Computer Reseller News Report: Milken to Buy IT Training Company

Announcement Expected Today, According to Report Posted to CRN Online at

May 6, 1997

Financier Michael Milken is leading an investment group that plans to buy Productivity Point International Inc., a leading industry computer training provider, according to a report by Associate Editor Jerry Rosen and Section Editor Kevin Merrill of Computer Reseller News. The report says that sources close to the negotiations said Milken and PPI founders reached an agreement last week and an announcement was expected soon.

CRN Online notes that the privately held PPI is one of the largest IT training organizations, with more than 110 software training centers and projected 1996 revenue of $120 million. The company provides authorized IT training for Microsoft, Novell, Lotus and other companies and its franchise network is the largest education partner of Microsoft Corp., providing training to reseller organizations and end users.

Details of the acquisition were not immediately known, CRN said, but when Milken's company, Education Technology LLC, closes the deal, "it will mark its second foray into corporate IT education."

Following is additional text from the story:

In August 1996, Education Technology, based in the Los Angeles area, provided $170 million in backing to CRT Group PLC. London-based CRT Group has revenue of $200 million. One of its divisions -- CRT Multimedia -- makes self-paced learning titles and recently has started pushing into corporate markets through software resellers to augment its traditional retail customer base.

Education Technology was formed in January 1996, by Milken and billionaire entrepreneur Larry Ellison, Oracle Corp.'s chairman. Milken was the man who made junk bonds infamous while at Drexel Burnham Lambert. His well-documented fall from grace included a prison term.

As for the PPI deal, Donald Hunt, PPI's chief executive and chairman, did not add any details when contacted this morning. "I'm not in a position to make any comment at this moment," Hunt said.

Two other franchisees were reluctant to discuss the company's future on the record.

Timothy Preheim is Hinsdale, Ill.-based PPI's largest shareholder and owns and operates the largest franchise network within PPI. The company's legal name is Global Training Network, but it does business as Productivity Point International Inc. Preheim did not return a call seeking comment.

It is unclear whether the proposed investment would buy out Preheim to gain control over the PPI name and network. PPI does not have its own corporate locations. Instead, it provides development, sales and marketing support for franchisees, and collects royalties on courseware sales and franchise fees.

The acquisition could possibly include not only Preheim's interests, but also those of some of PPI's more profitable franchisees, a model executed last fall by one of PPI's main rivals, ExecuTrain Corp. Atlanta-based ExecuTrain received a $50 million capital infusion to buy dozens of its franchisees in a bid to centralize operations to better serve national accounts.

Ironically, Milken was rumored then to be a source of that funding. But ExecuTrain never confirmed the source of the money, only to say that it was a combination of bank credit and outside equity.

As of late, Milken has been focused on high technology and education, and the purchase of PPI seems a natural fit for Milken.

News of Milken's bid for PPI raised eyebrows inside Microsoft, which is at odds with Oracle. But Microsoft executives said they were not concerned about further Oracle involvement with PPI, because it was Ellison's private investment capital, not funds associated with Oracle.

PPI was founded in 1983, and in 1990 launched its nationwide computer training network. The company says it has trained more than 4 million students throughout North America.

Last month, PPI announced that 67 of its training centers were renewed as ATECs for 1997. It plans to have four more of its training centers as ATECs this year.

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-0- 05/05/97

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