Cherry Tree & Associates | July 2023 | Volume XVII, Issue 1

SELECTED NEWS

PowerSchool to Acquire SchoolMessenger

PowerSchool, a provider of cloud-based software for K-12 education, has signed a definitive agreement to acquire SchoolMessenger, a provider of K-12 communication tools. The acquisition aims to expand PowerSchool’s commitment to providing a comprehensive platform that supports personalized education and helps students reach their full potential. The integration of SchoolMessenger’s platform into PowerSchool is expected to provide educators with improved tools to increase family engagement and support student success. The acquisition is set to be completed in the third quarter of 2023.

businesswire.com

Preply Raises $120 Million in its Series C Round

Preply, the language app known for its live tutors, closes out its Series C round at $120 million and doubles down on artificial intelligence. In 2022, Owl Ventures led the Company’s initial Series C round of $50 million. This year, Horizon Capital led the extended round, with edtech specialist Reach Capital, Hoxton Ventures, and other existing investors also participating. Preply — built around human tutors, and differentiated from the likes of Duolingo, which approaches language learning with no live tutoring at all — is planning to use the funding to double down on artificial intelligence, specifically using the technology to “scale” the experience.

techcrunch.com

Truelink Capital Acquires Richardson Sales Performance

Richardson Sales Performance (Richardson), a sales training and performance improvement provider has been acquired by Truelink Capital, a middle-market private equity firm based in Los Angles. For over 40 years, Richardson has equipped sales organizations across industries and geographies to accelerate growth by enabling agility in sales teams so they can get ahead of buyers’ changing needs and act quickly to win. The Truelink operations team intends on working together with Richardson’s leadership team to make strategic investments in growing the Company, both organically and through strategic M&A.

prnewswire.com

Toprankers Acquires The Lex Guru

Edtech startup Toprankers has acquired The Lex Guru, a legal test prep platform based in Indore. The platform will be rebranded as Judiciary Gold. It is Toprankers’ second law-related intellectual property, complementing its existing platform LegalEdge for preparation of law exams. The acquisition aims to expand its presence in the market. This marks Topranker’s second acquisition this year, following its purchase of the career guidance platform ProBano in April.

inc42.com

Achieve Partners Acquires Elentra Corp

Elentra Corp has recently been acquired by Achieve Partners, a social impact investment firm focused on digital transformation in the Medical and Allied Health Sciences Education market. Built by universities for universities, Elentra offers a fully integrated digital platform providing an end-to-end solution that manages all aspects of curriculum delivery and assessment requirements. With over 40 of the world’s leading medical and health sciences educational institutions already using the Elentra platform, Achieve believes the Company is ideally positioned to lead the market as it consolidates. As part of the transaction, Achieve will contribute growth capital to scale the Company and accelerate development.

einnews.com

Specialized Education Services Acquires Lattice Educational Services

Specialized Education Services, Inc. (SESI), a provider of education services for K-12 students who require additional educational and behavioral support, acquired Lattice Educational Services (Lattice), a California Department of Education (CDE) nonpublic school program located in Sonoma County. Lattice has a long-standing reputation for providing a school placement option for students with developmental disabilities, autism and behavior challenges who require intensive educational services in a nonpublic setting, complementing SESI’s scope of work serving learners with special needs. The acquisition is expected to allow SESI to leverage its extensive resources and expertise to enhance both the education and support services offered at Lattice, while ensuring the continued success of its student body.

globenewswire.com

Leverage Edu Raises $40 Million in Fresh Funding Round

Leverage Edu, a study abroad portal, has secured new investment from Educational Testing Service (ETS), a global testing and assessment company. The equity part of the funding round rose between $25 to $27 million, bringing the total amount raised, including debt, to nearly $40 million. The Company’s valuation is expected to reach around $150 million, a 25% increase from its previous valuation in March 2022. Leverage Edu plans to focus on the U.S. higher education market with the fresh funds.

bwdisrupt.businessworld.in

Kahoot Receives $1.7 Billion Acquisition Offer from Goldman Sachs and Others

Kahoot, the popular platform known for education-focused games, has received a bid to go fully private in an all-cash deal that values Kahoot at $1.7 billion. The private equity division of Goldman Sachs Assets Management is leading the bid, with existing Kahoot backers General Atlantic (its largest shareholder), LEGO Group’s KIRKBI Invests A/S, and Glitrafjord named as the other major shareholders in the proposed deal. Shareholders must approve the deal for it to go through, which is still in progress. The deal would represent a premium on Kahoot’s publicly traded share price as of July 13, 2023 – specifically 53% to the closing price on May 22, 2023.

techcrunch.com

Tuition.io Acquires Wiley’s Tuition Business

Tuition.io has acquired Wiley’s Tuition Manager business to strengthen its position as an education assistance service provider, allowing its customers to access a wide range of benefits through its highly configurable platform. Tuition.io is an education assistance benefits provider while Wiley’s platform enables employers to offer tuition assistance benefits to their workforce. After the migration of Wiley’s clients later this year, Tuition.io expects that over 100 employers will be utilizing its tuition assistance services.

benzinga.com

Wayside Publishing Acquires Lit

Wayside Publishing has acquired Lit, a language acquisition tool, to enrich its world language programs with Lit’s library of videos. Wayside, a provider of print and digital materials for K-12 world language classrooms, aims to enhance its content creation capabilities and reduce costs by leveraging Lit’s in-house video production team. Lit offers animated video stories that promote language acquisition through user input, and its planned integration into Wayside’s products is expected to provide customers with engaging animated stories and activities for contextualized language learning.

marketbrief.edweek.org

Certus Acquires Workforce 180

Certus, a training and certification program has acquired Workforce180, an eLearning certification provider servicing workforce development boards, nonprofits, and government agencies across the U.S. Established in 2014, Workforce180 provides professional development opportunities through virtual training and credentialling. Certus has been expanding its workforce development solutions over the past year. In 2022, Certus acquired Metrix Learning, a provider of online education solutions designed for the public workforce. Integrating Workforce180 and Metrix Learning is expected to enhance both brands' elite products and solutions, better enabling workforce development professionals to serve their local communities.

certus.com

Sallie Mae Acquires key assets of Scholly

Sallie Mae (Nasdaq: SLM), has acquired key assets of the widely known search app, Scholly. In addition to Scholly’s scholarship search and app, Sallie Mae will acquire Scholly’s scholarship administration technology, and Scholly Offers, a platform that matches users with strategic partners to help them earn cash back. Following the transaction, Sallie Mae intends to make Scholly free for all students, families, and other users, providing access to search and apply for millions of dollars in scholarships. To date, Scholly reports helping millions of members secure more than $100 million in scholarships.

businesswire.com

Calvin University to Acquire Compass Film School

Calvin University is set to acquire Compass College of Film and Media, a nonprofit Christian college in Grand Rapids, Michigan. Compass College’s programs will be integrated into Calvin’s Department of Communication. The acquisition will allow Calvin to expand its offerings for students as well as extend the physical reach of its campus in downtown Grand Rapids. The acquisition is expected to be finalized before the Fall 2023 semester, pending regulatory approval.

insidehighered.com

Braintrust Tutors Closes its $2.5 Million Seed Round

Braintrust Tutors closed on a $2.5 million seed funding round, let by prominent investors Scott Sandell, John Chambers, and LAUNCH. The investment is expected to help the K-12 tutoring platform further fuel the Company’s rapid growth by expanding its network of certified teachers and learning specialists. "We are thrilled to have access to such a formidable list of high-profile investors, each with a wealth of experience and a deep understanding of scaling disruptive technology businesses," said Jen Mendelsohn, Co-Founder and CBO of Braintrust Tutors.

newswire.com

CHERRY TREE EDUCATION FOR-PROFIT 50 INDEX

For-profit education comprises more than 5% of the roughly $1.5 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

Say what you will about Twitter (we refuse to call it X), Education Twitter has always been a vibrant, and often a thoughtful and respectful, place for discourse on education trends and ideas. It has been a powerful platform for movements such as the Science of Reading and for specific education companies such as Flipgrid. But it is Twitter afterall, so it is not immune from hyperbole from the fringes of both political parties, or from promoting inaccurate statements and sound bites because they express what some wish to be true.

Case in point – a Congressperson from Connecticut (Rep. Jahana Hayes) recently Tweeting (“X-ing,” seriously? No.) that we have disinvested in public education for decades. We’ll cut her some slack in that Education is too complicated of a problem to effectively describe in a Tweet, but claiming a reduction in funding is patently false. While is true that teacher salaries on average have stayed flat over time, per pupil spending has risen over 300% since 1960 on an inflation-adjusted basis. We don’t take issue with that increase, as we can’t think of a better thing to invest in than the education of our children. And we’re supportive of spending more money on teacher salaries, especially if it comes with reforms that address underperforming teachers, focusing the curriculum, and disruptive students. But the problem is not that we’ve reduced funding, because we haven’t.

We bring it up because we think there is an opportunity, and an obligation, to find ways to improve our educational system. And because one of the biggest issues we see facing the U.S. K-12 system, is the teacher shortage. It is bad now, especially in Science, Special Education, and in struggling districts. And with one-third of teachers nearing retirement age, it is likely going to get worse. Outsourced services, and programs that train teachers and other professionals in effective strategies and that lead to reduced turnover, are already part of the solution and this opportunity is only going to grow. Experienced education executives know that schools have plenty of money. The challenge is matching solutions to schools’ needs and priorities, patiently navigating the decision-making process, and sometimes helping schools identify and access the funding.

For a confidential discussion about your company’s prospects and 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.

About Cherry Tree & Associates:

Cherry Tree is a Minneapolis-based investment banking firm with more than four decades of transaction experience, with education being a primary segment focus. Our services include Sell-Side M&A where ownership wants to either realize their liquidity goals or desires to recapitalize their business to better position it for future growth. Additionally, we represent Buy-Side clients in efforts to add acquisitions to complement their organic growth efforts.

Prepared by:

Chad Johnson, Managing Partner

cjohnson@cherrytree.com | 952.253.6010

www.cherrytree.com

Follow me on Twitter@ChadEricJohnson

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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.