Cherry Tree & Associates | January 2018 | Volume XII, Issue 7
Shutterfly Agrees to Acquire Lifetouch

Shutterfly, an online digital photo retailer, agreed to acquire Lifetouch, a school photo company, for $825 million. In 2017, Lifetouch had $964 million of revenue. The transaction is expected to close in the second quarter of 2018.

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ASSIST Agrees to Acquire Advantages School International

ASSIST, an integrated K-12 education management system, agreed to acquire Advantages School International, a fully accredited online high school curriculum. Advantages School International offers over 400 courses. Terms not disclosed.

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National-Louis University Agrees to Acquire Kendall College

Kendall College, a for-profit school, and its owner Laureate Education (Nasdaq:LAUR), agreed to transfer Kendall’s programs to National-Louis University, a private non-profit American university, for $1. Kendall had $24.2 million of revenue in 2017.

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Jumpstart World Acquires Sokikom

Jumpstart World, a subsidiary of NetDragon WebSoft (SEHK:777) that provides educational video games for kids, acquired Sokikom, an online math-based game. Terms were not disclosed.

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LivingTree Acquires Edbacker

LivingTree, a private social network for schools, acquired Edbacker, an online fundraising and membership management platform. Terms were not disclosed.

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Asteria Education Acquires ECS Learning

Asteria Education acquired ECS Learning, a publisher of test preparation materials. Business Capital provided $4 million to Asteria Education to finance the transaction. Asteria Education is owned by AAVIN Private Equity Advisors.
Ellevation Raises $10 Million

Ellevation, an English language learning platform, raised $10 million. The Series B round was led by Reach Capital, and also included the Chan Zuckerberg Initiative, Omidyar Network, and Emerson Collective.

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Lambda School Raises $4 Million

Lambda School, a San Francisco coding bootcamp, raised $4 million in a seed round. Y Combinator and Tandem Capital participated in the round.
Wonderschool Raises $2.1 Million

Wonderschool, a network of in-home daycares and preschools, raised $2.1 million in a round led by Omidyar Network. The round also included Be Curious Partners, Rethink Education, Edelweiss Partners and Learn Capital.

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TeacherGaming Raises $1.6 Million

TeacherGaming, a Finland-based company that provides educational games to classrooms, raised $1.6 million. The seed round was led by Makers Fund.

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Silver Lake to Buy Majority Stake in Weld North Education

Silver Lake, a private equity firm, agreed to buy a majority stake in Weld North Education, a provider of digital curriculum and tools for pre-K-12 schools, from KKR. Terms were not disclosed.
Intermediate Capital Group Acquires PSB Academy

Intermediate Capital Group (LSE:ICP), a London-based private equity firm, acquired PSB Academy, a private school in Singapore, from Baring Private Equity Asia. PSB Academy’s current enrollment is 12,000 students. Terms were not disclosed.

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Saw Mill Capital Partners Acquires MeTEOR Education

Saw Mill Capital Partners, a New York private equity firm, acquired MeTEOR Education, a provider of learning spaces and interior design services for education providers, from Hudson Ferry Capital. Terms were not disclosed.

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Centre Lane Partners Acquires Infobase

Centre Lane Partners, a New York-based private equity firm, acquired Infobase, a cloud-based provider of educational content solutions, from VSS, a private equity firm. Terms were not disclosed.

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Brainly Acquires Bask

Brainly, a peer-to-peer learning platform for students and educators, acquired Bask, a video learning platform that allows teacher-produced video content to be integrated into various learning management systems. Terms were not disclosed.

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Sequel Youth and Family Acquires Rebecca School and Aaron School

Sequel Youth and Family, a provider of behavioral health programs backed by Altamont Capital Management, acquired Rebecca School and Aaron School, both special needs schools, from MetSchools. Terms were not disclosed.
Pearson Agrees to Sell Stake in Utel

An undisclosed buyer agreed to acquire a 44.75% stake in Utel, a Mexican online university, from Pearson (LSE:PSON). The transaction is expected to close in the first half of 2018
Thinkful Raises $9.6 Million

Thinkful, an online coding school, raised $9.6 million in a Series A round led by Owl Ventures. Tribeca Ventures also participated in the round. Thinkful acquired Viking Code School and The Odin Project last December.

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LearnPlatform Raises $3.2 Million

LearnPlatform, a provider of software that allows educators to make data-driven decisions, raised $3.2 million. The Series A round was led by New Markets Venture Partners and Emerson Collective.

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ParentPowered Raises $2.65 Million

ParentPowered, a text messaging platform for parents, raised $2.65 million in a seed round led by Omidyar Network. Valhalla Charitable Foundation, The Richard E. and Nancy P. Marriott Foundation and Heising-Simons Foundation also participated.
Degree Analytics Raises $1 Million

Degree Analytics, a startup that uses predictive analytics to increase college graduation rates, raised $1 million in a seed round. Investors included Rick Dalzell (formerly Amazon), David Palumbo (SoftMatch), and Larry Benz (Confluent Health).

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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.
* EV= Enterprise Value
In the past two months there has been news that both houses of congress are working on an update to the Higher Education Act which would make significant changes to higher ed. Initial reports are that the Senate is taking a bi-partisan approach while the House is pushing a plan largely along party lines. 

It is too early to say what any bill would look like that could pass both houses and get signed into law, but initial themes that have sometimes had bipartisan support include streamline the federal aid forms and program management, and penalizing specific schools if they have a high level of students that are unable to pay back their loans. There has also been talk of capping student loans and limiting debt forgiveness, while increasing funding to community colleges and expanding opportunities for shorter pathways from education to the workforce.

Count us as optimistic. The impact of these potential changes, and the opportunity for both non-profit and for-profit schools, are significant. Even if some of the changes are difficult. For example we’ve long believed that federal subsidies for Masters and PhD programs are a driver of increasingly unaffordable tuition plans and the explosion in student loan debt, as institutions graduate students far in excess of the number of jobs requiring the degrees. And expanding opportunities for shorter pathways to degrees has the potential to significantly benefit individuals and the companies who need skilled workers.

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 Chad Johnson.

Prepared by:
Chad Johnson, Managing Director | 952.253.6010

Cherry Tree & Associates is a private investment banking firm headquartered in Minneapolis. Our firm specializes in serving middle market companies and their owners, whether private, public, or divisions of larger corporations.
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.