AI's Growing Role in EdTech M&A

AI is here—and the EdTech industry’s journey to fully integrate it across products and services is now a key driver of M&A opportunities. Today’s rapidly evolving landscape demands that founders go beyond simply answering whether they’re using AI; they must explain how, where, and to what extent it is embedded in their operations. Tangible results from AI implementations are more persuasive than promises or roadmaps.

From adaptive learning platforms to personalized learning pathways and administrative tools, AI is reshaping how educators operate. Unsurprisingly, it has become a persuasive driver of merger and acquisition strategies and a key consideration at various stages of the valuation process. At Vista Point Advisors, we’ve supported EdTech companies with robust AI integration—such as Element451—in positioning themselves as attractive players in the M&A landscape. Telling a compelling, evidence-based story about a company's AI capabilities was essential to Element451’s successful sale.

Here's what EdTech founders should know when preparing for capital raises or exit opportunities.

Current AI Applications in EdTech

It’s no longer enough for an EdTech company to claim AI integration. As the market matures, buyers, users, and investors are requiring proof of effective, results-oriented AI capabilities. Here are several current AI use cases transforming EdTech:

• Adaptive Learning Platforms: Tools like Khanmigo offer personalized tutoring that guides students toward self-discovery rather than simply providing answers. These platforms generate valuable data to help teachers identify learning gaps and determine when human intervention is needed.
• 24/7 Support Tools: Chatbots and virtual assistants offer around-the-clock support for students, teachers, and administrators, improving productivity and learning continuity—even outside regular school hours.
• Content Creation and Adaptation: AI tools enable educators to easily create or modify curriculum—for example, adjusting reading levels to suit student needs or generating supplementary materials on the fly.
• Infrastructure and Security: AI is powering safer, smarter educational environments. It can detect and respond to breaches, optimize building operations for cost savings, and provide analytics for improved safety and efficiency.
• Admissions and Administrative Automation: AI streamlines tasks like application screening and performance prediction, freeing up staff to focus on strategic initiatives and student support.

AI’s Emerging Impact on EdTech M&A

Deep Integration and Tangible Results

In M&A, deeply embedded AI capabilities are proving to be a competitive advantage. For example, we recently facilitated a $175 million strategic growth investment in Element451, an AI-first CRM and student engagement platform, by PSG Equity. During this transaction, it became clear that AI-forward companies—those with deeply integrated, results-driven AI—are outperforming competitors who treat AI as an afterthought. This distinction was a core consideration for Element451’s valuation and is likely to become a key driver in EdTech valuations overall.

AI’s Role In Element451’s Valuation Process

AI introduces new layers of complexity into an already nuanced valuation process. Independent Consultants and in-house buyer AI-specialists are tasked with evaluating the depth and effectiveness of a company’s AI tools before a deal proceeds. Founders should prepare in advance by ensuring their AI offerings go beyond superficial claims and deliver measurable outcomes.

Element451’s journey offers a compelling case study of how integrated, pragmatic AI can materially improve a startup’s perceived and real value, both to customers and investors. In a podcast interview on The Path to Exit, CEO Ardis Kadiu explained that rather than launching a standalone AI product, his team embedded AI into existing customer workflows. An AI chatbot for admissions reduced call volume by 30%, while internal support tools powered by AI helped increase gross margins by 30 to 40 points.

These weren’t just efficiency wins—they were compelling proof points in diligence. AI compressed the cost of service delivery while improving product stickiness. As Kadiu put it, "what was amazing is how hard it was to explain AI in the pitch," he said. “But when we got into diligence… you could see the lightbulb go off.”

The key wasn’t just that Element451 used AI. It was that they used it intelligently—to reinforce their existing moat (proprietary data and workflow knowledge), not replace it. That clarity of strategy—and the measurable business impact—ultimately helped close their funding round.

The Subjectivity of Valuation

In addition, the valuation process can be subjective, and this is especially true when you add AI-related factors and diligence into the mix. Given these complexities, here are a few key things EdTech founders should keep in mind when managing valuation expectations, from a recent podcast by Vista Point managing directors Mike Lyon and Scott Austin:

• Understand the differences between buyer types (e.g., private equity, PE-backed strategics, public strategics), and don’t make direct comparisons between them.
• Don’t equate your company’s value with what a single buyer is willing to pay—true valuation lies in what all buyers might offer collectively.
• Use public comparisons as a reference point only; behind-the-scenes factors like growth strategy and market positioning can significantly influence perceived value.
• Avoid direct comparisons between your AI capabilities and those of competitors—every implementation is unique.
• Stay open to unexpected outcomes: in Element451’s case, the third and lowest initial bidder ended up closing the deal after making a significant final offer.
• Expect AI consultants to test and evaluate your AI tools during due diligence.

Integrating AI at Every Level

As EdTech founders consider how to position themselves and what technologies to invest in for future M&A opportunities, they should keep AI at the forefront of the conversation.

It could be helpful to look for additional opportunities in education trends, such as integrating AI in skills-based and trade-based education opportunities, which are growing in popularity and interest. Also, tools that can offer AI-related curriculum and development opportunities for students and staff can differentiate themselves from others by not only using AI, but helping others learn more about it.

Key considerations when positioning EdTech companies for M&A

Vista Point Advisors recommends the following when preparing to position your AI-driven EdTech company for M&A:

• Consider and be able to articulate how your software is either defensible against AI disruption or can leverage AI to gain a competitive edge.
• Be prepared to answer, in detail, "How are you using AI?" Provide compelling data, results, and case studies. In Element451’s case, expert storytelling around their AI capabilities helped attract stronger offers.
• If your platform targets administrators rather than students, your exposure to AI disruption may be lower—but AI capabilities can still boost efficiency and scalability.
• Hire AI specialists to assess your current integration and identify improvements that could strengthen your M&A positioning.
• Work with an investment bank who understands the market and has the expertise to help position your company’s story to show its value.

It’s time for EdTech founders to move past the "deer in the headlights" phase of AI adoption. Embrace curiosity, pursue innovation, and seek guidance from AI and M&A experts when needed. Your future success in the EdTech space—and in the M&A market—could depend on it.

This material and the opinions voiced are for general information only and are not intended to provide specific advice or recommendations for any individual or entity. All opinions and views constitute our judgments as of the date of writing and are subject to change at any time without notice. Past performance is no guarantee of future results and there is no assurance this trend will continue. Testimonials from past clients may not be representative of the experience of other clients and there is no guarantee of future performance or success. Clients are not compensated for their comments.

Clicking some links in this article will take you to websites independent of and unaffiliated with Vista Point Advisors. The information and services provided on these independent sites are not reviewed, guaranteed, or endorsed by Vista Point Advisors or its affiliates. Please keep in mind that these independent sites' terms and conditions, privacy and security policies, or other legal information may be different.