What is an e-learning platform worth?

An e-learning platform sells two things at once: software that delivers courses, and the courses themselves. A buyer can look at them separately, because the software and the courses can age differently and can belong to different people. The course library, the institutional relationships and the learner base are distinct from the delivery software, and each can be owned, in whole or in part, by someone other than the company. This guide sets out the questions to ask about a platform, the features that can lower what a buyer is willing to pay and how reported earnings can be recast. It is general discussion of method, not an appraisal of any business, and it gives no multiple or price figure.

Who owns the courseware decides how much of the library is an asset

Under the Copyright Act the author of a work is its first owner, and an employer is the first owner of a work an employee made in the course of employment, in the absence of any agreement to the contrary. A course produced by a salaried staff member can therefore belong to the company, while one written by a contractor who is not an employee belongs to the contractor until it is assigned in writing. The Act also says an assignment, or a grant of an interest by licence, is not valid unless it is in writing and signed by the owner or the owner’s duly authorized agent. CIPO will register an assignment or licence, so a buyer can ask for the certificates. Courses the company owns outright are its own asset. Courses it only licenses are used on the licensor’s terms, so read those terms before treating the course as the company’s.

Revenue is read by how it is earned

Per-seat licences, subscriptions and one-off course sales can look alike on an income statement and still differ in how reliably they repeat. A per-seat contract with a school or employer repeats only if the client renews, so ask about renewal dates, contract length and how many of the paid seats were actually used. Ask what share of the paid seats went unused and whether it bears on renewal. For individual subscribers, ask for cohorts: how long a given month’s sign-ups keep paying. For course sales, ask how much they depend on marketing spend. The glossary entries on recurring revenue and customer churn cover the vocabulary.

Completion and engagement are evidence, not decoration

Enrolment counts show that people bought. Completion, time spent and return visits show whether learners are using the product. Read them with context. A compliance course that employees must finish can show high completion whatever its quality, while an elective course with high completion says more about the course. Ask how each figure was measured and whether the platform’s own reports can reproduce it, because a metric that cannot be rebuilt from raw logs is a claim rather than evidence.

Features worth a closer look

A few features are worth a closer look in an otherwise sound platform, because each can bear on the price a buyer is prepared to discuss, and a seller can address some of them before going to market.

• Instructor content licensed on terms that end, or must be renegotiated, when ownership changes.
• One institutional client, such as a school board or a large employer, supplying most of the revenue with no commitment beyond its current term.
• Courses that have gone out of date, so the library needs rewriting before it can be sold again.
• Learner data collected under a privacy policy that does not match how the data is used or how a buyer intends to use it.
• Professional or educational recognition held by the founder or by one course rather than by the company, with no confirmation that the recognizing body will extend it to a new owner.

The learner data point deserves a sentence of its own. PIPEDA applies to personal information an organization collects, uses or discloses 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. The Privacy Commissioner’s summary of the Act lists identifying purposes, consent and limiting use, disclosure and retention among its fair information principles. So ask whether the consent learners gave covers the use a buyer intends, and have counsel assess any gap before relying on the data.

How the earnings get recast

Recasting turns the owner’s accounts into the earnings a new owner could expect. BDC says a valuator typically reviews records that include discretionary and non-recurring expenses and management compensation, and a platform raises adjustments of its own. If the founder also authors or presents the flagship courses, ask what hiring that work would cost. Check how content production costs are booked, because profit comparisons only mean something when costs are treated the same way. Where annual contracts are paid in advance, cash has arrived for service still to be delivered, so ask how much of last year’s cash is next year’s obligation. Refunds, payment-processing fees, video hosting and bandwidth can grow with learner numbers rather than with revenue, so test whether margins hold as usage grows. BDC notes that a valuator’s report can help a seller evaluate offers.

What can make two similar platforms differ in value

Part of the answer is who is buying. BDC says a strategic buyer is often willing to pay more because they see synergies; for an e-learning platform, that could mean a larger company that can sell the library through its own channels. BDC says the final price can be affected by the buyer’s strategic interests, due diligence, availability of financing and the seller’s post-transaction involvement, and that buyers may insist on a reduced price when a seller cuts all ties. On a platform whose best courses carry the founder’s face and name, that last point deserves attention. A business where people deliver the training, rather than a platform, raises different questions; see what a training and e-learning provider is worth.