After years of chasing growth through mergers and acquisitions, the education-technology behemoth Anthology Inc. has more than $1 billion in debt and declared Chapter 11 bankruptcy last week.

The breakup of this big company isn’t expected to affect institutions that contract with Anthology, since it’s spinning off its products to other buyers. But it’s the latest sign of a changing education-technology market that’s resetting in the years after the pandemic spurred low interest rates and boosted interest in online education.

As part of its plan to restructure and emerge debt-free by early next year, Oaktree Capital Management and Nexus Capital Management are giving Anthology $50 million to focus its resources on Blackboard, the learning management system it purchased in 2021. At the same time, Anthology is selling its enterprise operations, life-cycle engagement and student success businesses, and it already has buyers lined up; Encoura has agreed to be the “stalking horse” bidder for the life-cycle engagement and student success businesses, while Ellucian will do the same for Anthology’s enterprise operations.

“With the strong support of our investors, a recapitalized Teaching & Learning platform is well positioned to invest in new capabilities, drive greater efficiency, and help our customers stay focused on what matters most: delivering exceptional outcomes for students,” Bruce Dahlgren, Anthology’s CEO, said in a statement.

Market analysts say they aren’t particularly surprised by Anthology’s unraveling, which was driven by the company’s incorrect speculation that colleges and universities would want to buy its entire suite of software products and services. That included its learning management, student information and customer relationship management systems.

“Anthology assumed that by combining the LMS, SIS and CRM that they would get a lot more cross-selling,” said Phil Hill, an education-technology market analyst, told Inside Higher Ed. “What they misunderstood was that academics—the deans, provosts and faculty—really pick the LMS and they’re not going to pick an LMS because the registrar and chief information officer picked a different SIS. That synergy they were looking for just really didn’t exist.”

But five years ago, investors didn’t see it that way.

In 2020, the private investment firms Veritas Capital and Leeds Equity Partners combined three education-technology companies—Campus Management, Campus Labs and iModules—into one new company: Anthology. At the time, Jim Milton, then-CEO of Anthology, said the move was aimed at “harnessing the collective power of three industry leaders” to deliver “a transformative data experience for institutions.”

One year later, Anthology also acquired Blackboard, which was owned by Providence Equity Partners, for an undisclosed amount, and Veritas became the majority owner of the combined companies. Although it was once the dominant LMS provider, by 2021 Blackboard was losing clients to Instructure (maker of Canvas) and D2L. By bringing Blackboard into Anthology’s fold, the company aimed to “create the most comprehensive ed-tech ecosystem across academic, administrative and student engagement applications.” According to Milton, the deal also likely made Anthology “the largest education-technology company selling into higher education.”

‘Enormous’ Integration Burden

But in court filings, Anthology said that rapidly expanding through those mergers and acquisitions “introduced several operational hurdles,” including difficulty integrating and managing its “sprawling product portfolio.”

Joseph Licata, founder and CEO of the higher education software and consulting company Canyon GBS, told Inside Higher Ed in an email that such an “enormous” integration burden drove Anthology’s downfall.

“Anthology’s bankruptcy reflects the financial and operational strain created when education technology companies scale primarily through acquisition rather than disciplined product and engineering strategy,” he wrote. “Managing overlapping architectures, redundant services, and different code bases significantly increases costs and slows innovation.”

As a result, Anthology was left with inflated costs as it tried to navigate an increasingly competitive education-technology market. Over the past two years, its revenue fell by $80 million. At the same time, interest rates kept rising from the historic lows of 2020 and 2021.

All of it made the debt that had financed Anthology’s expansion unmanageable.

“Colleges and universities have become more conservative buyers, stretching procurement timelines and delaying major renewals,” Licata said. “When interest rates rose and revenue growth plateaued, the company ran out of room to absorb the debt and operating inefficiencies.”

He added that Anthology’s bankruptcy, which comes about a year after online program manager 2U filed bankruptcy, is part of a larger reset in the higher ed–technology market.

“[It’s] moving from a growth-at-all-costs phase to one focused on sustainability, interoperability, and trust. Institutions are starting to prioritize affordable, compliant, and modular platforms over large legacy monolithic systems,” Licata wrote. “They want partners who can demonstrate long-term stability, transparent data practices, and clear return on investment.”

And colleges and universities likely stand to benefit from Anthology’s plan to sell most of its assets and focus solely on its teaching and learning platforms, said Justin Menard, CEO of the market research firm ListEdTech.

“At the end point, everyone is going to be a winner. The investment firms will get their money either way, and the institutions will get better support,” he said. “The three companies will be able to focus on their expertise instead of Anthology trying to do everything.”