News reports suggest that a major buyout deal for a stake in UK-headquartered private schools operator Cognita Schools may be on the brink of collapse.
Cognita, valued at almost US$7 billion, is held by UK and Swiss-based investment house Jacobs Capital, which has been negotiating with Blackstone Inc. and CVC Capital Partners plc.
The talks may be close to breakdown, with a mismatch in valuation expectations between seller and investors cited as a main stumbling block. New UK legislation introducing a 20% value-added tax on private school fees from January this year may have also triggered a reset in expectations around Cognita. Controversy surrounded the company’s sudden closure of three UK schools in May as it reportedly positioned for a sale of up to 40% of its global portfolio.
A review of European private equity deal activity in the first half of 2025 from law firm Ropes & Gray showed very modest recovery, with deal value up 2% compared to the first half of last year. It predicts “relatively muted” activity and a “modest recovery” for the rest of the year.
Major buyout funds have plenty of dry powder ready to invest, and a major deal like the Cognita stake sale could make a big difference to the market.
Bloomberg reported in June that Blackstone and CVC were contenders for the Cognita stake Permira and Cinven were also cited as potential suitors, but Blackstone and CVC appear to be the ones that held on until the final rounds.
Jacobs Capital’s difficulties in striking a deal may be related to its own recent history and its somewhat peculiar Swiss pedigree. Its story began in 1895 with the foundation of a coffee business in Bremen. This family concern flourished after World War 2 and moved to Switzerland in 1970, acquiring various branded businesses. In 1994, it transitioned into a Zurich-based holding and investment company.
In 2017, the group founded Telemos Capital, a London-based private equity firm backed by Jacobs family money. The merger of Jacob Holding and Telemos Capital into Jacobs Capital was announced in June, “funded by evergreen, family capital… underpinned by the Jacobs family’s continued stewardship”.
The simultaneous execution of a merger and a major secondary buyout deal may have been difficult for any entity. But also, the fact that Philippe and Nicolas Jacobs were the only two figureheads announced as co-chairmen of Jacobs Capital raises an eyebrow, if not a red flag. The priorities, and mindset, of a family investment firm are necessarily very different from those of major buyout groups, and there may have been added challenges in reaching a meeting of minds.
