Thread regarding Cengage layoffs

Layoffs are The Cengage Way™

"There is no growth potential in this industry."

Oh, there is TONS of growth to be had in this industry. Just not at Cengage;)

There are a lot of different ways it can go, but I guarantee you Cengage in its present format will not be around for much longer.

1000%

I agree there's no way an IPO happens with Cengage in its current structure. That was always a pipe dream. There is no growth potential in this industry.

Now that they've gutted production, the only value left in the company are the brands and intellectual property. Is there a gold mine? Probably not...but certainly enough to pick the bones. You could bundle titles and subjects off to MH and Pearson. Keep in mind that Apax has been hoovering cash off the company's balance sheet since they acquired Cengage. Apollo bought in for $500 million, and I would guess they've made most of that back or more. So whatever they can get from dicing the company up is gravy to them. Also, for the operations they shutter they will likely receive tax benefits if they show it as a loss on paper. The people who run the private equity firms spend all of their time working on financial tricks and schemes.

There are a lot of different ways it can go, but I guarantee you Cengage in its present format will not be around for much longer.

I just dont think there enough Mankiws out there to get enough $$ to move the needle. Who knows.

I just don't think there is any appetite for an IPO. The US IPO market has been dead pretty much since COVID. A legacy higher ed publisher with lipstick on the pig will excite absolutely no one.

But yes, I agree, they will until they have 10 people left if they have to.

That’s why it makes infinitely more sense that the company will be sold piece by piece. Acquiring Mankiw or Milady could be a win for another publisher.

It also explains why so many essential roles are being sent to CPI. Who cares about quality or even essential operations functions if the company won’t exist in a year?

Do the math. If Apax and Apollo can get out of the investment and make a little money, they are gone. The question is who would be the acquirer(s)? There are two players, Pearson and MGH. I just cant believe either would want legacy HE brands.

But I've been around long enough to know that these PE folks could sell a dead skunk to a 5-star restaurant. It's hard to tell what they have up their sleeves.

Remember, Thomson Learning did EXACTLY what the poster very thoughtfully suggests. They bought a couple dozen best of breed brands, packaged them together, ran a really nice business and then got out while the getting was good. Di-k Harrington is a genius.

It worked 35 years ago. I just don't see that working now.

Cengage is owned by private equity and has accelerated deep cost cutting since taking on a second private equity investor a year ago. That means one of two things are extremely likely:

1. Cengage will be sold off entirely as a single operating unit.

2. Cengage's individual business units will be sold off individually or shuttered.

I don't think option 1 is very likely given that this was attempted once with the MGH merger and shut down by the government due to anti-trust concerns. Outside of existing publishers, there aren't many companies that make sense to acquire or merge with Cengage.

I think option 2 is much more likely. The higher ed business is the legacy asset and could probably fly under the radar in terms of regulation as an acquisition target. Especially if they chop it up into smaller units and sell off brands. What's left is the "skills" business which they are hyping as having growth potential. Probably a lot of smoke and mirrors in order to inflate the value and sell off. The rest of the pieces like Gale probably go away altogether if they can't find a suitor. Again, you could sell off a few Gale brands or imprints to another library competitor and then shutter the business.

What MH doesnt understand about workforce skills, is that it is an incredibly fractured market where you just don't pay reps to schlep into an office and have a professor adopt your material.

You bring in many different equations. CFO's, budgets, HR, competing internal departments. And frankly, with chat GPT, much of that content is easily developed internally, versus having to buy it.

Can it be a viable business? Sure. It would be a nice, tidy $100mm company. It would take 10 sales reps to cover the ground that 1 higher-ed sales rep covers.

There are also many competitors with a 20-30 year headstart here.

I've tried to sell in that market. You actually have to schedule appointments if you can find the person who is the buyer. It is so much harder. Is it bigger, sure, but good luck getting to it.

And be left with what? Gale? If Higher Ed goes, it all goes.

I think Cengage’s higher ed business is going to look very different in a few years. Unless you’re working on a Mankiw or a Co title, Cengage Higher Ed has an expiration date.

If you pay attention to MH’s posts on LinkedIn, he’s all about workforce skills development. He doesn’t talk about the latest textbook for Intro to Basketweaving.

McGraw Hill is moving forward with Evergreen. Unless Cengage figures out how to accelerate their textbook updates, how can they compete? And should they compete? Unless you’re talking about textbook for a STEM major, students and professors don’t want a $200 textbook and MindTap. They’re looking for OER.

It will be interesting to hear the customer feedback about the CPI-produced titles. If those projects flop and more customers drop Cengage, I could see the Cengage Higher Ed title list shrinking.

Post from TheLayoff.com

Do you know this for a fact or is this speculation?

They're sending jobs to India. I don't think that means they're getting rid of higher ed entirely. They're getting rid of US workers.

content managers, DPMs, content creation managers...

Specifically, who?