Given the characteristics of basic education and the restriction of the education laws, most of the leading private education institutions in the market are local or regional brands.

Currently, most mergers and acquisitions (M&A) in the education industry are horizontal integration. Taking Maple Leaf Education as an example, it is China’s largest K-12 education group providing international education. Its 2017 annual report showed that as of October 15, 2017, it has 73 schools and 28,111 students. Among them, 71 schools are distributed in 20 cities in China, and two in Canada. For its fiscal year ending August 31, 2017, Maple Leaf Education achieved revenue of 1.083 billion yuan.  

 Maple Leaf Education merged with Hainan National Science Park Experimental School on May 12, 2017 by acquiring 47.5 percent of the equity interest in Hainan Science and Education Group with 77.915 million yuan. The merged school is a K-12 boarding school in Haikou with more than 3,300 students. In addition, Maple Leaf Education also acquired a 4.9 percent equity stake of Hainan Science and Education Group with 7.497 million yuan. After the completion of the transaction, Maple Leaf Education holds a total of 52.4 percent of the equity interest in Hainan Science and Education Group, becoming the largest shareholder of Hainan National Science Park Experimental School.

 Maple Leaf Education merged with Eastern Shenzhen International Academy (ESIA) on December 14, 2017 by acquiring a 55 percent equity stake of ESIA with 89.045 million yuan. After the completion of the acquisition, ESIA became the first school under Maple Leaf Education in Shenzhen and even Guangdong Province.

In January 2018, Maple Leaf Education announced that it intended to acquire 100 percent of the equity of Hainan Meishe Frontier, Meiwen Frontier Management, Ivy League Frontier, Meihua Frontier and Meicheng Frontier with a total of RMB 150 million. As a result, all schools and Youth Service Center wholly owned by the relevant sellers will be also owned by Maple Leaf Education. Maple Leaf Education will gain 3,260 students from this acquisition.

In China’s K-12 education and training market, there are more than 100,000 education and training institutions, but only a few of them boast annual revenues of more than 1 billion yuan. The industry concentration is very low. The industry is tending to converge as the result of rapid development of offline training institutions represented by Tomorrow Advancing Life and Four Seasons Education, as well as the online training institutions represented by VIPKID and 51Talk. The M&A cases between educational and training institutions are on the rise year on year.

 Statistics from the China Industrial Information Online (www.chyxx.com) showed there were 27 cases of domestic secondary market M&A in the education industry in 2017. The total investment amount was about 15.496 billion yuan. The subsequent mergers involving K-12 basic education included the acquisition of Wenkaixing by Zhongtai Bridge Steel Structure Co., Ltd and Chengdu No.7 High School by Wanxin Media.

In the meantime, more listed companies focus on education by divesting their existing businesses. In 2017, Zhongtai Bridge sold its original bridge steel structure business at a price of 639 million yuan, focusing on developing international education. Kingsun Share sold its original semiconductor lighting business at a price of 1.35 billion yuan, intending to further expand its education business by further merging or acquiring the high-quality assets relevant to the education service sector. Since 2016, Kingsun Share has spent a total of 6.718 billion yuan in acquiring the assets of eight education companies.