvas, but today’s news puts even more emphasis on that need."
  3. Why Instructure’s News Matters: Market history (Phil Hill)
    "Why is a potential change as mundane as having Instructure’s shares traded in public markets vs. being owned by a larger company newsworthy?"
  4. Canvas LMS Provider Instructure Considers Sale (EdSurge)
    "The last time a publicly traded learning management system provider was taken private was Blackboard, back in 2011."

Resources and Reactions on Twitter

Twitter Thread of Resources from Kyle M.L. Jones on Twitter:

Kyle M. L. Jones on Twitter: "I'm gathering literature on the Instructure sale. Seeing as this doesn...

Other Conversations in the Community

I'm sure more news and reactions will be coming in and as I'll update this as they do - feel free add any links or questions in the comments, follow to stay up to date. It will be very interesting to understand what this means for the future of Canvas!

Photo by Oleg Magni from Pexels

12 Comments
Community Team
Community Team

Because the Canvas Community is a home for Canvas users, here is a link to a letter from Instructure CEO Dan Goldsmith to customers:

https://www.instructure.com/letter-from-dan 

Regards,

SD

Learner II

What I like about this letter is that it would seem Dan is interested in keeping Bridge as part of the software service lineup provided by Instructure. The other statements and comments seemed to imply it wasn't a focus. 

Learner II

Thanks scottd@instructure.com‌, I've added that link. 

Learner II

Thanks to christopher.phillips@usu.edu‌ for putting this together. It would be great to hear more about these developments, particularly of any changes. The barracuda story is encouraging, but our experiences with other VLE companies make us nervous of repeated changes in backers which lead to poorer customer outcomes.

ta

jim

Learner II

Thanks j.c.turner@ljmu.ac.uk‌, I agree that it would be great to hear more on this - I assume some of the silence from Instructure (besides the minimal official statements) have to do with legal guidelines as they go through the process, it will definitely be good to hear more in this new year! 

Community Team
Community Team

Today, Dan sent out a blog post to our customers that, in part, touches on the acquisition so I'll post a link here: https://www.instructure.com/canvas/blog/our-customers 

Learner II

Thanks scottd@instructure.com‌, I've added that link. 

Surveyor

Hi Christopher,

Thanks for updating the original post. There are a lot of concerns being discussed and it's good to share information in our communities.

Kyle M. L. Jones has been collecting links too: Kyle M. L. Jones on Twitter: "I'm gathering literature on the Instructure sale. Seeing as this doesn... 

Many of the ones he's posted are in your thread, but I thought I would share this as it's another resource.

Learner II

Thanks ian.linkletter@ubc.ca‌, I've added a link to that thread - much appreciated! 

Community Team
Community Team

Hello All,

There is another related blog post out this morning: https://www.instructure.com/canvas/blog/corporate-leadership-changes-and-acquisition-updates 

Learner II

Hi

I saw this article about more layoffs at instructure. Getting jumpy about the direction we are all heading in. Our contract is up for renewal in two years. I really hope this company can continue with its current 'culture'. I don't want to go back to Blackboard or end up in MS teams. 

Should I be worried?

Jim

Learner II

I saw the same article j.c.turner@ljmu.ac.uk‌ and wondered what those changes will mean. I am hopeful that we will soon get some more information on the direction that Instructure is headed under new leadership and what their priorities are. I would guess that they are having lots of internal conversations right now and we may be in a bit of a holding pattern with an Interim Chief Executive Officer until someone permanent steps into those shoes. It will be very interesting to see where things go and what these changes mean. 

About the Author
Working on accessibility and usability in Northern Utah.