Buying an e-learning platform in Canada

Buying an e-learning platform means judging three things at once: a library, a product and a body of learners. The job is to find out which one is carrying the revenue, how long it will keep doing so and what it will cost to run once the founder steps back. Two platforms that look alike on the surface can differ in whether the library is owned, current and used, or rests on content that is licensed, ageing or tied to one person. This guide covers how to tell them apart, what to ask the seller and what you must be able to do yourself to run one lawfully. It is general information, not a view on any listing.

What to look for

Look for a library you can trace course by course to an owner, paperwork behind each author, and engagement data you can reproduce from the platform’s own logs. Check whether the best-selling courses depend on one instructor’s name, whether institutional customers have committed beyond their current term and use the seats they pay for, and who owns the job of keeping courses current. Points that call for a closer look include revenue that comes from a handful of clients, completion quoted as a headline with no definition, and one person who built the courses and also sells, supports and updates them.

Questions to put to the seller

• Which courses are licensed in rather than owned, and what happens to each licence if the company is sold. The Copyright Act requires an assignment, or a licence granting an interest, to be in writing signed by the owner or the owner’s duly authorized agent.
• How many paid seats were actually used in the last term, and which accounts are close to not renewing.
• Which courses refer to rules, software or standards that have since changed, and what refreshing them would cost.
• What learners were told about their data when they signed up, and whether any complaint, breach or regulator inquiry is open.
• Whether any recognition by a professional or educational body is held by the company, by a person or by a particular course.

Learner privacy becomes your duty

Whether you buy shares or assets changes how the data arrives, and counsel should settle that early. After closing, though, PIPEDA makes an organization responsible for personal information under its control, and accountability, consent and limiting use are among the fair information principles the Privacy Commissioner lists for PIPEDA. Before you buy, be able to say who will answer a learner’s access request, who will assess a breach and how the safeguards stay in place. PIPEDA applies to personal information collected, used or disclosed in the course of commercial activities, subject to the exceptions in the Act, which also allows an exemption for activity within a province whose substantially similar law applies, and a learner’s sign-up details and course history can be personal information.

If the platform has Quebec learners, the Commission d’accès à l’information says Law 25 requires a privacy impact assessment for any project to acquire, develop or overhaul an information system or electronic service involving personal information, and before disclosing personal information outside Quebec. It also says personal information about a minor under 14 can no longer be collected from the minor without the consent of the person with parental authority or the tutor, unless the collection is clearly for the minor’s benefit. A platform sold to schools may hold exactly this kind of data.

What you must be able to show

Qualification here is mostly about what you can demonstrate. If you borrow, BDC’s acquisition loan asks that the business be Canadian and generating revenue, and that you have a clear transaction structure, an agreed purchase price with the way it was determined, a letter of intent, an expected closing date and a known down payment, along with financial statements or tax returns for the business. BDC also says that before applying for financing, you and the seller must agree on a purchase price, and that a financing structure may combine your own investment, a business loan and seller financing. If the platform’s courses carry recognition from a professional or educational body, that body may have its own criteria for a new owner, so ask it what it will want from you before you commit.

Matching the platform to the buyer you are

What you need from a listing depends on why you are buying. If you want the technology, check support processes and documentation. If you want the library and the institutional relationships, check ownership paperwork and renewal dates. An individual operator buying a smaller platform should be honest about the hours: updating courses, answering support and handling privacy requests do not stop when the sale closes. The general guide to buying a software business covers the product side, and how to do intellectual property due diligence covers the paper.