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CompassLearning bought by private investment firm

Students master technology at a young age and software must keep up with that trend.
Students master technology at a young age, and software must keep up with that trend, CompassLearning says.

Educational software company CompassLearning has been purchased by Marlin Equity Partners, a move that CEO Eric Loeffel said will give the company greater flexibility in a fast-paced market that must respond to the needs of digital natives.

Marlin Equity Partners purchased CompassLearning from Reader’s Digest Association on Jan. 26. Loeffel said CompassLearning plans to enhance its product line in an attempt to grow in the education market, and he expects a greater ability to respond to customer needs now that CompassLearning is not a subsidiary of a large corporate parent.

Reader’s Digest Association filed for bankruptcy in August 2009, citing a loss in advertising and high debt. In a recently approved reorganization, the firm is expected to emerge from bankruptcy in a plan that would cut its debt by 75 percent.

Publishers have been hit hard with declining advertising revenue and consumer sales as the U.S. economy struggles to gain footing.

“This partnership comes just as we are seeing a convergence of student interest, teacher interest, and technological innovation that will generate a real revolution in educational software,” said Loeffel.

The market for educational software is poised for exponential growth as digital natives reshape the way educators think about teaching and learning, he said.

Just as television defined the baby boomers, today’s students are growing up with texting, Twitter, YouTube, and increasingly mobile access to the internet. Digital natives express a desire to learn with the same technologies that infuse others aspect of their lives, and research shows that these students respond best to creative, personalized, web-based learning.

Its new ownership will give CompassLearning increased flexibility, Loeffel said, adding: “By the nature of being in today’s marketplace, you have to be agile and nimble.”

CompassLearning’s products include professional development, and Loeffel said the company has 70 educational consultants who will work with educators one-on-one to reveal how to engage today’s digital natives.

“What does today’s research say about how kids learn?” he said. “We don’t just pay lip service to digital natives, we are using research and customer feedback … to learn how to build products for today’s kids.”

And while the term “digital natives” seems to be the most current catchphrase in education, Loeffel said it’s more than just a label.

“The fact is, digital natives do learn differently than we did,” he said. “It really is impressive, the rate at which they learn, the amount of information [they digest], and how they’re processing all that to learn and develop their skills.”

Another trend that is becoming more and more of a reality in education, Loeffel said, is integrating social networking into educational practices and products.

“Teachers want to know how to connect with students,” he said. “Kids are texting each other, they’re on Facebook, and they’re constantly engaging with those kind of tools.”

In response to this trend, CompassLearning is working to incorporate social networking features into its products, Loeffel said, so that students can connect with other students—and they can contact teachers with problems or questions about assignments.

Loeffel said schools should be encouraged to maintain a focus on 21st-century skills even when the federal stimulus funding runs out.

“What happens when those resources are no longer available? Will we abandon whatever initiatives or progress we’ve begun?” he said. “You have to watch that and ask those questions.”

Marlin Equity Partners is a California-based private investment firm whose holdings include nearly a dozen other technology-based companies.

Based in Austin, Texas, CompassLearning says its software is used by 11 million students in 20,000 schools nationwide. Its flagship product, Odyssey, creates a personalized learning path for each student using flash-based activities to teach and review concepts. The software allows teachers to assess students’ performance, diagnose their strengths and weaknesses, and prescribe targeted instruction.



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