| Notes |
The driving force behind the creation of Knowledge Universe was Michael Milken, the controversial king of junk bonds who served 22 months in federal prison and paid a $1 billion fine for six counts of felony securities fraud. After his release from prison in 1993, much of his attention was spent on the Milken Family Foundation, which was involved in education through the awards granted to top teachers and minority students. He also came to see for-profit education as a business opportunity, revealing to Fortune magazine in 1996 his vision for a "cradle to cane" enterprise, encompassing not only schooling for children but also technical training and continuing education for adults. Even capturing a small percentage of this vast market could mean tens of billions of dollars. To make his vision a reality he contacted Lawrence Ellison, founder and CEO of Oracle. A subsidiary of Oracle was already one of the world's largest computer training companies, making Ellison a likely partner. Milken also enlisted his brother Lowell, and together the three men formed Knowledge Universe with $500 million in financing. The company essentially served as a vehicle for investing in the education industry.
The initial focus of Knowledge Universe was in an area with which Ellison already felt comfortable: IT training. The first acquisition took place in September 1996, a United Kingdom-based IT training company called CRT, followed by similar purchases over the next two years. It was because of Lowell Milken's interest in early childhood education that the company began to look for a suitable investment in the childcare business. They settled on CDC, then paid $80 million to take the company private. It took on the name of the acquiring subsidiary before becoming Knowledge Learning. With the deep pockets of its corporate parent to back it, and free of shareholder pressure to produce short-term results, the company was again positioned to grow rapidly through acquisitions. Instead of targeting single units or small chains, however, Knowledge Learning was now able to consider buying operations that were larger than itself. Aside from this shift in strategy, the company also began to focus more on children's education, an area that had originally been an offshoot of its childcare operations.
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