upGrad and Unacademy Acquisition Talks End Due to Valuation Disputes

The recently speculated acquisition discussions between the online higher education platform upGrad and the leading test-prep company Unacademy have concluded after both entities could not reach a consensus on valuation, as per sources familiar with the situation. Ronnie Screwvala, co-founder of upGrad, confirmed to Startup Superb that they are halting the process due to differences in valuation. He indicated that while specific numbers cannot be disclosed, it is accurate to say that a mutually acceptable valuation was not achieved.

Startup Superb had previously reported on the merger and acquisition discussions between upGrad and Unacademy, which gained attention during a period when Unacademy was undergoing internal restructuring, implementing cost-management strategies, and sharpening its emphasis on core test-preparation services. In recent intervals, Gaurav Munjal, the co-founder and CEO of Unacademy, had publicly stated that the company was considering various strategic avenues, encompassing fundraising and potential M&A deals, while underscoring that no decision had been made.

Munjal also elaborated on the company’s stance regarding employee stock option (ESOP) exercises and valuation expectations, amidst concerns surrounding internal liquidity and employee remuneration. Separately, Unacademy has paused its planned alterations to its 2018 ESOS scheme due to significant opposition from former employees. The objections primarily revolved around the tax repercussions and liquidity issues linked to exercising stock options at a markedly lower valuation compared to earlier investment rounds.

Unacademy has yet to provide an official statement regarding the halted merger discussions. Established in 2015, Unacademy has secured over $800 million from backers including SoftBank, General Atlantic, and Tiger Global, and was last evaluated at approximately $3.4 billion during the peak of the edtech funding boom. Nonetheless, similar to many contemporaries in the sector, the firm has encountered pressure to adjust growth expectations amid an extended funding slowdown. upGrad, active in the realms of higher education, upskilling, and overseas education, has undertaken selective acquisitions in the past to enhance its offerings.