4GL School Solutions buys smaller rival that makes software for special-ed pupils

Private Towson company does not disclose terms

August 03, 2005|By William Patalon III | William Patalon III,SUN STAFF

4GL School Solutions Inc., a Towson firm that sells software to help schools better manage special-needs students, said yesterday that it has agreed to purchase rival Tranquility Solutions Inc. of Plymouth, Ind.

Both companies are privately held. Terms of the deal were not disclosed, although the sale will close within 30 days, said Allison L. Duquette, 4GL's president and chief executive officer. Other deals are possible, she said.

"4GL will continue to grow and extend its reach, be it organically [by expanding its existing business], as well as through acquisitions, strategic alliances and partnerships," Duquette said.

With 170 employees and annual sales of about $25 million for the fiscal year that ended June 30, 4GL has focused primarily on larger school systems, according to Duquette.

While Tranquility is smaller - about 30 employees - and focuses much of its efforts on smaller school systems, its clients are mostly outside markets that 4GL serves, meaning this deal will broaden the Towson firm's reach, Duquette said.

Companies such as 4GL and Tranquility are attempting to address one of the biggest challenges that school systems face today - special-education students, whose physical, emotional or mental handicaps can restrict their ability to learn at the same pace as their classmates.

While these special-needs students account for an estimated 10 percent to 15 percent of kindergarten through 12th grade enrollment, this group accounts for a quarter of a public school system's budget, according to some industry estimates.

At the same time, tougher federal rules can mean millions in lost federal financing for school systems that fail to meet special-ed objectives, such as in the No Child Left Behind legislation.

Such worries can increase the allure of the software packages and consulting services offered by companies in this business, said J. Mark Jackson, director of K-12 research for Eduventures Inc., a Boston market-research and advisory firm that works with companies serving the education market.

"Accounting for special-needs kids is a demanding but necessary service," Jackson said.

Jackson estimates that there are 52 million to 53 million students in the U.S. market, and that the annual market for information-management software is currently $125 million - and growing.

But the market also is highly fragmented with dozens - if not hundreds - of companies peddling software products and consulting services, some to a single school district, experts say. That's driving - and will continue to drive - consolidation deals such as the one announced yesterday, Jackson said.

By law, teachers must devise - and then stick to - an individualized education plan for each special-ed student. The program identifies the student's problem areas or shortcomings, devises a strategy to address them, and then tracks performance and, hopefully, progress, Jackson said.

That work has historically been done manually, creating hours of paperwork for individual teachers - and a nightmare for administrators at both the school and school-district levels, since those officials must organize, interpret and report on the progress of their special-ed populations, Jackson said.

The tech firms have standardized and computerized the entire process, slashing the time teachers must devote to paperwork and streamlining the administrative work that takes place higher in the school-system's chain of command, Jackson and Duquette said.

4GL was founded in 1996. Investors include private equity firm Warburg Pincus LLC and Novak Biddle Venture Partners.

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