Noodle Partners, recently working with colleges to build and offer online applications removed the second part of its name. But the New York City-based company has a new partner who can help expand its footprint in an increasingly competitive market.
Yesterday, Noodle announced it had acquired the “key assets” from HotChalk, a Campbell, California-based firm that also offers online program management (OPM) services to higher education institutions.
The deal shows signs of a turbulent sale given that HotChalk was in the hot seat not so long ago. In February, one of its largest clients, Concordia University Portland, closed due to financial insolvency. An investigation of The Oregonian attributed these issues to its agreement with HotChalk, under which the college paid over half of its revenue to the company (as much as $ 62 million over the course of a year). Dismissals of the company followed, and HotChalk sued the college’s parent organization – a Lutheran church – alleging that it was deceived and that Concordia could have made the cuts necessary to survive.
Noodle CEO and founder John Katzman has been an outspoken critic of such tuition-sharing schemes that HotChalk enters into with universities. He was not always like that. 2U, the last company he founded and with which Noodle competes, works in the same way as other OPM providers. But he has changed his heart and has done so written long-standing, these agreements argue too expensive for colleges and keep costs high for students – a point that is the subject of an ongoing, fierce debate among the higher education industries.
However, what Noodle acquires is not HotChalk’s business model. It takes over the management of HotChalk’s programs, including a teacher education and leadership program at New York University’s Steinhardt School. Inside the Higher Ed reports that talks are underway “about the transition from the revenue-sharing model it used with HotChalk to more of a service model fee that Noodle favors.”
Noodles model looks somewhat like a main contractor. Colleges pay for the services they need, some of which are outsourced to third-party companies and others that Noodle provides. With this acquisition, Noodle will also bring a higher marketing agency, previously owned by HotChalk, into its fold, Associates for creative communicationand plans to make its services available to the university’s customers.
More than 50 people across HotChalk’s marketing, sign-up and technology teams will join its new owner, including CEO Rob Wrubel, who will serve as Noodle’s marketing manager.
The financial terms of the deal were not disclosed and Katzman declined a request for comment.
HotChalk was founded in 2004 and has raised $ 235 million in investment capital, most of which comes from German publisher Bertelsmann. Industrial sources say that this transaction was probably not close to this amount.
Noodles, which raised $ 16 million in June has worked with more than two dozen universities, including Howard, Tufts, the University of Michigan and the University of Tennessee, to establish over 50 online programs.
According to HolonIQ, an education market research firm, over 770 universities worldwide offers online applications through more than 200 OPM providers. Product discretion that almost 300 new partnerships could have been formed by the end of 2020, almost doubling the number from the previous year.