Congratulations to the companies who won this year’s BETT Awards. The winners were:

• 2Simple www.2simple.comSmart Learning www.smartlearning.co.uk
• SAM Learning www.samlearning.com
• Crick www.cricksoft.com
• Cabrilog www.cabri.com
• Atticmedia www.atticmedia.com
• LJ Group www.ljgroup.com
• TAG Learning www.taglearning.comCLEO www.cleo.net.uk
• Turning Technologies www.turningtechnologies.com
• Q4 Technologies www.q4technologies.com

While these awards are an important recognition, there is a large cloud hanging over the whole educational software market. Some companies, including those above, produce internationally competitive software, but more don’t, and with the end of e-Learning Credits (ELCs) in sight, with BBC jam and the sales of Harcourt, Wolters Kluwer and Thomson Learning, investors in the sector are starting to get worried.

What seems obvious is that there will be consolidation, but who will end up surviving is hard to predict. The most innovative and largest move so far was Riverdeep’s multi-billion dollar reverse takeover of Houghton Mifflin. While this was an Irish company taking over a US rival, the structure, scale and sheer audacity of this transaction set a benchmark, not likely to be surpassed in the UK market. It dwarfed the sale of Granada Learning and Riverdeep are thought to already be doing due diligence on Harcourt Education, which if successful would vault them to the number two position in the US market.

Which of the 2006 and 2007 BETT winners will still be in business in 2008 and 2009? We expect one or two will go out of business and half the remainder will merge or have new owners. Some may fall to Pearson, Informa, etc, but more likely will be rolled-up by smaller private equity companies.

Private equity firms seem to think education is an interesting market even if large media companies don’t. These businesses may trade on secrecy and intrigue, but we had to laugh when we saw a well-known deal maker (minus ID badge) pretending to be a teacher and asking lots of questions at the stands of the BETT award winners.