July 2017
Volume XII, Issue 1
Bertelsmann Increases Stake in Penguin Random House  
Bertelsmann, a privately held German media company, increased its stake in Penguin Random House, one of the world's largest book publishers, to 75%. Bertelsmann is purchasing Pearson's 22% stake for $1 billion. The deal has Penguin Random House valued at $3.55 billion
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Duolingo Raises $25 Million
Duolingo, a language learning service with over 200 million users, raised $25 million in Series E funding led by Drive Capital. It plans to use the capital to launch new products and nearly double its headcount. Duolingo has now raised $108.3 million in funding, and is valued at $700 million
Frontline Education Acquires School Improvement Network  
Frontline Education, a software company focused on K-12 recruiting, hiring, time and attendance, and substitute management solutions, has acquired School Improvement Network, a leading professional growth provider for education. Financial terms of the transaction were not disclosed
Liulishuo Raises $100 Million
Liulishuo, a China-based company that operates English language learning mobile apps, raised $100 million in Series C funding from China Media Capital, Wu Capital, Trustbridge Partners, IDG Capital, GGV Capital, Cherubic Ventures, and Hearst Ventures. Liulishuo has more than 45 million registered users and nearly 600,000 paid users
National American University Holdings Announces Plan to Acquire Henley-Putnam University
National American University Holdings (NASDAQ:NAUH), which operates National American University, a multi-campus institution of higher learning, has announced it intends to acquire Henley-Putnam University, a for-profit online university dedicated to the professional development of military, law enforcement, and national security professionals. Henley-Putnam University had 713 students enrolled in its programs at the end of 2016. It is expected that Henley-Putnam University's programs will become part of National American University's degree offerings
Leeds Equity Partners Invests in Dalton Education and Money Education
Leeds Equity Partners, a private equity firm focused on investing in the learning and knowledge industries, has invested in Dalton Education and Cobalt Financial Solutions (d.b.a. Money Education).  Dalton Education and Money Education provide CFP education and test preparation solutions, as well as materials for investment planning and tax education. Financial terms of the transaction were not disclosed
Education Solutions Services (ESS) Acquires Source4Teachers
Education Solutions Services has acquired Source4Teachers, an education staffing firm for K-12 school districts. Source4Teachers generated an estimated $150 million in staffing revenue in 2015. Prior to the acquisition, Source4Teachers was a portfolio company of Nautic Partners, a middle-market private equity firm. Financial terms of the transaction were not disclosed
Silverback Learning Acquires EdifyAssess
Silverback Learning, a K-12 education technology company and developer of personalized learning platforms, has acquired EdifyAssess, a cloud-based enterprise platform that manages all aspects of an organization's assessment programs. Financial terms of the transaction were not disclosed
Ingram Content Group Acquires Book Network International
Nelson Publishing Acquires Edusight's Technology Assets
Nelson Publishing, a Canada-based educational publisher, has acquired the technology assets of Edusight, a provider of online learning products. This was Nelson Publishing's first purely digital acquisition. Financial terms of the transaction were not disclosed
AcademixDirect Acquires PathSource
AcademixDirect, a company that provides marketing services to help higher education institutions recruit and enroll students, has acquired PathSource. PathSource provides a range of career and resume tools, and its apps have been downloaded by nearly 1 million users. Financial terms of the transaction were not disclosed
BrightBytes Acquires Authentica Solutions
BrightBytes, a provider of learning analytics that currently impacts one in five schools in the United States, has acquired Authentica Solutions, the developer of a popular education data integration platform for K-12 schools. Authentica was a 2017 Microsoft Education Partner of the Year finalist. Financial terms of the transaction were not disclosed
ExecOnline Raises $16 Million 
ExecOnline, a provider of online leadership development programs, has raised $16 million in Series B funding. The funding was led by NewSpring Growth Capital, and also included Osage Venture Partners, New Atlantic Ventures, Kaplan, and Thomas Lehrman. ExecOnline will use the proceeds to grow its online leadership development offerings, and extend its market leadership by expanding sales and marketing
Kahoot Raises $10 Million 
Kahoot, a Norwegian company known for its game-based educational quiz platform, raised $10 million in Series A funding. The funding will come from Microsoft Ventures, Creandum, Northzone, and private investors. Kahoot has 50 million monthly active users, and will use the funds to hire new employees
NetDragon Websoft Acquires JumpStart 
NetDragon Websoft Holdings Limited (SEHK:777), a Chinese video game and internet community developer, has acquired JumpStart, a provider of educational products which specialize in educational games for K-12 students. JumpStart has over 5 million monthly active users, along with 90 million registered accounts. Financial terms of the transaction were not disclosed
Weld North Acquires Teaching Channel 
Teaching Channel, a non-profit video-based online professional learning company, has transitioned to a for-profit company. Teaching Channel has created over 1,300 classroom focused videos, and offers a SaaS-based professional development platform. Investors include Weld North and members of the management team. Financial terms of the transaction were not disclosed.
Franklin Covey Acquires Jhana Education 
Franklin Covey (NYSE:FC), a provider of organizational performance improvement services, has acquired Jhana Education, a company specializing in creating and disseminating micro-learning content and tools for leaders and managers. Franklin Covey will use the acquisition to expand its All Access Pass product, which allows users unlimited access to Franklin Covey's entire collection of content. Financial terms of the transaction were not disclosed
Certica Solutions Acquires ItemLogic 
Certica Solutions, a provider of K-12 data management software and education content solutions, has acquired ItemLogic, a business of KobellSystems. ItemLogic provides enterprise-class assessment and item content management systems. Certica will add ItemLogic's capabilities to its Certica Connect platform. Financial terms of the transaction were not disclosed
Abl Raises $7.5 Million 
Abl Schools, a company that develops time and resource management software for middle schools and high schools, raised $7.5 million in Series A funding from Rethink Education, Sinovation Ventures, Owl Ventures, Reach Capital, and First Round Capital. Since last April, Abl has raised $12 million
Ironhack Raises $3 Million 
Ironhack, a company that offers coding and programming courses, raised $3 million in funding, which was led by Madrid-based JME Venture Capital. Ironhack currently has offices in Madrid, Barcelona, Paris, and Miami, and plans to use the funding to open new coding campuses in Latin American and Europe
Learnerbly Raises £1.6 Million 
Learnerbly, a United Kingdom-based provider of professional learning tools to support employee training and development, has raised £1.6 million. The funding was led by Frontline Ventures, and also included Playfair Capital, the London Co-Investment Fund, Future Planet Capital and other United Kingdom-based angel investors
Clark Raises $2.2 Million 
Clark, which provides an online scheduling and payment tool for tutors and their clients, has raised $2.2 million in funding, led by Lightspeed Ventures. Several other investors participated, including Rethink Education, Flatworld Partners and Winkelvoss Capital
Signal Vine Raises $2 Million 
Signal Vine, an enterprise text messaging platform used by higher education institutions to communicate with students, has raised $2 million in Series A funding from New Markets Venture Partners. Signal Vine will use the funding to hire new employees and accelerate the development of its messaging platform
LoftSmart Raises $2.75 Million 
LoftSmart, an online marketplace and review system for student rentals in college towns, has raised $1.7 million in funding. The funding was led by Tribeca Venture Partners
PeopleGrove Raises $1.8 Million 
PeopleGrove, the creator of an online mentorship platform for students and working professionals, has raised $1.8 million in funding. The funding was led by Reach Capital, and also included Bisk Ventures, Collaborative Fund, Floodgate, GSV, Launch Capital, RiverPark Ventures, and University Ventures. The company will use the capital to expand its team of engineers and increase its outreach to universities and students
Vidcode Raises $1.5 Million 
Vidcode, a startup focused on teaching teenagers how to code, has raised $1.5 million in funding from BrainPOP, ZhenFund, Rethink Education, NYU Ventures, CoVenture, Evan Korth Syndicate, Stephano Kim, and Cherry Ventures. Vidcode plans to use the new funds to enter into strategic partnerships to extend sales and expand its curriculum
Escape Technology Receives Investment from Alpine Investors 
Alpine Investors, a software and services focused private equity firm, has invested in Escape Technology, a provider of ERP software for K-12 schools in California. Financial terms of the transaction were not disclosed
Byju's Receives Investment from Tencent 
Byju's, a provider of online video lessons and interactive activities for students, has received an investment from China-based Tencent Holdings. Byju's plans to use the funds to accelerate product development for new markets and aid inorganic growth through acquisitions. Byju's has 9 million users registered on its platform, and had previously raised $50 million in September 2016. Financial terms of the transaction were not disclosed
Inspired Receives Investment from TA Associates 
Inspired, an independent group of schools in Europe, Africa, Latin America, and Australia, has received an investment from TA Associates. Inspired operates more than 30 schools and educates 19,000 children around the world. Financial terms of the transaction were not disclosed
BARBRI Acquires iLawVentures 
BARBRI, a legal education provider, has acquired iLawVentures, a provider of online J.D. and post-J.D. programs for United States law schools. Financial terms of the transaction were not disclosed
Driving Dynamics Recapitalization 
Driving Dynamics, a provider of driver safety training for fleet-based organizations in North America, has been acquired by its CEO, Art Liggio, and Delancey Street Capital Partners. Financial terms of the transaction were not disclosed
MC Monthly Commentary:

Readers who follow our monthly comparison of the EFP 50 to the S&P 500, have surely noticed the former's surge in the past few months, after several years of tracking or lagging the broader index. For the most part, this is due to the resurgence of the Postsecondary segment, specifically the For-Profit Colleges.
Correspondingly, we expect to see more M&A activity with Postsecondary schools in the coming 6-12 months. National University's acquisition of Henley-Putnam above is a great example. Valuations are up mainly due to the new administration in Washington D.C., which has led to changes in regulatory pressure, making it easier for for-profit colleges to do business. Although the segment still struggles from lower enrollments and negative perceptions, many good programs exist providing tangible benefits to students. Many of those programs are likely to test the market now, given improved valuations and what could turn out to only have been a temporary reprieve from onerous regulations. Whether it is temporary remains to be seen, but our conversations in the past few months indicate that there is pent-up demand to sell.
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 = 1.6x
EV*/Revenue = 0.9x
EV*/Revenue = 1.3x
EV*/Revenue = 1.5x
EV/EBITDA = 10.8x
EV/EBITDA = 6.3x
EV/EBITDA = 9.7x
EV/EBITDA = 11.5x
3-Yr Rev Gr = 1.0%
3-Yr Rev Gr = -3.0%
3-Yr Rev Gr = 4.2%
3-Yr Rev Gr = 0.8%
EBIT Margin = 12.9%
EBIT Margin = 6.9%
EBIT Margin = 4.6%
EBIT Margin = 5.5%

* 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.