ACT Teams Up with Nexus Capital

On April 8th we published a blog post, The ACT Needs a Makeover, and May be Getting One Soon, outlining the market struggles facing the testing organization. Two days later, news broke that ACT was partnering with Los Angeles-based private equity firm Nexus Capital Management LP. There is no indication that this partnership will directly result in changes to the ACT exam. The company’s future seems to be focused on diversifying by providing professional credentialing.

New structures, new directions

ACT is shifting from being a nonprofit company with 501(c)(3) status to a public benefit corporation with an obligation to drive tangible benefits to the public in addition to its shareholders. In its new partnership with Nexus, ACT will gain access to capital and expertise. ACT struggled financially during the pandemic and has largely stagnated since then. Receiving a significant infusion of cash and additional resources can help the company get back to innovating and diversifying its portfolio of products.

Partnering with Nexus Capital

Nexus has a good deal of exposure to consumer goods but is relatively new to the education sector. In 2019 it purchased Pearson, now Savvas Learning, specializing in K-12 curriculum products. Managing Pearson (Savvas) and ACT pushes Nexus towards a meaningful position in the curriculum and assessment space.

Indication of ACT’s future direction

In the announcement of the partnership, the focus seemed to shift away from college admissions and towards credentialing at different stages of life and career. The announcement outlined the ACT’s new emphasis on “readiness credentials” and helping to “better match employers with available talent, create new opportunities for upskilling mid- and late-career professionals, help learners identify their strengths and provide recommendations about applying them in education settings and the workplace.”

Clearly, Nexus is interested in the career work ACT has done with its WorkKeys product line and hopes to expand that significantly. This is a good hedge against any major changes to the college admissions testing landscape. Credentialing and skill assessment will play a larger role in the world of work to come.

Other developments for the ACT

The private equity move is the biggest change in years for the ACT, but other changes are afoot within the organization.

ACT is experimenting with a shorter format test in June.

As discussed in our April article, ACT is piloting a shorter format test in June. Students can enter into a lottery to be assigned to a shorter testing condition. The ACT writes that students “will be randomly assigned a test form with one of two timing conditions: either the full ACT or a version with fewer questions and reduced time per section.” This is an exciting development, and hopefully, a shorter, less speedy, potentially adaptive ACT is on the horizon.

ACT digital testing is expanding.

The ACT is getting some traction with its digital test as it expands to more districts and states with its more flexible scheduling. Individuals are also gaining the opportunity to take a digital test during national administrations, but it is unclear how broadly this is being adopted. A digital, adaptive test, with all of its benefits, will be a much bigger deal than a digital ACT with the same timing, form and structure as a paper test.

We’ll keep you updated with developments to this story, particularly with a focus on the changes to the ACT’s flagship test.