Noodle Partners, which works with faculties to construct and provide on-line packages, lately ditched the second part of its name. But the New York City-based firm has a brand new associate to assist develop its footprint in an more and more aggressive market.
Yesterday, Noodle announced it had acquired the “key assets” of HotChalk, a Campbell, Calif.-based firm that additionally gives on-line program administration (OPM) providers for higher-ed establishments.
The deal has indicators of a troubled sale, on condition that HotChalk was within the sizzling seat not too way back. In February, one of its greatest clients, Concordia University Portland, shut down due to monetary insolvency. An investigation by The Oregonian attributed these issues to its cope with HotChalk, beneath which the school paid over half of its tuition income to the corporate (as a lot as $62 million throughout one 12 months). Layoffs on the firm adopted, and HotChalk sued the school’s mum or dad group—a Lutheran church—alleging it was defrauded and that Concordia might have made the cuts vital to survive.
Noodle CEO and founder John Katzman has been an outspoken critic of such tuition revenue-share preparations that HotChalk enters into with universities. He wasn’t at all times this manner. 2U, the final firm he based and which Noodle competes with, operates on this method, as do different OPM suppliers. But he’s had a change of coronary heart and has written at size arguing these offers are too costly for faculties and maintain prices excessive for college kids—a degree that’s the topic of an ongoing, fierce debate among the many larger schooling business.
What Noodle is buying shouldn’t be HotChalk’s enterprise mannequin, although. It will take over the administration of HotChalk’s packages, together with a teacher-training and management program at New York University’s Steinhardt School. Inside Higher Ed reports that talks are underway “about transitioning from the revenue-sharing model it used with HotChalk to more of a fee-for-service model that Noodle favors.”
Noodle’s mannequin is considerably related to a basic contractor. Colleges pay for the providers that they want, some of that are outsourced to third-party corporations, and others which Noodle supplies. With this acquisition, Noodle may even deliver into its fold a higher-ed advertising company beforehand owned by HotChalk, Creative Communication Associates, and plans to make its providers out there to its college clients.
More than 50 folks throughout the advertising, enrollment and expertise groups from HotChalk will be part of its new proprietor, together with CEO Rob Wrubel, who will function Noodle’s chief advertising officer.
Financial phrases of the deal weren’t disclosed, and Katzman declined a request for remark.
Founded in 2004, HotChalk has raised $235 million in funding capital, most of it from German writer Bertelsmann. Industry sources say that this transaction was probably nowhere close to that quantity.
Noodle, which raised $16 million in June, has labored with greater than two dozen universities, together with Howard, Tufts, the University of Michigan and University of Tennessee, to set up over 50 on-line packages.
According to HolonIQ, an schooling market analysis agency, over 770 universities the world over are providing on-line packages by way of greater than 200 OPM suppliers. It estimates that there could possibly be virtually 300 new partnerships fashioned by the top of 2020, almost doubling the tally from the earlier 12 months.