American College Testing, known as ACT, has been a powerful member of the Iowa City and Corridor’s regional business community for decades.
But will its importance continue after its recent “partnership” with Nexus Capital Management LP, a Los Angeles-based private equity firm?
Forbes magazine reported that Nexus will become majority owner of the newly changed for-profit legal entity.
“Our partnership with Nexus Capital Management uniquely positions ACT to meet a watershed moment in our nation, as the demand for talent is growing and becoming more diverse,” said ACT CEO Janet Godwin, who will remain in that position. “The need to prepare learners for success after high school for both college and work has never been higher, nor has the need to ensure that every learner has access to equitable college and career planning resources, guidance, and insights.”
ACT was the ideal business model for a college town — marrying business and academia — having been born out of the University of Iowa and notably structured as a nonprofit legal entity.
ACT was first introduced in November 1959 by University of Iowa professor Everett Franklin Lindquist as a competitor to the Scholastic Aptitude Test (SAT).
Over the years, ACT has become an iconic worldwide brand and one of Iowa City’s largest private employers.
Unfortunately much has changed since the COVID-19 pandemic compromised the educational testing requirements and standards of college applicants. ACT hasn’t fully recovered, and has been racing to revamp its business model.
According to Forbes magazine, 1.4 million students sat for the ACT in 2023, down from more than two million in 2017.
While ACT is still a large employer, it is nowhere near its employment ceiling.
ACT is even in the process of trying to sell its impressive 93-acre main campus in Iowa City. The Iowa City Community School District bought the Tyler Building on the ACT campus for $8.7 million in 2023.
Ms. Godwin said in a 2023 news article that ACT intends to “keep a significant presence in the Iowa City area, including office space downtown, where we are recognized by community members for our continuing commitment to the Eastern Iowa Corridor.“
These changes and the notable switch to becoming a for-profit business entity by its new private equity partners is bound to stir some angst and concern in Iowa City.
After all, private equity firms don’t have the best reputation in Iowa City, particularly with the dismantling of the Iowa City Press-Citizen newspaper, which has been owned by the Gannett media company and has gone through several private equity owners.
“The time is right to move into the next phase of ACT’s long-term growth strategy alongside a partner with significant industry expertise, giving ACT the scale and capital necessary to deliver on its promise of education and workplace success,” said Daniel A. Domenech, chairman of ACT Board of Directors and former executive director of AASA, the School Superintendents Association.
We are rooting for these changes to work so that ACT’s importance in the region will be maintained and even increased.
