Perspectives
26 February 2026
Raghu Velamati, Senior Managing Director in Macquarie Capital’s Software & Services team, was recently featured on The Deal’s ‘Behind the Buyouts’ podcast.
In this episode, Raghu explores the edtech landscape and state of the education market in 2026 with host Chris Nolter. Their conversation covers the year’s anticipated M&A activity, the growing role of AI in back‑end optimisation, the current funding environment and broader IPO trends.
You can listen to the latest episode and read highlights from the conversation below.
The definition of education has expanded far beyond its traditional meaning to the “knowledge” ecosystem. Raghu discusses how learning is now viewed as a continuous journey that evolves throughout one’s career and life. As a result, learning is no longer confined to traditional milestones like K-12 or university – it now spans a lifetime. With the rise of lifelong learning and the technologies aiding it now more accessible than ever, the idea of a single, traditional educational pathway has faded, giving way to more diverse and personalised learning routes.
Raghu points to three areas where he anticipates – and he currently sees – heightened activity in education M&A:
The sector is seeing momentum in M&A interest driven by structural, demographic shifts. As populations age and people live longer, demand for healthcare services is rising sharply, while current health systems continue to experience critical workforce shortages. These generational pressures are accelerating the need for expanded healthcare training programs, fueling investor interest and investment in the sector.
As the job market continues to evolve rapidly, organisations must invest urgently in human capital to maintain growth, competitiveness and opportunity, as working adults are seeking self-improvement, with a majority expressing a desire for further training. Workforce training and upskilling are a critical part of preparing today’s workforce for the changes ahead. Although a great deal of focus has centered on digital capabilities – such as understanding AI and data analytics, and improving technological literacy more broadly – human-centric skills remain at the forefront of this space.
The industry had historically faced regulatory scrutiny, but today’s policy environment has allowed these institutions to operate and grow on more level footing with nonprofit systems, especially as the need for skilled labor rises. Reflecting this momentum, Macquarie Capital recently acted as capital markets advisor to Apollo and Vistria on the IPO of Phoenix Education Partners, the parent company of University of Phoenix.
Raghu describes AI’s role in education as both an enabler and a disrupter – something that now factors into nearly every transaction and client conversation from the outset.
He highlights three areas where AI has become more impactful:
By contrast, AI has not fully emerged in higher-stakes environments – like professional licensure preparation – where its use is currently confined to being a supplemental tool rather than a primary learning method.
Although 2025 saw the most M&A activity since 2021, driven by mega deals, transaction volumes in the $US100 million to $US1 billion range did not grow until the latter half of the year. Today, private equity firms are increasingly focused on pathways to liquidity after holding their assets for five to seven years, and pressure from limited partners to distribute continues to build. As a result, Raghu says that he and his team are seeing more minority recapitalisations, continuation vehicles and other solutions in seeking liquidity, with a firm’s fundraising cycle being a consideration.
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