Cherry Tree & Associates | May 2019 | Volume XIII, Issue 11
Cengage to Merge with McGraw-Hill Education

Cengage and McGraw-Hill plan to merge in an all stock merger valued at roughly $5 billion. The new company is expected to retain the McGraw Hill name but will be led by Michael Hansen, the current CEO of Cengage. Combined, the two companies will reportedly generate $3.1 billion and have a library of 44,000 textbook titles
Wiley to Acquire Knewton

John Wiley & Sons (NYSE: JW) announced that it will acquire the asset of Knewton, a provider of affordable courseware and adaptive learning technology. Knewton’s Alta courseware platform claims to service over 300 colleges and universities in key subject areas. The deal is expected to close around May 31, 2019
2U Completes Acquisition of Trilogy Education

2U (Nasdaq: TWOU) has completed the acquisition of Trilogy Education Services, a workforce accelerator preparing adult learnings for careers in the digital economy. The transaction was originally announced in early April of 2019

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Netflix Acquires StoryBots

StoryBots, a children’s media company and brand, has been acquired by Netflix. StoryBot’s show “Ask the StoryBots”, first launched on Netflix in 2016, often features celebrity voices and is now on its 3rd season of programming.

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Kahoot Acquires DragonBox for $18 Million…

Kahoot, the e-learning platform using games to educate children, has acquired DragonBox, a creator of math apps. The $18 million deal is a combination of cash and stock. Kahoot reportedly had 1 billion plays on its platforming 2018.

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…and Poio 

Kahoot, shortly following its acquisition of DragonBox, acquired Poio, the learn-to-read app for children. Poio, based in Oslo, Norway, has reportedly helped over 100,000 children learn to read through playing games. Poio is expected to launch an English edition and make it available to Kahoot’s users world-wide.
Digital Architecture Completes Two Acquisitions

Digital Architecture, a portfolio company of Serent Capital, has acquired New Ed and Visual Schedule Builder. New Ed, now called EXPLORE, is a provider of curriculum and career exploration solutions. Visual Schedule Builder, now called REGISTER, is a provider of student pathways, schedule planning, advising and registration. Digital Architecture’s solutions are reportedly utilized by over 700 higher education institutions.
Excelligence Learning Acquires Certain Assets of Abrams Learnings

Excelligence Learning, the provider of education tools for early childhood and elementary learning, has acquired the Letter People and DIG pre-K curriculum assets from Abrams Learning. The assets will be incorporated into Frog Street Press, a subsidiary of Excelligence.
Remote Learning Acquires Envisiontel 

Remote Learner, a provider of custom e-learning solutions, acquired Envisiontel, a learning technology company specializing in cloud integration applications. Remote Learner has reportedly impacted over nine million learners to date.
Abl Acquires School by Design

Abl, the developer of school scheduling software, has acquired the technology and consulting firm, School by Design. The combined company will reportedly serve 230 schools across 55 districts in 23 states.
Sawyer Raises $11 Million

Sawyer, the marketplace for out-of-school learning activities, raised $11 million in a series A round led by Advance Venture Partners with participation from Notation Capital and Collaborative.

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CollegeDekho Raises $8 Million

The startup providing a platform for facilitating interaction between students and colleges, CollegeDekho, has raised $8 million in a series B round led by existing investors GirnarSoft and Man Capital.
PeopleGrove Raises $4.7 Million

PeopleGrove, the platform connecting students with alumni and career mentors, has raised $4.7 Million in a series A round led by Reach Capital with participation from Brisk Ventures, Collaborative Fund, GSV Accelerations, Launch Capital, Riverpark Ventures and University Ventures.
Terra Dotta Raises $3.4 Million

Terra Dotta, a provider of higher education travel risk management and international program services, has raised $3.4 million in growth capital from LNC partners.
Renaissance Acquires Freckle Education

Renaissance, the pre k-12 education technology company, has acquired Freckle Education, makers of the math, social studies, science and English language digital platform. Reportedly, over 700,000 teachers use Freckle across 75,000 schools .
Pluralsight Acquires GitPrime for $170 Million 

The provider of online courses focused in technology skills, Pluralsight (Nasdaq: PS), acquired GitPrime, the platform that aggregates activity from different code repositories like GitHub and GitLab. The transaction is expected to close in May for $170 million cash. Pluralsight reportedly offers over 6,000 courses to over 16,500 business customers.
Sterling Partners’ Education Opportunity Fund Invests in Reading Plus

Reading Plus, an adaptive literacy intervention and practice tool for grades 3-12, has received an undisclosed investment from Sterling Partners’ Education Opportunity Fund. This is the sixth platfrom investment in the most recent fund
Absorb Software Acquires Torch LMS 

Absorb Software, provider of the Absorb Learning Management System, acquired Torch LMS, a SaaS based learning management system provider. Absorb Software received strategic investment from Silversmith Capital Partners and expects to complete several future acquisitions as part of the growth strategy.
Examity Raises $90 Million

Examity, the anti-cheating platform that provides online course providers with proctoring services, raised $90 million from Great Hill Partners. Examity has reportedly partnered with 500+ institutions and certification programs worldwide.

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RNL Acquires Converge

RNL, a provider of higher education enrollment, student success and fundraising solutions, acquired Converge, a digital marketing firm serving the higher education market. Converge has reportedly worked with 100 institutions and more than 300 programs for digital advertising.
Excel Education Systems Acquires Washington Online Learning Institute 

Minneapolis based Excel Education Systems, acquired Washington Online Learning Institute, a regionally accredited career college. The Washington Online Learning Institute will move its headquarters to Minneapolis, undergo a rebranding process and launch online programs the summer of 2019.
Acendre Acquires ICS Learning Group

Acendre, the cloud-based talent management software for government agencies, acquired ISC Learning Group. ICS Leaning Group is a provider of e-learning training solutions, learning content and software for manufacturing, healthcare, financial services and pharmaceutical markets.
O2B Kids Acquires Brookside Academy  

O2B Kids, the provider of early education services for children in the Southeast US, acquired Brookside Academy, which has two location near Atlanta, GA. O2B Kids is a portfolio company of Spire Capital.
Atairos Invests in ProQuest

ProQuest, the curator of journals, e-books, dissertations and much more, received a private investment from Atairos. ProQuest will use the proceeds to repurchase most of the shares owned by Goldman Sachs. Cambridge Information Group will maintain the majority ownership of ProQuest.
OpenSesame Raises $28 Million 

OpenSesame, the marketplace for corporate learning programs, raised $28 million in a series C round led by FTV Capital with participation from Altos Ventures.
Outschool Raises $8.5 Million

Outschool, the marketplace for online classes for children in middle and high school, raised $8.5 million in a series A round led by Reach Capital and Union Square Ventures.
Interplay Learning Raises $5.5 Million

Interplay Learning, a provider of virtual reality-based training software for skilled trades, raised $5.5 million in series A funding. S3 Ventures led the round while Shasta Ventures, Sierra Ventures, Hold Ventures, Wild Basin Investments and Shelter Capital Partners participated.
Upswing Raises $2 Million

Upswing, an edtech startup developing an app for non-traditional and diverse students, raised $2 million in funding from Impact America Fund, Rethink Education, Lumina Foundation and Strada. It has now raised $5 million to date.

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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
The state of Higher Ed Publishing can be told, to some degree, in the headlines of this month’s newsletter. It isn’t a coincidence that at the same time McGraw-Hill and Cengage are merging (read; consolidating), J. Wiley acquired Knewton, and 2U acquired a workforce accelerator focused on preparing learners for digital careers. 

As we write this month’s commentary, the Wall Street Journal has just published an article noting that for the seventh year in a row, college enrollment is down. They note that the decrease is especially attributable to older students, who are less in need of re-skilling thanks to a strong economy, or are finding other ways of obtaining the skills they need. Of course we all know that the increasing burden of student debt is causing families to more carefully plan their students’ academic careers (the article notes that more students under age 18 are taking advantage of dual-enrollment programs with their high schools, as your author once did), which is in turn causing colleges to seek ways to make school more affordable. And of course, print materials are increasingly viewed as expensive and quickly outdated. 

In any time of significant change, there is also opportunity. Where, you ask? For our money, it can be found in digital and 21st-century skills development, in STEM programs, in selling to individuals, and in digital solutions, to name but a few. We also expect that when the next downturn comes and jobs are less plentiful, more workers will decide the time is right to invest in their personal development
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

Prepared by:
Chad Johnson, Managing Director and Partner | 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.