Cherry Tree & Associates | January 2020 | Volume XIV, Issue 7
SELECTED NEWS
K12 Acquires Galvanize 

K12 (NYSE: LRN), the virtual schooling and education management provider, acquired Galvanize for $165 million in cash. Galvanize is a Denver-based coding bootcamp which also owns fellow coding bootcamp, Hack Reactor. K12 reportedly expects $50 million in revenue from Galvanize in 2020, meaning the $165 million purchase price is about 3.3x forward revenue. 

prnewswire.com
John Wiley & Sons Acquires mthree

John Wiley & Sons (NYSE: JW.A) has announced an acquisition of mthree, a company that helps students and professionals further their technology skills to meet the needs of financial institutions, technology companies, and government agencies. In 2019, mthree was expected to generate over $50 million in revenue with a projected growth rate of 20%. John Wiley & Sons expects the acquisition of mthree to enforce their commitment to providing excellent career outcomes and high-quality education services.  

transomcap.com
Weld North Education Acquires LearnZillion

Weld North Education, an education company that provides digital intervention and products in the K-12 market, has announced the acquisition of LearnZillion, a Washington, D.C.-based seller of core curricula. Weld North has stated that this acquisition will serve as a platform and distribution system for other curricula currently in Weld North’s portfolio. This transaction brings the total students served by Weld North to over 7.4 million. 

mentoringminds.com
KKR Acquires OverDrive from Rakuten

KKR, a global buyout firm, has agreed to acquire OverDrive, a digital reading platform for libraries and schools, from Rakuten USA. Overdrive has a proprietary platform which provides a large catalog of eBooks, audiobooks, magazines and other digital media. OverDrive reportedly serves a network of 43,000 libraries in more than 75 countries.

businesswire.com
Kaltura Acquires Newrow

New York-based, Kaltura, has announced the acquisition of Newrow. Kaltura is a provider of video collaboration tools used by corporate, government, and educational institutions. Newrow has a similar suite of offerings including video conference software and tools for creating online assessments.

prnewswire.com
Jolt Raises $14.1M in Series A Funding

London-based edtech company, Jolt, has announced the completion of a series A funding round totaling $14.1 million. Jolt provides education curriculum for young professional who which to switch or accelerate their career as an alternative to the tradition MBA path. The round was led by Balderton Capital, with Hillsven Capital and Octopus Ventures participating. This series brings the total capital raised by Jolt to $23.3 million since its founding in 2015. 

globenewswire.com
AdmitHub Raises $7.5M in Series A Funding

Boston-based developer of conversational artificial intelligence platform, AdmitHub, has announced the close of a series A funding round generating $7.5 million in capital. Investors in the round included Salesforce Ventures and the Google Assistant Investment program. The technology developed by AdmitHub is targeted to guide students through college. AdmitHub was founded in 2014 and helped more than 1.5 million students. 

prnewswire.com
Embodied Labs Raises $3.2M in Seed Funding

Embodied Labs, a California-based platform that utilizes virtual reality technology to educate the aging work force, has announced that they have raised $3.2 million in seed funding. The round was led by Ziegler Link-Age Fund, with The Venture Reality Fund, SustainVC, WXR Fund, and ETF@JFFLabs participating. Embodied was selected as one of the finalists to present at the Health 2.0 VentureConnect event held during the J.P Morgan Healthcare Conference in San Francisco in January. 

businesswire.com
Adjacent Academies Raises $2.1M in Seed Funding 

Adjacent Academies, a company that enables liberal arts students to earn college credit through courses that develop technology skill required by the advancing workforce, has announced the close of a seed funding round totaling $2.1 million in capital. The round was led by Rethink Education with New Ground Ventures, Bisk Ventures, and Entangled Group participating. Courses provided by Adjacent expose students to JavaScript and competency skills, while as refining skills in communication and teamwork. 

prnewswire.com
Veritas Capital Announces Acquisition of Campus Management and Edcentric

Veritas Capital, a private equity firm, has announced that they have acquired a stake in Campus Management Corp and Edcentric Holdings from Leeds Equity Partners. Leeds Equity will remain an investor in both companies in partnership with Veritas. Campus Management is a provider of cloud-based student information system throughout the world. Edcentric serves as a SaaS platform that drives data driven engagement solutions for high education institutions with their students and alumni. 

prnewswire.com
Pearson Acquires Interactive Learning Technology Assets from Smart Sparrow

Pearson, a global learning company, has announced that they have acquired digital learning technology from Smart Sparrow. Sparrow is an edtech company based in Sydney, Australia. The transaction valued Sparrow’s assets at $25 million. Pearson expects to use the assets to help accelerate the launch of their Global Learning Platform, which provides personalized learning experiences for students.  

prnewswire.com
ProctorU Merges with Yardstick 

ProctorU and Yardstick, both providers of online testing services and developers of proctoring tools to catch online cheating, will be merging and operating under the name Meazure Learning. ProctorU reports proctoring about 2 million exams per year and its tools are offered in more than 600 higher-ed institutions. Yardstick has recently growth through acquisitions and reports serving 90 clients across industry and professional organizations. 

businesswire.com
COPUBLICA Education Acquired by EDT Partners

EDT partners, a global education consulting firm, has announced an acquisition of COPUBLICA Education. COPUBLICA is a Danish-based consulting firm that collaborates with edtech providers, governments, publishers, universities, and civic organizations. The firms have worked together over the last two years and this acquisition serves as a next step in aligning the goals of the two firms.  

eab.com
Busuu Acquires Verbling 

Busuu, a language learning platform, has announced the acquisition of Verling, a live video tutoring company. Busuu has claimed to have over 100 million users globally and is generating breakeven cash flow. The companies expect to leverage AI-powered platform with best-in-class tutoring to accelerate the learning speed of their users.  

businesswire.com
Outlier Raises $11.7M in Series A Funding

Outlier, a startup that provides students with online classes eligible for college credit, has raised $11.7 million in funding through a series A round. The round was led by GSV Ventures, with Harrison Metal, Tectonic Capital, and Jackson Square Venture participating. Outlier has stated that their goal is to increase student’s access to high quality education at an affordable cost.  

prnewswire.com
Amesite Raises $5.5M in Funding

Amesite, a software AI company that provides an online learning platform for higher education markets, has announced that it has closed a funding round with $5.5 million of capital from investors. This funding round brings the total capital raised by the company to $11 million since founding in 2017. 

globenewswire.com
Edquity Raises $2.4M in Seed Funding 

Edquity, a financial planning company for high school and college students, has announced that they have raised $2.4 million in seed funding. The round was led by ECMC Foundation with Omidyar Network, Spring Point Partners, American Family Insurance Institute for Corporate and Social Impact, and Michelson 20MM Foundation participating. Edquity expects to use the proceeds to expand their network of national colleges and universities. 

prweb.com
CHERRY TREE 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.
* EV= Enterprise Value
MONTHLY COMMENTARY
We’ve always tried to follow the maxim that focus is an important discipline for any business. As Warren Buffet once said, “Everybody’s got a different circle of competence. The important thing is not how big the circle is. The important thing is staying inside the circle.”
 
Cherry Tree & Associates provides M&A advisory services, both sell-side and buy-side, and the sell-side services occasionally include institutional capital raising. Thanks to the backgrounds of some of our founders, we’ve always included strategic planning as a service, but only to the extent it is oriented to identifying capabilities and strategic advantages to acquire, market segments that seem especially attractive for M&A due to their fit with a company’s strategy, and/or complementary products and services to buy that can expand a company’s addressable market and/or increase sales opportunities.
 
But we are often asked, due to our role in helping entrepreneurs plan for an eventual exit, to help in initiatives focused on improving operations or adding capabilities. In the past, we’ve tended to refer these clients to others in the industry who we think are best suited to provide what a company might need. For 2020, we’re excited to have partnered with a firm that specializes in helping companies build or improve capabilities, especially as they relate to sales and marketing projects and functions in the education markets.
 
We will continue to stay focused on M&A transactions at Cherry Tree, but we’re happy to be able to provide a more seamless and integrated service to help those clients and potential clients who are working to improve their prospects for an eventual transaction. 
 
For a confidential conversation about your company’s needs to add capabilities and improve operations, or regarding strategic alternatives for exiting, merging, acquiring, obtaining venture financing, and how trends in education affect your prospects, please contact us at 952-893-9012.
Prepared by:
Chad Johnson, Managing Partner
cjohnson@cherrytree.com | 952.253.6010

Follow me on Twitter @ChadEricJohnson


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.