People pass by as a banner for publisher McGraw Hill is displayed during the company’s IPO at the New York Stock Exchange (NYSE) in New York City, U.S., July 24, 2025. REUTERS
NEW YORK, (Reuters Breakingviews) – Buyout shops learned some hard lessons this week. The initial public offerings for educational publisher McGraw Hill (MH.N), and market research firm NIQ Global Intelligence (NIQ.N), both landed with thuds, but the more important news is that respective backers Platinum Equity and Advent International managed to get the exit processes underway. It’s the price to pay for an industry clogged up with portfolio companies to sell and cash to spend.
Since it started in 1888, McGraw Hill has been an acquirer, passed around and broken up. It spawned credit rating agency S&P Global and once owned BusinessWeek magazine. Platinum bought the company from peer Apollo Global Management (APO.N), for $4.7 billion, including debt, in 2021.
The transition from printed books to digital ones helps boost operating margins, but McGraw Hill also lost $86 million last year. It is burdened with net debt of about 4 times adjusted EBITDA, which will fall after IPO proceeds are used to pay off a slug of it. Revenue increased by an impressive 7% in the year through March, but rivals Pearson (PSON.L), Wolters Kluwer (WLSNc.AS), and Springer Nature (SPGG.DE) all grew faster.
This combination of factors failed to inspire investors, but was enough for Platinum to double its equity, on paper, according to Breakingviews calculations. McGraw Hill sold shares on Thursday at $17 apiece, below the mooted $19 to $22 range, and they are now trading even lower. Moreover, the $3.3 billion company is valued at about 8 times EBITDA, a steep discount to the 12 times that Platinum paid, according to S&P.
NIQ’s story is similar. The data cruncher was hived off by TV ratings shop Nielsen and acquired by Advent in 2020 for $2.7 billion. It, too, is unprofitable, and carries a heavy debt load, at 5 times last year’s EBITDA. Shares priced at the lower end of the range and then dipped when they started trading.
The debuts are disappointing, but at this stage almost any private equity sale is welcome. With distributions sinking to historic lows. nearly two-thirds of investors in private equity funds expressed a desire for conventional M&A or IPO exits even if it means accepting lower valuations, consulting firm Bain found. The backlog of ageing assets is taking an ever-bigger toll on buyout barons. It’s why these latest deals are textbook examples of both the problem and the solution.
Editing by Jeffrey Goldfarb; Production by Pranav Kiran
