September 2017
Volume XII, Issue 3
Berkshire Partners Invests in Curriculum Associates  
Curriculum Associates, an educational publishing company that provides instructional and assessment material, received an investment from Berkshire Partners. Curriculum Associates generated $153.8 million of revenue in 2016, and had a three-year growth rate of 150%. Financial terms of the transaction were not disclosed
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Campus Management Acquires Hobsons' CRM Assets
Campus Management, and its private equity backer Leeds Equity, acquired five business lines from Hobsons including Radius, AppReview, ApplyYourself, Connect and Retain. Hobsons' reportedly sold the assets to focus on its Naviance, Intersect and Starfish business lines. Terms were not disclosed.
Absorb Software Raises $59 Million    
Absorb Software, a Canada-based developer of a learning management system for businesses, governments, and higher education institutions, raised $59 million in its first round of funding. Silversmith Capital was the round's only participant. Absorb has over 600 customers, and serves over 2.5 million learners each month
Taskstream-Tk20 Acquires LiveText
Taskstream-Tk20, an assessment management platform for educational institutions, acquired LiveText, a platform that measures student learning. In March 2017, Taskstream and Tk20 merged to form Taskstream-Tk20. Currently, Taskstream-Tk20 supports over 1,000 higher educational institutions. Financial terms of the transaction between Taskstream-Tk20 and LiveText were not disclosed
Education Brands Acquires inResonance
Education Brands, a portfolio of education-focused software and service companies, acquired inResonance, a data and web solutions provider for independent schools. Financial terms of the transaction were not disclosed
Catapult Learning Acquires Desert Heights Academy
Catapult Learning, a provider of contracted educational services for K-12 students, acquired Desert Heights Academy, a provider of special education services in Phoenix, Arizona. Over 250 students attend Desert Heights Academy, which opened in 2008. Financial terms of the transaction were not disclosed
RISE Files for IPO
RISE Education, a China-based provider of English language education, filed to go public on the NASDAQ. The company, which is currently a portfolio company of Bain Capital, could raise between $100 million to $200 million from the IPO. Last July, Bain Capital sought to sell RISE Education at a $1 billion valuation. At the end of its fiscal year on June 30, 2017, the company reported $123 million in sales. RISE Education plans to list under the symbol REDU
Kelly Services Acquires Teachers On Call
Kelly Services, a company providing workforce solutions for various industries, acquired Teachers On Call, a provider of substitute teacher staffing services for K-12 schools. Teachers On Call, which had an estimated $24.3 million of revenue in 2014, serves over 110 school districts throughout Minnesota and Wisconsin. Financial terms of the transaction were not disclosed
INVIVO Communications Acquires Spongelab Interactive
INVIVO Communications, a Canada-based provider of digital marketing and communication services for the healthcare and pharmaceutical industry, acquired Spongelab Interactive, a Canada-based developer of video games used by organizations for education and training. INVIVO Communications had estimated revenues of $9 million in 2016. Spongelab Interactive has provided 650,000 teachers and students over 10 million pieces of learning content since the company began in 2012. Financial terms of the transaction were not disclosed
Carnegie Learning Acquires Globaloria
Carnegie Learning, a supplier of textbooks and software for math curriculum, acquired Globaloria, an online learning platform targeted at teaching K-12 students computer science. Financial terms of the transaction between Carnegie Learning and Globaloria were not disclosed
One Exam Prep Enters Agreement to Acquire Contractor Exam Preps
One Exam Prep, a provider of exam preparation services and materials for contractors, entered into an agreement to acquire Contractor Exam Preps, a company that provides preparation services for the National Association of State Contractor Licensing Agencies (NASCLA) exam. One Exam Prep is a division of ProBility Media Corp. (OTCQB:PBYA), which offers career advancement services for various professions. Financial terms of the transaction were not disclosed
Piedmont International University Enters Agreement to Acquire John Wesley University 
Piedmont International University and John Wesley University announced that they will merge effective June 1, 2018. Both institutions are located in North Carolina, and offer religious-focused undergraduate and graduate courses that may be taken online or on-campus. Piedmont International University previously merged with Tennessee Temple University in May 2015. Piedmont International University's enrollment for the 2016-17 academic year was 750, while John Wesley University had 150 students in the current semester. Financial terms of the transaction were not disclosed
cPrime Acquires DevJam 
cPrime, a provider of IT management and training services, acquired DevJam, a provider of product development training and education. cPrime had revenues of $20.7 million in 2013. Financial terms of the transaction were not disclosed
Mindware Acquires Peaceable Kingdom 
Mindware, a manufacturer of educational toys for children, acquired Peaceable Kingdom, a developer of games for children that emphasize cooperation. Financial terms of the transaction were not disclosed
Maths for More Acquires Design Science 
Maths for More, a Spain-based math and science software company known for its product called WIRIS, acquired Design Science, a California-based developer of software for scientific and technical communication. Financial terms of the transaction were not disclosed.
Ravensburger AG Acquires ThinkFun 
Ravensburger AG, a Germany-based toy company, acquired ThinkFun, a Virginia-based developer of logic and STEM-based games. ThinkFun had estimated revenues of around $9 million in 2016. Financial terms of the transaction were not disclosed
Babilou Acquires The Blossom Nursery 
Babilou, France's largest private daycare provider, acquired The Blossom Nursery, a Dubai-based nursery provider. Babilou manages over 1,500 nurseries across Europe. Financial terms of the transaction were not disclosed
Guild Education Raises $21 Million 
Guild Education, an education benefits company that offers online classes and programs for working adults, raised $1 million in Series B funding. The round was led by Bessemer Venture Partners. Cowboy Ventures, Harrison Metal, Redpoint, and Social Capital also participated in the round. To date, Guild Education has raised over $31 million
Unacademy Raises $11.5 Million 
Unacademy, an India-based online learning platform that offers lessons for free, raised $11.5 million in Series B funding. The round was led by Sequoia India and SAIF Partners, with Nexus Venture Partners and Blume Ventures also participating. The company, which has raised a total of $17.5 million, has over a million registered users, and offers over 50,000 lessons
ThinkCERCA Raises $10.1 Million
ThinkCERCA, a writing platform that is designed to improve critical thinking skills in students, raised $10.1 million in Series B funding. The round was led by Scott Cook, the founder of the software company Intuit, and his wife, Signe Ostby. Other investors participated in the round, including Follett Knowledge Fund, Plum Alley Investments, and China-based TAL Education Group. ThinkCERCA has now raised $14 million, and plans to use the new funds to add 7,000 new interactive lessons to its platform. The platform is currently being used by 220 school districts across 40 states
Labster Raises $10 Million 
Labster, a Denmark-based developer of interactive 3D virtual lab simulations for high schools and colleges, raised $10 million in Series A funding, led by Balderton Capital. Northzone and David Helgason, founder of Unity Technologies, also participated. Labster currently offers 64 simulations, and plans to use a portion of the funds to create new simulations. Overall, the company has raised over $13.5 million
MissionU Raises $8.5 Million 
MissionU, a one-year educational program focused on career preparation that is marketed as an alternative to college, raised $8.5 million in Series A funding. The round was led by FirstMark Capital, and also included BoxGroup, First Round Capital, Learn Capital, University Ventures, Rethink Education, Omidyar Network, and John Doerr. The company has now raised $11.5 million in funding, and received over 4,700 applications for its first class
Piper Raises $7.6 Million 
Piper, a company that offers a computer-building kit for children, raised $7.6 million in Series A funding, which was led by Owl Ventures. Reach Capital and StartX also participated in the round. Piper's computer-building kit is used in over 750 schools throughout the world
Vemo Education Raises $7.4 Million 
Vemo Education, a company that helps educational institutions develop and implement income share agreements, raised $7.4 million in seed funding. The round was led by University Ventures and NextGen Venture Partners. Other investors included Haystack Partners, Route 66 Ventures, Task Force X Capital, and Third Kind Venture Capital. Vemo Education facilitated $23 million of income share agreements during the 2016-17 academic year Raises $7 Million, a student loan repayment assistance platform, raised $7 million in Series B funding, led by Wildcat Venture Partners. MassMutual Ventures and Mohr Davidow Ventures also participated. The company, which has now raised more than $15 million, manages more than $2 billion in student loans on its platform
Evertrue Raises $6 Million 
Evertrue, an online platform that manages fundraising for educational institutions, raised $6 million in Series C funding. The round was led by University Ventures, and also included Bain Capital Ventures. The company has now raised a total of $23.5 million, and claims to serve over 300 educational institutions
Credly Raises $4.6 Million 
Credly, a digital platform for creating and issuing credentials, raised $4.6 million in funding. The round included investments from New Markets Venture Partners, University Ventures, Lumina Foundation, City & Guilds Group, and Lion Brothers. Credly has now raised more than $7 million total since March 2016
Cybrary Raises $3.5 Million 
Cybrary, a free cybersecurity training platform, raised $3.5 million in Series A funding in a round led by Arthur Ventures. Ron Gula, the founder of Tenable Network Security, also participated in the round.  Cybrary, which has now raised a total of $5.3 million, has around 1.3 million registered users. The company plans to use the new funds to provide more courses
Classcraft Raises $2.8 Million 
Classcraft, a Quebec-based company that creates educational video games that students and teachers play in the classroom, raised $2.8 million of funding. The round was led by Toronto-based Whitecap Venture Partners, and also included Brightspark Ventures and MaRS Catalyst Fund. Classcraft's video games are used in 75 countries, including 20,000 schools in the U.S
King's Learning Raises $2.5 Million 
Kings Learning, an India-based developer of an English-language tutoring app, raised $2.5 million in funding. The round was led by the Michael & Susan Dell Foundation, and also included Village Capital. Kings Learning's mobile app, Enguru, has been downloaded nearly 2 million times
Tenka Labs Raises $2 Million 
Tenka Labs, a developer of STEM toys for children, raised $2 million in seed funding. Tenka Labs previously raised $2.1 million in February 2017. The round's investors were not disclosed
Packback Raises $1.5 Million 
Packback, a company that provides textbook rentals and an online learning platform where college students ask and answer questions, raised $1.5 million. The round was led by University Ventures, with ICG Ventures also contributing. Packback has now raised around $5 million, and expects to have over 70,000 paid student users at more than 50 campuses over the next academic year
Serent Capital Invests in ArbiterSports 
Serent Capital invested in ArbiterSports, a provider of sports management solutions for the youth sports, K-12, and higher education markets. ArbiterSports, whose majority owner is the NCAA, has been used by schools and sports leagues to make nearly 15 million assignments to over 500,000 sports officials each year. Financial terms of the transaction were not disclosed
Pro-Mech Learning Systems Announces $1.1 Million Debt Financing 
Pro-Mech Learning Systems, a provider of online technician training, announced it was raising $1.1 million of debt financing. The company previously raised $1 million in February 2016
MC Monthly Commentary:

Strategic shifts and trends can be seen in many of the stories in this month's newsletter, in all segments of the education markets we follow.

Curriculum Associates' deal with Berkshire partners is certainly eye-catching, given their incredible success with blended supplemental curriculum solutions with i-Ready. They are one of the larger success stories in PreK-12 in the last five years, having combined assessment and instruction, using print and digital tools in a way that is teacher-led.

TaskStream TK20's acquisition of LiveText is interesting not only because it brings the combined firms to over 1,000 institutions served. It shows that they (and financial backer Quad Partners) continue to move into planning, combining assessment management with tools that support and inform accreditation. Other firms, such as eLumen, have shown that customers value assessment management that integrates adjacent functionality such as curriculum and interoperability with other solutions such as an institution's LMS and SIS.

The Absorb recapitalization by Silversmith is also notable in the corporate education market. The corporate LMS market is significantly fragmented and for the most part, commoditized. But the size of the investment, and the participation of a growth-oriented private equity firm like Silversmith, indicates that the company is one to watch. 
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 = 1.0x
EV*/Revenue = 1.5x
EV*/Revenue = 1.5x
EV/EBITDA = 13.2x
EV/EBITDA = 7.2x
EV/EBITDA = 11.9x
EV/EBITDA = 13.0x
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.