Cherry Tree & Associates | October 2018 | Volume XIII, Issue 4

SELECTED NEWS

Wiley to Acquire Learning House for $200 Million  Global research and education content provider, John Wiley & Sons (NYSE: JWA, NYSE: JWB), has agreed to acquire Learning House from Weld North for $200 million (3.3x LTM Revenue; 28.6x LTM EBITDA). Learning House provides online program management services for colleges and universities. Learning House is reportedly expecting $70 million in revenues in fiscal 2018, up 17% from the year prior .  Read more newsroom.wiley.com Norwest Equity Partners Invests in the Institute for Integrative Nutrition The Institute for Integrative Nutrition, the New-York based professional health coaching and certificate program, received investment of an undisclosed amount from Norwest Equity Partners. Invested capital will support development of a more robust content platform. The Institute for Integrative Nutrition claims to serve 100,000 students in over 150 countries through its online learning platform.  Read more globenewswire.com Turnitin Acquires Gradescope Turnitin, the web platform that checks student papers for plagiarism, has acquired Gradescope, an AI enabled platform reducing the time associated with grading papers and assignment in college. Gradescope reports having graded 60 million answers at over 600 institutions. Read more turnitin.com Redshelf Raises $25 Million Redshelf, a publishing distribution company of digital content and e-readers, raised $25 million in series C funding led by DNS Capital. Redshelf claims to partner with 600 campus bookstores and have more than 500,000 digital titles. Read more edsurge.com Kahoot Raises $15 Million Kahoot, the educational gaming and trivia platfrom, raised $15 million in a round led by Datum Invest. The Norwegian startup claims to have 70 million monthly active users and has now raised a total of $60 million with investors including Microsoft Ventures, Northzone and Creandum.  Read more edsurge.com Mrs. Wordsmith Raises $11 Million Mrs. Wordsmith, the vocabulary content provider using illustrated and printed workbooks, has raised $11 million in Series A funding to support expansion into U.S. and Chinese markets. The round was led by Trustbridge partners while Reach Capital and Kindred Ventures participated. The Company has raised a total of $14.5 million to date.  Read more businesswire.com Serent Capital Invests in KEV Group Kev Group, a provider of cash accounting management and online payments software serving the K-12 schools market, has received investment of an undisclosed amount from Serent Capital. KEV’s School Cash Suite claims to be used by 9,000 schools and manage more than $1.5 billion in funds.  Read more serentcapital.com LEARN Behavioral Acquires Total Spectrum LEARN Behavioral, provider network serving special needs children, acquired Total Spectrum, a provider of applied behavioral analysis services for children with autism. LEARN Behavioral is backed by private equity firm, LLR Partners and serves more than 3,000 families annually.  Read more behavioral.net Trilogy Education Acquires Firehose Project and JobTrack Trilogy Education, a workforce accelerator, announced the acquisition of both Firehose Project and JobTrack. Firehose Project is an online coding platform and JobTrack is a career services platform. Read more www.prnewswire.com IXL Learning Acquires ABCya IXL Learning, a web-based provider of K-12 assessments and exercises, has acquired ABCya, a creator of online education games. ABCya claims to have over 120 million users and offers more than 400 games.   Read more edsurge.com Foundry College Raises $6 Million Foundry College, a 2-year online college specifically tailored towards working adulting looking to fill “middle-skill” jobs, has raised $6 million from Learn Capital. Read more globenewswire.com

Cengage Invests in Codevolve Codevolve, provider of hands-on computer programming training, announced it has received a strategic investment from Cengage. Beginning in January, Cengage Unlimited users will have access to new programming language courses provided by Codevolve. Read more www.prnewswire.com Southern New Hampshire University and LRNG Announce Merger Southern New Hampshire University (SNHU) and LRNG, both for-profit educators, are merging to build a learning and workforce solution focused on low-income populations for cities and employers. LRNG will become the community impact arm of SNHU following the merger. SNHU and LRNG reportedly serve 130,000 and 50,000 learners, respectively.  Read more press.kaptest.com Cheddar Acquires Rate My Professors   Rate My Professors, a site allowing college students to write reviews on professors, has been acquired by Cheddar, the news network company delivering media through streaming platforms. Rate My Professors is reportedly used by 6 million college students a month with 125,000 reviews added monthly.  Read more businesswire.com ExecOnline Raises $18 Million ExecOnline, a provider of online leadership development programs, has raised $18 million in Series C funding. ABS Capital led the round while New Spring Capital, Osage Partners, Kaplan and New Atlantic ventures participated in the round. ExecOnline claims to partners with top business schools and Fortune 1000 corporations.  Read more pulse2.com Lambda School Raises $14 Million Lambda, the 30-week online software and coding school that allows students to pay tuition after graduating and gaining employment, has raised $14 million in a Series A round led by Google Ventures with support from Stripe. Lambda has now raised $18.1 million.  Read more lambdaschool.com LLR Acquires Edlio LLR Partners has purchased Edlio from L Squared Capital Partners. Edlio is a SaaS based Content Management Systems for k-12 schools and is based in Los Angeles, California. The investment by LLR will be used to support Edlio’s market expansion. Read more www.llrpartners.com Applied Training Systems Acquires Mindflash Applied Training Systems (ATSI), a leading partner of online software solution in the HR space, has acquired Mindflash, a corporate learning management solution. Mindflash claims to have delivered 10 million courses to data and the combined company will reportedly serve 5,200 customers on a combined basis.  Read more businesswire.com NexPhase Announces Recapitalization of Action Behavior... NexPhase Capital, LP ("NexPhase"), an operationally-focused independent private equity firm, announced the successful recapitalization of Action Behavior Centers, LLC ("the Company" or "ABC"), an Austin-based provider of Applied Behavior Analysis ... Read more www.nexphase.com Abry Partners Invest in Lighthouse Autism Center Lighthouse Autism Center, a provider of center-based applied behavioral analysis therapy, has received strategic investment from Abry Partners. Lighthouse operates 5 centers across northern Indiana and southern Michigan.   Read more prnewswire.com Spire Capital Invests in O2B Kids Early Education O2B Kids Early Education, a provider of early education services in the Southeast, has received investment from Spire Capital Partners. Spire has committed an undisclosed amount of growth capital to support the expansion of O2B’s operations.   Read more prnewswire.com Repl.it Raises $4.5 Million Repl.it, an online programming platform, raised $4.5 million in a seed round led by Marc Andreesen and Andrew Chen of the venture capital firm, Andreesen Horowitz. Repl.it claims to have 1 million monthly users.   Read more repl.it

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

People love to quote Wayne Gretzky for “skating to where the puck is going to be,” but this month we suggest investors and company executives think more like Warren Buffett: if everyone knows (or thinks) the puck is headed in a certain direction, it is going to get crowded, and expensive (“you pay a high price for a rosy consensus.”)  I have nothing against high prices… at least when I’m on the sell side. But it is clear that while opportunity abounds in the education market today, this includes areas that are more affordable than others as investments. I’m thinking specifically of curriculum and content, be it for elementary learners, or working adults trying to upskill their skills and improve their job prospects. A confluence of factors is driving this opportunity, including but not limited to: technology deteriorating the “moat” around traditional large publisher businesses, technology allowing for new methods of teaching and learning, and dedicated competitors targeting and owning specific market segments and beachheads. Despite the increase in more modular, more flexible learning solutions, we are confident that there will always be a market for research-based, high quality content developed by experienced professional educators and education-savvy businesses. The administrative software market for all segments, be it Pre-K-to-Adult, has many positives, including “stickier” customers, fewer decision makers, and a more streamlined decision-making process. Not to mention relatively higher valuations in the M&A market. But the curriculum market is large and growing for dedicated and innovative education companies, and thus often producing significant investment returns as well. Usually at a more attractive entry price.

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 cjohnson@cherrytree.com | 952.253.6010 www.cherrytree.com 

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.

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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.