August 2017
Volume XII, Issue 2
Vista Equity to Purchase The Advisory Board Company's Education Business  
The Advisory Board Company (NASDAQ: ABCO) has agreed to sell its education business to Vista Equity Partners for $1.55 billion. The education business includes Royall & Company, which provides data driven student engagement and enrollment management solutions for higher education institutions. Royall & Company was initially acquired by The Advisory Board Company in December 2014 for $850 million, at a time when Royall & Company was generating $109 million in revenue
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Frontline Education Acquired by Thoma Bravo
Thoma Bravo, a San Francisco-based private equity firm that manages $17 billion of equity, acquired Frontline Education, a HR software services provider focused on serving educational organizations. While financial terms of the transaction were not disclosed, sources say the company was valued well above a billion dollars
Pearson Sells GEDU to Puxin Education    
Pearson (UK:PSON) sold GEDU, a provider of English language education for Chinese students looking to study abroad, to Puxin Education, a China-based tutoring and test preparation company. Pearson is expected to receive $80 million from the sale. In 2016, GEDU generated £78 million in revenue, and served over 64,000 students
Barnes & Noble Education Acquires Student Brands
Barnes & Noble Education (NYSE: BNED), a provider of educational products and services for universities and K-12 schools, acquired Student Brands, an educational technology company that offers direct-to-student services focused on improving writing skills, for $58.5 million in cash. Student Brands has over 20 million unique monthly users
Impero Software Acquired by Investcorp
Investcorp Technology Partners, a European technology investment fund, acquired Impero, a U.K.-based company that provides monitoring and management software used by schools. The size of the transaction was £27.5 million, or $36.3 million. Impero has around $10 million in revenue, and is used by more than 1,400 schools in the U.K., and over 500 school districts in the U.S
School Specialty to Acquire Triumph Learning
School Specialty, a distributor of educational materials, has agreed to acquire Triumph Learning, a provider of K-12 instructional materials. Triumph Learning, whose products reach over 6 million students and 400,000 teachers, reported $25 million revenue in 2016. Financial terms of the transaction were not disclosed
Elsevier Acquires Bepress
Elsevier, an information and analytics company specializing in science and medicine, acquired Bepress, a company whose platform helps universities showcase their faculty's academic research and publications. Bepress has an estimated $6.2 million in revenues, and provides over 2 million articles on its platform. Financial terms of the transaction were not disclosed
Activate Learning Acquires IT'S ABOUT TIME
Activate Learning, a provider of K-8 science curriculum, acquired IT'S ABOUT TIME, a provider of research-based STEM curriculum for K-12 and university students. Financial terms of the transaction were not disclosed
Echo360 Acquires Astute Technology
Echo360, an educational video and active learning platform, acquired Astute Technology, a virtual meeting platform that also offers online testing and certification. To date, Astute Technology's platform has issued over 3 million continuing education certificates. Financial terms of the transaction were not disclosed
Harris School Solutions Acquires JR3
Harris School Solutions, a company providing educational software for K-12 schools, charter schools, and continuing education programs, acquired JR3, a provider of educational management systems for school districts. Financial terms of the transaction were not disclosed
Lingo Media Still in Process of Acquiring Vested Finance
Lingo Media (OTCMKTS: LMDCF), a developer of English language learning products, is still in the process of acquiring Vested Finance, a company known for its college marketplace app called Schoold. The parties agreed to extend the terms of their prior letter of intent while they continue working towards a definitive agreement for the transaction that was announced last March
Palamon Capital Partners Buys Stake in Business School24 
Palamon Capital Partners, a London-based private equity firm, acquired a 49% stake of Business School24, the education and training unit of the fourth bestselling Italian newspaper. The transaction valued Business School24 at €80 million
Great Yarmouth College and Lowestoft College Merge to Form East Coast College 
Great Yarmouth College and Lowestoft College, both U.K.-based higher education institutions, merged to create East Coast College. The newly formed college will hold classes at both the Great Yarmouth site and the Lowestoft location. Financial terms of the merger were not disclosed
Prodigy Finance Raises $240 Million 
Prodigy Finance, a provider of student loans to international students, raised $40 million in Series C funding led by Index Ventures. Balderton Capital and AlphaCode also participated in the funding. The U.K.-based company also obtained $200 million in debt from an unnamed investment bank. Prodigy Finance has delivered over $325 million in loans to more than 7,000 students
VIPKID Raises $200 Million 
VIPKID, a China-based company that offers an online English teaching tool, raised $200 million in Series D funding. The round, which valued VIPKID at $1.5 billion, was led by Sequoia Capital and Tencent Holdings. VIPKID had previously raised $100 million in August 2016.
Zuoyebang Raises $150 Million 
Zuoyebang, a China-based developer of a mobile study platform that helps students with homework, raised $150 million in Series C funding. The round was led by the Chinese venture capital firm H Capital, and also included Sequoia Capital, Legend Capital, Granite Global Ventures and Xianghe Capital. Zuoyebang, which has 60 million active users each month, has now raised $235 million
Hustle Raises $8 Million 
Hustle, a "personalized" mass text-messaging platform, raised $8 million of Series A funding from Social Capital. Founded in 2014, Hustle generated $3 million in revenue in its first year, and has raised $11 million since November 2016. The text-messaging platform was used by several candidates and organizations in the 2016 U.S. presidential election to obtain donations
A Cloud Guru Raises $7 Million 
A Cloud Guru, a U.K.-based online training platform for cloud computing, raised $7 million in Series A funding from Elephant Venture Capital. A Cloud Guru currently has 250,000 students in 160 countries, and hopes to enroll one million students over the next year
Sawyer Raises $6 Million 
Sawyer, a software company that connects parents and providers of supplemental education for children, raised $6 million in funding led by Advance Venture Partners. Other investors include the Chan Zuckerberg Initiative, 3311 Ventures, Collaborative Fund, and Female Founders Fund, among others. Sawyer's platform currently hosts providers across 15 states, and lists over 10,000 classes each month
Tinkergarten Raises $5.4 Million
Tinkergarten, a provider of outdoor early childhood education, raised $5.4 million in Series A funding. The round was led by Owl Ventures, with Omidyar Network and Reach Capital also participating. In total, Tinkergarten has raised $8.3 million, but has yet to generate enough revenue to break even
Lightneer Raises $5 Million 
Lightneer, a Finland-based educational gaming studio, raised $5 million in seed funding. The round was led by GSV Acceleration, and also included Brighteye Ventures, IPR VC, and Reach Capital
Verso Learning Raises $2 Million 
Verso Learning, a professional development platform used by educators to make data informed decisions while teaching, raised $2 million in Series A funding, which was led by Ken Lowe of Canberra Data Centers. The Australia-based company, whose platform is used by more than 12,000 schools in over 100 countries, plans to use the money to expand its operations in the U.S
SVAcademy Raises $2 Million 
SVAcademy, which provides professional training to underrepresented youth seeking tech jobs, raised $2 million in funding. The round was led by Bloomberg Beta, and also included Rethink Education, Precursor Ventures, Uprising Ventures, 500 Startups, and WTI
Southwest Foodservice Excellence Receives Investment from Harkness Capital 
Southwest Foodservice Excellence, a outsource foodservice provider for K-12 schools, received an investment from Harkness Capital.  The company, which operates in 11 states and serves over 80 million meals annually, has around $125 million of revenue. Financial terms of the investment were not disclosed
Teaching Channel Converts to a For-Profit Company 
Teaching Channel, a video-based online professional learning company, announced that it has transitioned from a non-profit company to a for-profit company. Teaching Channel offers over 1,300 learning videos, and has over a million registered users. The company has around $5 million in revenue
MC Monthly Commentary:

Venture Capital continues at a strong pace, albeit off slightly from recent periods. Cherry Tree proprietary research on venture capital activity in education segments reveals that there are fewer, but larger deals happening, in a variety of segments.
When comparing the first half of 2017 to 2016, total venture capital activity in the sectors and of the types we follow (investments of more than $1.2 million, in pre-K-12, postsecondary, or corporate learning) decreased only 5% in dollar terms, but with more than 30% fewer transactions. The average size increased nearly 37%, indicating that investments are centering in later stage financings.
From a sector standpoint, one of the factors skewing the increase in deal size is a significant increase in deals in China. And globally, significant money continues to flow into English Language Learning companies, especially in China and India.  Other sectors receiving larger inflows include Science and STEM related products and solutions that increase student engagement, adaptive solutions and learning management systems that offer greater personalization of instruction, and platforms focused on tutoring and mentoring. Similar to last year, in the first half of 2017 there were roughly an equal number of pre-K-12 and postsecondary transactions, while corporate learning saw half as many. 
For a confidential conversation about your company's strategic alternatives for exiting, merging, acquiring, or obtaining venture financing, and how trends in education affect your prospects, please contact us at 952-893-9012.
Education For-Profit 50 Index
For-profit education comprises more than 5% of the roughly $1.3 trillion that is spent on education in the U.S. annually. Cherry Tree created the Education For-Profit 50 Index representing a group of publicly traded for-profit education companies .
The For-Profit Education 50 Index consists of companies in the Pre-K-12, Postsecondary Education, Training and Development, and Education Products and Services segments for-profit education industry.

Postsecondary Education
Training  and Development
Education Products and Services Providers
EV*/Revenue = 1.5x
EV*/Revenue = 0.9x
EV*/Revenue = 1.2x
EV*/Revenue = 1.4x
EV/EBITDA = 11.3x
EV/EBITDA = 7.2x
EV/EBITDA = 11.2x
EV/EBITDA = 12.3x
3-Yr Rev Gr = 2.8%
3-Yr Rev Gr = -3.0%
3-Yr Rev Gr = 1.9%
3-Yr Rev Gr = 1.0%
EBIT Margin = 13.0%
EBIT Margin = 6.8%
EBIT Margin = 4.6%
EBIT Margin = 5.9%

* EV= Enterprise Value

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Important Disclosures
The information included in this publication has been obtained from public sources, and is not based upon private or confidential Cherry Tree information. Cherry Tree gathers its data from sources it considers reliable. However, it does not guarantee the accuracy or completeness of the information provided within this publication. Any opinions presented reflect the current judgment of the authors and are subject to change. Cherry Tree makes no warranties, expressed or implied, regarding the accuracy of this information or any opinions expressed by the authors. Officers, directors, partners of Cherry Tree and Cherry Tree proprietary investment funds may have positions in the securities of the companies discussed, and certain affiliates of Cherry Tree may recommend to specific clients the purchase and sale of securities discussed in the publication.  This publication does not constitute a recommendation with respect to the securities of any company discussed herein, and it should not be construed as such. Cherry Tree or its affiliates may from time to time provide investment banking or related services to these companies. Like all Cherry Tree employees, the authors of this publication receive compensation that is affected by overall firm profitability. We undertake no obligation to update any information in this publication. 

The Education For-Profit (EFP) 50 Index is a hypothetical index, and does not reflect an actual investment portfolio.  Comparisons between the EFP 50 Index and the S&P 500 are for illustrative purposes only.  Correlations in performance information for the EFP 50 Index and the S&P 500 should not be relied upon as indicative of risks involved in owning or holding a portfolio of securities similar to the EFP 50 Index. Past performance should not be relied upon as indicative of future performance.