The Great Consolidation: ETS Acquires ACT in Landmark Shift for Standardized Testing
In a move that marks the most significant transformation in the history of American educational assessment, Educational Testing Service (ETS) announced Tuesday that it has officially acquired ACT, the nonprofit organization behind the eponymous standardized college admissions exam. This acquisition, which sees the former fiercest rivals in the high-stakes testing arena joining forces, follows a period of profound turbulence for both institutions as they struggle to adapt to a rapidly shifting landscape in higher education and workforce development.
The terms of the acquisition from the private equity firm Nexus Capital Management remain undisclosed. However, the deal represents more than just a change in ownership; it signals a fundamental pivot for two legacy organizations that once dominated the college admissions pipeline, now pivoting toward a future defined by skills-based credentialing and lifelong learning.
A Chronology of Decline and Reinvention
To understand the weight of this acquisition, one must look at the trajectory of both organizations over the last decade. For years, the SAT and ACT served as the twin pillars of American meritocracy, functioning as the primary gatekeepers to higher education.
The Pandemic Turning Point
The COVID-19 pandemic served as a catalyst for a movement that had been brewing for years: test-optional admissions. As testing centers shuttered in 2020, colleges and universities across the United States suspended their requirements for standardized test scores. What began as a temporary emergency measure evolved into a permanent institutional strategy. By the 2026 admissions cycle, fewer than 10 percent of bachelor’s degree-granting institutions required applicants to submit ACT or SAT scores, according to data from FairTest.
The ACT’s Struggle
The decline in test-takers has been sharp. In 2019, 1.78 million students took the ACT; by 2025, that number had plummeted to 1.38 million. This sustained attrition forced the ACT to execute significant cost-cutting measures, including the layoff of over 100 employees in 2023. The organization’s subsequent sale to the private equity firm Nexus Capital Management in 2024 was framed as a strategic necessity to pivot away from a reliance on college admissions testing toward broader career-readiness tools.
The ETS Reckoning
ETS has faced its own existential threats. Two years ago, the organization lost its long-standing contract to administer the SAT for the College Board—a massive blow to its primary revenue stream. Like its rival, ETS has undergone multiple rounds of layoffs since 2019. Reports surfaced in early 2026 that the organization was exploring a sale of its legacy crown jewels: the Graduate Record Examination (GRE) and the Test of English as a Foreign Language (TOEFL). While no such sale has materialized, the intent to shed these assets underscores a company looking to divest from legacy products in favor of new ventures.
Supporting Data: The Shrinking Admissions Market
The data paints a clear picture of an industry in retreat. The decline in participation is not merely a cyclical fluctuation but a structural shift.
- Participation Gap: The 22% drop in ACT participation between 2019 and 2025 highlights the erosion of the "universal" testing model.
- The "Test-Optional" Reality: With over 90% of colleges no longer mandating scores, the utility of the traditional test as a sole arbiter of student potential has been largely decoupled from the admissions process.
- Diversified Revenue Streams: ACT’s move to emphasize the ACT WorkKeys system and the National Career Readiness Certificate indicates a transition toward the $20 billion workforce assessment market. In 2025, while only 36% of high school graduates took the traditional ACT exam, the organization’s workforce development tools saw increased interest from corporate partners seeking to quantify "soft skills" and workplace competencies.
Official Responses: Aligning Missions
The rhetoric surrounding the acquisition emphasizes "readiness" over "admissions." By shifting the focus from university entry to job placement, both CEOs suggest they are attempting to make their organizations indispensable in an era of economic uncertainty.
“Every student deserves a strong education, a fair shot at college, and a path to a good job,” said Amit Sevak, CEO of ETS, in a statement released Tuesday. “Together with ACT, we’re determined to serve students and parents along with educators and states by expanding access to education and job opportunities across America.”
Steve Tapp, CEO of ACT, echoed this sentiment, framing the acquisition as a necessary evolution for survival and scale. “Becoming part of ETS will allow us to take what we’ve built and scale it within a broader vision for readiness,” Tapp said. “Joining ETS gives us the platform to fulfill our mission at a scale we couldn’t reach alone. This is about more students getting the guidance they deserve, and more of them finding their way forward with confidence.”
Implications: The Rise of the "Skills-Based Transcript"
The merger of ETS and ACT is not merely a defensive maneuver; it is an aggressive move into the burgeoning sector of "skills-based credentialing." As the traditional degree faces skepticism regarding its value, employers are increasingly seeking granular data on prospective hires.
A Shift Toward Holistic Assessment
Michael Nettles, a professor of psychometrics at Morgan State University and a former chair of policy evaluation and research at ETS, views the acquisition as a response to a clear market signal. “The SAT and ACT scores can be useful because they may tell us something generally about candidates,” Nettles told Inside Higher Ed. “But colleges, universities and employers want to know more information about candidates—their commitment to learn and how they learn—that will help make decisions in matching people with places.”
FutureNav and the AI Era
ETS has already begun building the infrastructure for this new model. Last year’s launch of FutureNav Compass is telling; it moves away from multiple-choice testing and toward the evaluation of "soft skills" like communication, resilience, and collaboration. By producing a "skills-based transcript," ETS aims to provide a more nuanced profile of a candidate than a single composite score ever could.
Furthermore, ETS’s involvement with the forthcoming Khan TED Institute—which aims to launch an AI-focused degree—suggests a future where assessment is integrated directly into the learning experience rather than occurring as a one-off event. By controlling both the ACT and its own suite of future-focused assessments, ETS is positioning itself to be the primary arbiter of what constitutes "competence" in the modern economy.
Conclusion: A New Monopoly or a Necessary Evolution?
The consolidation of the testing market into a single, massive entity brings with it significant questions. Will the merger stifle innovation, or will it create the economies of scale necessary to build the next generation of assessment tools?
For the student of the 2030s, the "college admissions test" may look nothing like the paper-and-pencil Scantron tests of the past. It may instead be a continuous, AI-driven feedback loop that tracks the development of skills from secondary school through to the workforce.
While the merger may be driven by the decline of legacy testing, the ultimate ambition of ETS and ACT is to remain relevant in a world that is increasingly skeptical of traditional credentials. Whether this marriage of two former rivals succeeds in creating a new, more equitable system of "readiness," or simply preserves a fading model under a new corporate umbrella, remains the defining question of the next decade in American education.
