March 2017
Volume XI, Issue 9
Creative Learning Systems Acquired by Brass Ring Capital 
Creative Learning Systems, the leading provider of STEM and digital media programs for elementary, middle, and high schools, has sold a majority equity interest to Brass Ring Capital, a Minnesota-based private equity firm. Creative Learning Systems' primary product, SmartLabs, helps schools engage K-12 students in STEM and media arts subjects through applied technology and project-based learning. Terms of the deal were not disclosed.

Cherry Tree served as exclusive investment banking advisor to Creative Learning Systems in this transaction 
Barnes & Noble Education Acquires MBS Textbook Exchange
Barnes & Noble Education (NYSE:BNED), an operator of college and university bookstores across the country, has acquired MBS Textbook Exchange for $174.2 million (0.3x EV/Rev., 3.2x EV/EBITDA). MBS Textbook Exchange is a wholesale distributor of textbooks to college and university bookstores. The combined company will serve nearly 1,500 campus bookstores, and more than 6 million higher education students
Excelligence Learning Corporation Acquires ChildCare Education Institute
Excelligence Learning Corporation, a provider of educational tools and solutions for childhood education and elementary teachers and parents, has acquired ChildCare Education Institute. ChildCare Education Institute provides online training and certificates, child care registry development, and administrative solutions for the early care and education industry. This marks Excelligence Learning's second acquisition (Really Good Stuff in January 2016) since being acquired by Brentwood Associates in 2015
TaskStream Agrees to Merge with Tk20  
Tk20 and Tasktream, both assessment management solutions providers in the higher education market, have agreed to merge. The combined company will be the largest player in the industry, servicing nearly 1,000 higher education institutions internationally. Terms of the deal were not disclosed
Business & Legal Resources Acquires Navis Learning
Business & Legal Resources, a developer of compliance and training solutions for a variety of industries, has acquires Navis Learning, a provider of custom learning and development solutions. Navis Learning is well-known for its award-winning program, D2D methodology, which helps design custom training solutions tailored to each organization. Terms of the deal were not disclosed
MasterClass Raises $35 Million
MasterClass, an online education platform for vocational classes, has raised $35 million in its Series C funding round led by Institutional Venture Partners with participation from New Enterprise Associates, Javelin Venture Partners, and others. The company offers online classes taught by celebrities, such as Aaron Sorkin, James Patterson, and Steve Martin. The company plans to use the proceeds to add more classes and hire more employees
MakeBlock Raises $30 Million
MakeBlock, a Chinese manufacturer of education robots, has raised $30 million in its Series B funding round led by Shenzhen Capital Group and Evolution Media Capital. Founded in 2011, the company had previously raised a total of $6 million. MakeBlock has expanded into more than 140 countries and over 20,000 schools and educational organizations in its short history. The company plans to use the proceeds for product development and expansion into new markets
Edlio Acquires Sangha
Edlio, an L Squared Capital Partners portfolio company and content management system provider, has acquired Sangha,  provider of a mobile communication platform for parents, teachers, and administrators. Edlio raised $40 million from L Squared Capital Partners in October 2016 with the pursuit of potential strategic acquisitions in mind.  Terms of the deal were not disclosed
Nearpod Raises $21 Million
Nearpod has raised $21 million in its Series B funding round led by Insight Venture Partners with participation from GSV Acceleration, Reach Capital, Krillion Ventures, and others. Nearpod provides a mobile classroom platform that offers educational software and content. The company aims to enhance the classroom and learning experience through mobile devices. Nearpod plans to use the funding for hiring and digital content development
Examity Raises $21 Million
Examity, a provider of online secure proctoring services for educational institutions, has raised $21 million in a round of funding from University Ventures and Inherent Group. Examity had approximately $10 million of revenue in 2016 and was profitable. The company generated its revenue from a customer base of more than 150 institutions, including Michigan State University and Yale University. With its new funds and revenue increasing, Examity plans to increase hiring within the near future
WayUp Raises $18.5 Million
WayUp, operator of an online portal that helps students find jobs and internships, has raised $18.5 million in its Series B funding round led by Trinity Ventures with participation from Index Ventures, General Catalyst Partners, SV Angel, and others. More than 12,000 startups, local businesses, and Fortune 500 companies have hired on WayUp, according to the company. WayUp plans to use the proceeds to hire engineers and develop the portal's machine learning capabilities
Valencia Capital Acquires The Dawson Academy
Valencia Capital, a Florida-based private equity firm, has acquired The Dawson Academy, a provider of post-graduate dental education courses. The Dawson Academy offers both in-person lectures and workshops, and online courses to dental professionals. The company's customer base spans all 50 states, as well as internationally to 40 countries. Terms of the deal were not disclosed
Education Brands Acquires Ravenna Solutions
Education Brands, a developer of educational software, has acquired Ravenna Solutions, a provider of admissions CRM solutions for K-12 private schools. Education Brands will now focus its attention on filling out its software solutions portfolio for K-12 schools. The company intends to eventually offer solutions in the following areas: admissions, tuition management, enrollment, student management system, and other administrative areas. Terms of the deal were not disclosed
Voxy Raises $12 Million 
Voxy, provider of a personalized English language learning platform, has raised $12 million in a round of funding led by SJF Ventures with participation from Inherent Group, Rethink Education, and others. The company's customer base includes both educational institutions and businesses. Voxy claims that more than 4 million people in over 150 countries have used its platform. The company plans to use the proceeds for product development in order to expand into emerging markets
CampusLogic Raises $10 Million 
CampusLogic, a student financial aid engagement platform provider, has raised $10 million in its Series B funding round led by 4.0 Partners. The round of funding follows CampusLogic's acquisition of Cegment, a provider of student financial aid assessment products, in February 2017. Terms of the deal were not disclosed
Transition Capital Partners Acquires Hayes Software Systems 
Transition Capital Partners, a Dallas-based private equity firm, has acquired Hayes Software, a provider of inventory control solutions for K-12 schools. Hayes Software Systems' solutions track and manage instructional technology, facilities, and capital inventory items through its school asset management and textbook inventory management SaaS. The company serves 31 of the largest 100 school districts in the U.S. Terms of the deal were not disclosed
Kiddom Raises $6.5 Million 
Kiddom, designer and developer of a visual collaborative platform for K-12 classrooms, has raised $6.5 million in a round of funding from Khosla Ventures. The platform helps teachers plan curriculum, assess work, analyze reports, and personalize instruction. It also provides a dashboard for students to access and submit work, check grades, and ask questions. The company plans to use the proceeds for product development in order to create an operating system for K-12 education
The National Research Center for College & University Admissions Acquires Admittedly 
The National Research Center for College & University Admissions (NRCCUA®) has acquired Admittedly, an online provider of college advisory services. NRCCUA® also recently acquired Eduventures, a provider of primary research, analysis, and advisory services for higher education institutions, in September 2016. Terms of the deal were not disclosed
Pear Deck Raises $4 Million 
Pear Deck, provider of classroom engagement SaaS for K-12 schools, has raised $4 million in its Series A funding round led by Growth Street Partners with participation from Village Capital, Hyde Park Venture Partners, and others. Pear Deck's platform allows teachers to create synchronized, interactive presentations to drive real-time responses and assessment in the classroom. Founded in 2014, the company has already expanded into more than 40 states
Motimatic Raises $3.4 Million 
Motimatic, provider of an automated motivational support system, has raised $3.4 million in its Series A funding round led by University Ventures and New Markets Venture Partners with participation from GSV Acceleration, Jefferson Education Accelerator, and others. In the education market, Motimatic works with higher education institutions to help inspire students by sending personalized motivational messages. The company also serves the health, insurance, and financial services sectors
The University of Fredericton Acquires Don Sayers And Associates 
The University of Fredericton, a Canadian higher education institution, has acquired Don Sayers and Associates, a provider of professional training and development services, for approximately $3.8 million. The University of Fredericton pursued the acquisition in hopes of growing its occupational health and safety programs. Terms of the deal were not disclosed
CIBT Education Group Agrees to Acquire KGIC Assets 
CIBT Education Group (TSX:MBA), a Canadian higher education provider, has agreed to substantially acquire all of the assets of KGIC, formerly known as Loyalist Group. CIBT Education Group had previously acquired KGIC in March 2010, but then sold it to Loyalist Group for $12.8 million in September 2013. KGIC assets are comprised of 18 campuses located across British Colombia and Ontario
MC Monthly Commentary:

One of the most likely areas for attractive investment returns in Postsecondary is in providing better value. Ever escalating tuition costs are making the price less accessible to learners, while the increasing tide of student loan debt defaults may eventually cause a taxpayer revolt.

Innovators in postsecondary value include those offering lower priced programs (including all-you-can-eat options and those offering competency based degrees), programs addressing high demand and high paying careers (including coding schools and nursing programs), and those who help guarantee higher paying job placement (increasingly by offering tuition refund guarantees). Technology platforms that promise to increase learner persistence and student engagement have potential as well, if they can consistently demonstrate improved outcomes.

Not every parent or student will concern themselves first with whether their degree will prepare them for a financially rewarding career. And of course, there is "value" as well in a liberal arts education, in preparing one for life. But despite the growth of large state colleges, we see also the decline of small liberal arts colleges. There is no doubt that those who help drive improved value delivery stand to benefit. Unfortunately, others seek prescriptions that will make postsecondary problems worse (see calls for "free" college and ever greater student loan debt forgiveness).

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 = 1.7x
EV*/Revenue = 0.9x
EV*/Revenue = 1.3x
EV*/Revenue = 1.5x
EV/EBITDA = 11.9x
EV/EBITDA = 7.1x
EV/EBITDA = 12.1x
EV/EBITDA = 11.0x
3-Yr Rev Gr = 0.7%
3-Yr Rev Gr = -2.3%
3-Yr Rev Gr = 5.0%
3-Yr Rev Gr = 0.2%
EBIT Margin = 12.9%
EBIT Margin = 7.1%
EBIT Margin = 6.4%
EBIT Margin = 2.8%

* EV= Enterprise Value

> back to top
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.