The world of credentials and school transcript providers has gotten smaller after the merger of two companies that facilitate more than 18.5 million academic records exchanges a year.
Steering this deal is Brentwood Associates, which acquired a controlling stake in Credential Solutions in 2018. On Tuesday, the Los Angeles-based private equity firm completed its purchase of Parchment, which becomes the new name of the combined companies.
Together, they serve more than 13,000 high schools, universities and professional organizations that request transcripts, including background-check firms and licensing boards.
Parchment had raised $66 million in venture funding before the purchase from the likes of Raine Group, GSV Capital, Deborah Quazzo, Novak Biddle Venture Partners, ICG Group and Salmon River Capital.
Brentwood is still interested in purchasing more companies to expand Parchment’s suite of offerings, says Craig Milius, Brentwood’s managing director. The firm’s education holdings include Excelligence Learning, which builds and supplies physical products for early childhood education, and ClassWallet, a budgeting and payment processing platform for K-12 districts.
Next for the newly joined company is expanding the network of issuers who receive and send credentials including transcripts, diplomas, certificates and digital badges, says Parchment CEO Matthew Pittinsky, who will lead the new company. Pittinsky also co-founded learning management services company Blackboard before co-founding Parchment in 2003.
In this 2014 video, Matthew Pittinsky explains the thinking behind his company Parchment.
Based in Scottsdale, Ariz., Parchment processes orders for academic records and verifies them to ensure that they haven’t been changed or compromised. The company also issues digital certificates for corporate clients that want to award their employees. Revenues come largely from a cut of the fee that students pay their institutions for transcript services.
Credential Solutions, founded in 1997 and based in Deerfield, Ill., offered similar transcript services but had few overlapping customers, according to Pittinsky. After the merger, Parchment has 220 employees and is hiring.
Pittinsky says students and job candidates want more control over their credentials, with non-academic accomplishments like study abroad experiences and leadership positions in community organizations given the weight of grades.
And while those achievements appear on resumes, Pittinsky sees value in moving those achievements into the realm of verified credentials that academic institutions issue. “We think academic credentials should reflect that more comprehensive understanding of what a student knows and has demonstrated,” he says.
The combination of Parchment and Credential Solutions is the latest in a series of similar acquisitions in the credentialing business. Parchment bought AVOW Systems in 2012, and Credentials Solutions bought eScrip-Safe in 2014.
The CEO of the leader in transcript services, nonprofit National Student Clearinghouse, published a blog post in December when the merger was first announced. In the post, Rick Torres voiced concerns about the merger’s impact on competition and pricing, painting National Student Clearinghouse and the new Parchment as the two biggest players in transcript services and data exchange.
“As your advocate in higher education, we are very concerned about how this concentration of providers may impact institutional choice and service quality into the future,” Torres said. National Student Clearinghouse, based in Herndon, Va., provides transcript services to 1,100 institutions and has data relationships with 13,000 high schools and 46 states.
Pittinsky says Torres doesn’t factor in the worlds of digital badges, diplomas and other credential types, which creates a dynamic competitive market. “We see the competitive landscape quite differently,” he says.
