Cherry Tree & Associates | June 2021 | Volume XV, Issue 12
SELECTED NEWS
Edmentum to Acquire Apex Learning  

Edmentum, a global pioneer in education technology, announced it will be acquiring Apex Learning, a digital curriculum and virtual learning solutions provider. The acquisition follows Edmentum’s intention to meet the evolving needs of school districts by providing virtual and hybrid learning models. Edmentum claims to support educators in more than 40,000 schools nationwide and internationally.

edmentum.com
Ellucian to be Acquired by Blackstone and Vista Equity Partners

Private Equity firms, Blackstone and Vista Equity Partners, announced it will acquire Ellucian, an enterprise resource planning (ERP) software for higher-education institutions, from TPG Capital. The new partnership will work towards developing the Company’s suite of cloud-ready solutions to institutions. Today, Ellucian reports having more than 2,700 customers in over 50 countries.

businesswire.com
KKR to Invest in Education Perfect

KKR, a private equity firm, has announced it will be buying a majority stake in Education Perfect, a digital teaching and learning toolkit provider for schools based in New Zealand. The deal values Education Perfect at $318 million. Education Perfect plans to use the funds to expand its global reach beyond the more than 50 countries it currently serves.

reuters.com
Spark Education Files for U.S. IPO

Spark Education, an online education provider for K-12 students based in China, has filed for IPO on the Nasdaq. Spark Education is aiming to raise as much as $500 million in the IPO and plans on using the majority of its net proceeds to improve its course content and offerings, as well as its technology infrastructure.

caixinglobal.com
OverDrive to Acquire Kanopy

OverDrive, a digital reading platform for libraries and schools, announced it will be acquiring Kanopy, a leading video streaming service for public and academic libraries, from L Squared Capital. Through the acquisition, OverDrive will expand its curriculum to include Kanopy’s 30,000+ curated films that serve to inspire, educate, and entertain students.

businesswire.com
GoGuardian to Acquire Edulastic

GoGuardian, an education technology company serving K-12 schools, announced it will acquire Edulastic, an online assessment platform for K-12 teachers and administrators. Edulastic’s online assessments will be added to the GoGuardian suite of digital learning technologies and further GoGuardian’s mission to create the ultimate learning platform. GoGuardian reports reaching one out of three K-12 students nationwide which comprise more than 20 million students at over 14,000 schools.

businesswire.com
Cuemath to Raise $100 Million  

Cuemath, an online education platform based in India, is looking to raise $100 million in a Series D funding round, targeting a valuation of $1 billion. Cuemath previously raised $40 million during its Series C round with investment from firms including Alphabet Inc. and Sequoia Capital. Cuemath has reportedly taught over 200,000 students in over 20 countries and is targeting 1 million students across 50 countries by March 2022.

reuters.com
Apax Digital Invests in Revolution Prep

The Apax Digital Fund announced that will be investing in Revolution Prep, an online academic tutoring and, test preparation service provider. Revolutions announced its plans to help further enhance its online learning platform and expand its professional tutors. Since being founded in 2002, Revolution Prep claims to have helped more than 1 million families across the country.

apax.com
Learnosity Acquires Questionmark

Learnosity, a learning assessment platform, has acquired Questionmark, an end-to-end assessments, proctoring, and reporting solutions provider. Together, the newly enlarged partnership brings scale and deep expertise to the cloud-based assessment industry. Today, Learnosity serves more than 39 million learners across the K-12, higher ed, vocational training, and corporate training markets.

businesswire.com
GG4L Acquires Stackup

Global Grid for Learning (GGG4L), a membership-based collaborative providing schools and EdTech vendors a foundation for digital transformation, has announced it will be acquiring Stackup, an online reading, learning, and engagement assessment tool for educators. Stackup’s AI-based data analytics technology will be integrated and deployed through GGG4’s School Passport, an Integration as a Service (IPaaS) Platform, reportedly used by more than 20,000 schools and over 10 million students.

prnewswire.com
Cypher Learning Raises $40 Million 

Cypher Learning, a provider of learning management systems (LMS) for educational institutions and enterprises, has raised $40 million in growth equity from Invictus Growth Partners. The investment will be used to accelerate the sales, marketing, and development of its award-winning learning platform, and build on its profitability. Cypher’s products are used by over 20,000 organizations in all major e-learning sectors: academic, corporate, and entrepreneurship.

businesswire.com
Kognity Raises $20 Million

Kognity, a digital textbook publishing and e-learning platform company based in Stockholm, has raised $20 million in growth funding from Alfvén & Didrikson. Kognity launched its learning platform in 2015 and has established a global school customer base across more than 100 countries.

americanpress.com
Nexford University Raises $10.8 Million

Nextford University, an online university based in Washington DC, raised $10.8 million in a pre-Series A funding round led by Dubai-based venture capital firm, Global Ventures. Since launching in 2019, Nexford University has focused on providing affordable and unique degrees including, AI and automation, building a tech startup, business in emerging markets, digital transformation, e-commerce, and many more.

techcrunch.com
AllHere Raises $8 Million

AllHere, a provider of K-12 technology solutions, raised $8 million in a Series A round led by Spero Ventures. The latest round of funding will be used to grow the capabilities of AllHere’s conversational artificial intelligence (AI) chatbot which supports K-12 student attendance and grades. AllHere’s AI chatbot is reportedly being used in 8,000 schools across 34 states.

prnewswire.com
Commit Raises $6 Million

Commit, a professional network platform for Startup Engineers, raised $6 million in seed-stage funding. Commit plans on using the funds to grow the number of Engineers on the platform in the next 12 months as well as invest into programs to reach talent in the industry.

businesswire.com
2U to Acquire edX 

2U, a SaaS platform that helps non-profits and colleges run online universities, plans to acquire the assets of non-profit edX, the online host of multiple university-level courses for $600 million. The deal is hoping to close within 120 days subject to regulatory and governmental approvals and once combined.

techcrunch.com
Frontline Education to Acquire Hayes Software Systems 

Frontline, a provider of K-12 school administration software, announced it will be acquiring Hayes Software Systems, a SaaS provider to K-12 school administrators for IT asset management, inventory control, and help desk needs. Hayes has served educators for nearly 30 years and currently supports school districts in 40 states.

globenewswire.com
Skillsoft Goes Public 

Skillsoft (NYSE: SKIL), a digital learning and talent management software company, went public on June 14th. This follows the completion of Software Luxembourg Holdings S.A.’s merger with Churchill Capital Corp II and combination with Global Knowledge Training LLC, with the combined company now operating as Skillsoft. Skillsoft reports serving customers in over 160 countries and serves a customer base that includes approximately 70% of Fortune 1000 companies.

businesswire.com
Harris Acquires eScholar

Harris, a global vertical market software provider, announced it has acquired eScholar, a US-based data analytics software provider. Founded in 1997, eScholar’s suite of products brings together disparate student data sets to streamline processes. Today, eScholar’s management solutions are reportedly used by 13 state education agencies and over 4,800 districts across the country.

harriscomputer.com
Leeds Equity Invests in Genius SIS

Leeds Equity, a private equity firm dedicated to partnering with education, training, and information services industries, will be investing in Genius SIS, a cloud-based Student Information System (SIS) software and Training Management System (TMS) software provider. The investment seeks to accelerate penetration into new markets and enhance the current student, faculty, and administrator experience.

prnewswire.com
Byju’s Raises $350 Million

Byju’s, the online education platform with a massive presence in India, has raised $350 million in a recent funding round led by UBS Group and Blackstone, valuing the startup at $16.5 billion. Byju’s plans on using the funds to acquire other startups as part of its growth strategy.

techcrunch.com
GoStudent Raises $244 Million 

GoStudent, a one-on-one video tutoring marketplace for K-12 students, has raised $244 million in a Series C funding round, valuing the company at $1.7 billion. GoStudent is currently operating in 18 countries with over 400,000 sessions booked monthly on its platform, with 700% year-over-year growth and 15% month-over-month growth. GoStudent looks to continue the growth with the new funding being used to expand its geographic reach and increase the number of subjects covered.

techcrunch.com
Immersive Labs Raises $75 Million

Immersive Labs, a platform that teaches cybersecurity skills to corporate agencies, has raised $75 million in a Series C funding round led by Insight Partners with participation from Menlo Ventures, Citi Ventures, and Goldman Sachs Asset Management. Currently, Immersive Labs has around 200 employees, with joint operations HQs in Bristol, U.K., and Boston, U.S. The newly invested capital will help accelerate plans to raise headcount over the next two years.

techcrunch.com
Modern Campus’ to Acquire DIGARC 

Modern Campus, a modern learning engagement platform and portfolio company of The Riverside Company, announced it will be acquiring DIGARC, a provider of academic catalog and curriculum management, class and student scheduling, and student pathfinder software for higher education. Today, DIFARC’s catalog management software solutions are used by nearly 800 higher education institutions. 

globallegalchronicle.com
Stash to Acquire PayGrade

Stash, an online brokerage firm, announced it will be acquiring PayGrade, a financial literacy platform that provides K-12 teachers with a personal finance curriculum designed around simulated banking and investing. Under Stash, PayGrade will be expanding its digital tools to parents to teach and reinforce money skills at home.

investmentnews.com
Learning Care Group Acquires Prestige Preschool Academy

Learning Care Group, a leader in early childhood education, announced it will be acquiring Prestige Preschool Academy and its 23 preschools serving families in California, Colorado, Minnesota, and Virginia. The acquisition of Prestige Preschool Academy will add to Learning Care Group’s portfolio of nearly 1,000 locations across the United States.

globenewswire.com
Merlyn Mind Raises $29 Million 

Merlyn Mind, the AI digital assistant tool built specifically for teachers in K-12 classrooms, has raised $29 million in initial funding led by edtech investor, Learn Capital. The funding comes after recently piloting the service in 50+ classrooms in more than 20 schools. Merlyn Mind plans on launching its product commercially later this year.

techcrunch.com
Ringle Raises $18 Million

Ringle, a virtual English tutoring platform based in South Korea, raised $18 million in a Series A funding round led by Must Asset Management, valuing the company at $90 million. Ringle reports having over 700 tutors and 100,000 users worldwide.

techcrunch.com
Full Measure Education Raises $10 Million 

Full Measure Education, the company behind the leading mobile engagement platform for colleges and universities, raised $10 million in a growth equity round led by Fulcrum Equity Partners. The latest round of funding will be used for talent acquisition and scaling its executive, customer success, product, and engineering teams from 40 to 100 employees. The Full Measure mobile platform is currently being used at over 450 institutions across the country.

fullmeasure.io
Poised Raises $4.5 Million

Poised, a personalized digital communications coaching platform, raised $4.5 million in seed funding led by Wing Venture Capital. The funding will be used to expand its product, team, and educational content. Currently, Poised is in private beta.

businesswire.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
If you’re a business owner or investor who had been thinking about selling in the next couple of years, or an individual involved in M&A work, we don’t have to tell you that taxes are on peoples’ minds.

More specifically, the already frothy M&A world has seen a flurry of additional activity since the Biden Administration proposed essentially doubling the top capital gains tax from 20% to 40%, in part by taxing capital gains at the ordinary income rate (which he is proposing be increased to over 40%). And at the risk of depressing you (especially those of you in New York and California), that is only the proposed federal rate.

You don’t have to be an Ivy League MBA to see why sellers might want to try to avoid that outcome. There is no guarantee this proposal will become law, or when it will go into effect. For their part, the Administration is proposing it be back-dated to the end of April, 2021, in which case it would be too late. And if sellers want to have any chance of beating the tax increase by closing this year, that window is closing quickly. Bankers and attorneys are busy (and won’t get much of a Holiday season this winter… not that they’re an easy lot to feel sorry for), buyers have a lot of other deals on their plates and in their inboxes right now, and the accounting and other service firms that provide diligence are booking months in advance right now. Throw in any need for regulatory approval, and you face a steep hill to climb.

This situation raises many questions to consider, including; Will we see a change in the capital gains tax rate this year, and if so when will it be effective? If you are trying to sell this year, what strategies can you employ to improve your chances of getting it done before January 1st? If you get a strong offer today, how much time should you spend considering or seeking competing bids? Will buyers try to use the impending deadline to force last minute downward adjustments in price? Will we see a buyers’ market and/or a reduction in M&A activity next year?

For a confidential discussion 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.
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.