The Evidence on Market Consolidation: How ETS's Acquisition of ACT Reshapes the $2 Billion Standardized Testing Industry

Educational Testing Service (ETS) is officially acquiring ACT, bringing together two of the most recognized and influential names in American educational measurement. The landmark deal, announced in late June 2026, fundamentally reshapes the multibillion-dollar standardized testing industry by merging organizations that have historically dominated entirely different sectors of the assessment landscape. For decades, these two entities operated on parallel tracks, with ETS focusing on graduate-level and international assessments while ACT built its reputation as a Midwestern alternative to the coastal SAT. Now, their consolidation creates a unified testing giant with unparalleled reach across both K-12 education and the professional workforce, signaling a major strategic shift in how student aptitude and career readiness will be measured in the coming decades.

The acquisition carries a profound sense of historical irony for industry observers. For nearly eight decades, ETS served as the administrative engine behind the SAT, developing and scoring the exam on behalf of the College Board. That foundational relationship abruptly ended in 2024 when the College Board decided to bring the administration of the SAT entirely in-house, leaving ETS without a flagship undergraduate admissions exam to anchor its portfolio. Now, in a significant strategic pivot, ETS has purchased the SAT's biggest historical rival. By acquiring ACT, ETS instantly reclaims its position at the center of the high-stakes undergraduate admissions process, setting the stage for a renewed, well-funded rivalry with its former partner.[1]

The sheer scale of the resulting merger creates an assessment behemoth with an unprecedented footprint. According to company leadership, the combined entity will reach an estimated 35 million people annually across various stages of their educational and professional lives. ETS brings its massive global infrastructure, anchored by ubiquitous exams like the GRE for graduate school admissions and the TOEFL for English language proficiency. ACT complements this global reach with its namesake college entrance test and deep, established relationships with K-12 school districts and state education departments across all 50 states. Together, they possess the data, the institutional relationships, and the testing volume to influence educational policy on a national scale.[2]

The corporate structure of the acquisition highlights the rapidly shifting economics of the education sector. This deal marks the second major ownership change for ACT in just two years, reflecting a period of intense turbulence for the testing provider. In 2024, the historically nonprofit ACT underwent a controversial conversion into a for-profit public benefit corporation after being acquired by Nexus Capital Management, a Los Angeles-based private equity firm. That transition was initially intended to inject much-needed capital into ACT's aging infrastructure, but it also raised concerns among educators about the corporatization of a critical gateway to higher education.

ETS, which has maintained its status as a nonprofit organization since its founding, initiated the acquisition discussions directly with Nexus Capital Management. ETS leadership has outlined a nuanced approach to integrating the two distinct corporate cultures. While ETS plans to keep the ACT components operating as a for-profit entity in the near term, executives have explicitly stated that they will operate the brand as a mission-focused organization. ETS CEO Amit Sevak has left open the possibility of eventually changing ACT's legal status back to a nonprofit, emphasizing that the primary goal of the merger is to serve students and educators rather than to maximize short-term shareholder returns.

A primary driving force for ACT in seeking a well-resourced buyer was its steadily declining market share in the college admissions space. While the entire testing industry took a massive hit during the pandemic, ACT has struggled significantly more than its rival to recover its previous testing volume. In 2025, ACT participation sat at roughly 1.38 million students, representing a steep 27 percent decrease from its pre-pandemic high of 1.78 million. This sustained drop in participation threatened the organization's long-term financial viability and forced leadership to seek a strategic partner capable of funding a massive operational turnaround.

Meanwhile, the SAT managed to successfully navigate the post-pandemic landscape, rebounding to approximately 2 million participants in 2025. Industry analysts widely attribute the SAT's robust recovery to the College Board's swift and decisive transition to a fully digital testing format, which proved highly popular with both students and administrators. Furthermore, the College Board aggressively expanded its school-day testing contracts, allowing students to take the exam during regular school hours rather than on a Saturday morning. This combination of technological innovation and improved accessibility left the paper-heavy ACT at a distinct competitive disadvantage.

ACT has been racing aggressively to close that technological gap and win back state contracts. In April 2025, the organization launched the "Enhanced ACT," a shortened, fully digital version of the exam designed to compete directly with the streamlined digital SAT. However, rolling out a national digital testing infrastructure requires immense capital and technical expertise. The acquisition by ETS provides ACT with exactly that—access to ETS's massive, battle-tested technological infrastructure and the financial resources needed to accelerate its digital rollout without compromising the security or validity of the exam.

For ETS, the driving strategic force behind the acquisition extends far beyond the high-profile battle over college admissions. While the ACT exam inevitably grabs the mainstream headlines, ETS leadership has repeatedly emphasized that the deal is heavily focused on the lucrative and growing market for career credentialing and workforce readiness. As a central component of the acquisition, ETS takes full ownership of WorkKeys, ACT's widely used and highly respected workforce skills assessment system, which evaluates foundational skills required for success in the workplace.[2]

The WorkKeys system awards the National Career Readiness Certificate, a standardized credential that thousands of major US employers currently use to evaluate the workplace competencies of job applicants. ETS CEO Amit Sevak noted that combining ETS's global reach and research capabilities with ACT's established workforce tools will help address the rapidly shifting demands of the modern labor market. As the economy is radically reshaped by artificial intelligence and automation, employers are increasingly looking for verifiable skills assessments rather than relying solely on traditional college degrees to evaluate potential hires.[2]

To that end, ETS has set a highly ambitious public goal of preparing 100 million people for the next generation of jobs. By acquiring ACT's established state and district partnerships, ETS believes it can significantly accelerate that timeline. The organization aims to move beyond traditional, one-off academic testing and build a continuous ecosystem of lifelong career credentialing. This approach is designed to make "invisible skills" visible to employers, providing workers with portable credentials that demonstrate their adaptability and technical proficiency in an unpredictable economic landscape.[2]

The merger arrives at a pivotal and highly scrutinized moment for the broader standardized testing ecosystem. During the height of the COVID-19 pandemic, a massive wave of "test-optional" policies swept through American higher education, leading many observers to predict the imminent demise of the SAT and ACT. However, after several years of analyzing student performance data, the pendulum has begun to swing back, and standardized testing is currently making a high-profile, controversial comeback across the country.[1]

Over the past year, several highly selective universities, including the Massachusetts Institute of Technology, Stanford, and the entire Ivy League, have announced a return to mandatory standardized testing for admissions by 2027. Admissions officers at these institutions have argued that test scores remain the most reliable predictor of early college success and help identify talented students from under-resourced high schools. This shifting tide guarantees a stable, long-term market for both the SAT and the newly ETS-backed ACT, ensuring their continued relevance.[1]

In the immediate term, both ETS and ACT have moved quickly to assure the public that there will be absolutely no disruptions for students currently navigating the admissions process. Scheduled test dates, score reporting timelines, and the fundamental format of the ACT exam itself will remain entirely unchanged as the two companies begin the complex process of integrating their massive operations. Students who have spent months preparing for the current iteration of the ACT can proceed with their testing plans without fear of sudden administrative overhauls.

In the long term, independent college admissions counselors expect the merger to ultimately benefit students by fostering healthy, well-funded market competition. With ETS's deep financial resources and technological expertise behind it, ACT is highly likely to offer more frequent testing dates, expanded testing sites, and a significantly smoother digital experience. By ensuring that the SAT does not achieve a functional monopoly over the future of college admissions testing, the ETS-ACT merger preserves a vital element of choice for millions of high school students.[1]