Cherry Tree & Associates | September 2018 | Volume XIII, Issue 3
New Mountain Learning to Merge with Carnegie Learning

New Mountain Learning’s private equity owner, CIP Capital, acquired Carnegie Learning, a provider of educational math products and services, and announced plans to merge the two companies. The combined company will use the Carnegie Learning name.

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Houghton Mifflin Harcourt Announces $140 million Divestiture of Riverside

Houghton Mifflin Harcourt (Nasdaq: HMHC) announced plans to divest its Riverside clinical and standardized testing portfolio. Alpine investors, a San Francisco based PE firm, is reportedly buying the business for $140 million. The Riverside portfolio includes brands such as Iowa Assessments, Woodcock-Johnson and the Cognitive Abilities Test.
NCK Capital Acquires Tricoci University

Tricoci University of Beauty Culture, a cosmetology and esthetics education company headquartered in Chicago, was acquired by NCK Capital. This marks the second investment in post-secondary education made by the Dallas based lower middle-market private equity firm. Tricoci University has 16 campuses in Illinois, Indiana and Wisconsin.
Jacobs Holdings Announces Acquisition of Cognita

Cognita, a global group of private schools, will be acquired by Jacobs Holdings, the Switzerland based family office of the Jacobs family. Bregal Investments and KKR are the current owners of Cognita which claims to operate over 70 schools in eight countries an serve over 40,000 children.
Boxlight Corporation Acquires EOS Education

Boxlight Corporation (Nasdaq: BOXL), the provider of displays and hardware for the education market, acquired EOS Education, a K-12 consulting firm. The acquisition was funded with 100,000 shares of Boxlight Corporation which values the deal at roughly $300,000.
Amira Learning Raises $3 Million 

Amira Learning, an AI-powered reading assistant, has raised $3 million in a seed round led by Vertical Venture Partners. The application is built with technology developed at Carnegie Mellon University and the venture is led by former executives as Renaissance Learning.
Bertelsmann Announces Acquisition of OnCourse Learning 

Bertelsmann, the German publishing group, announced the planned acquisition of OnCourse Learning, a provider of digital training courses in corporate settings. Wisconsin based OnCourse Learning is currently owned by CIP Capital and is reportedly being sold for “mid-nine-digit euro range”. OnCourse claims to have 22,000 education courses serving about 750,000 corporate learners.
Kaplan Acquires Certain Assets of Barron’s Educational Series 

Kaplan, the education and career resources company owned by Graham Holdings Company (NYSE:GHC), has acquired certain education assets from Barron’s. The acquisition includes Barron’s branded test prep, study aids and foreign language assets as well as the Barron’s brand name. Kaplan claims the acquired assets include about 650 titles.
MasterClass Raises $80 Million 

MasterClass, an online platform featuring celebrity-taught classes, raised $80 million in Series D funding. Users of MasterClass, which has now raised $130 million, can pay an annual fee of $180 for unlimited classes or a $90 fee for access to an individual class. IVP led the round while Atomico, NEA, Javelin Ventures, Advancit Capital, and Evolution Media participated.
Vomela Companies Acquire Learning ZoneXpress  

Vomela Companies, a full-service specialty graphics provider, acquired Learning ZoneXpress, a provider of health, nutrition, and life skills education resources. The Vomela Companies claim to employ over 1,300 people across 22 cities and have extensive printing capabilities making Learning ZoneXpress a strategic fit.
Ed App Raises $4 Million

Ed App, a platform allowing companies to create their own training content and deliver it via smartphone or tablet, raised $4 million from SatefyCulture. The digital workplace safety checklist tool, SafetyCulture, raised $60 million at a $440 million valuation earlier this year.
Spear Education Acquires Pride Institute 

Spear Education, a continuing education company focusing on dentistry, acquired Pride Institute, a provider of practice management solutions for the dental industry.
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
We saw some discussion of Income Share Agreements recently and it got us thinking… We all know that the expense of higher education has grown much more rapidly than inflation over the past decades, and that student loan debt has similarly mushroomed. But is the answer to replace amortized term loans and predictable payments with loans where the students instead pay a percent of their income?

It is certainly worthwhile to innovate in search of solutions to the student loan (and college cost) issues, and to provide options for borrowers that especially in early years might be more affordable. And this could cause lenders (and hopefully colleges!) to think more about whether the education being obtained stands a predictable expectation of generating enough income to pay back the loan. This could lead to a better matching of degrees granted to the jobs that need to be filled in our society.

But we worry about several potential issues, for investors in higher ed and for society at large. First of all, we think borrowers should have more accountability to repay their loans, and to be more thoughtful about their education options and their financing choices. Secondly and related to this risk of less accountability, is the potential for less conscientious lenders to saddle students with loans that are much more expensive in the long term. Unfortunately, too many people today are calling for the laws of economics to be magically repealed and for college to be “free.” Providing students with complicated, expensive options that makes them less accountable could invite more pressure for college to be free and for loans to be forgiven. 
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.