Cherry Tree & Associates | October 2019 | Volume XIV, Issue 4

SELECTED NEWS

Adtalem Divests Brazilian Colleges for $465 Million Adtalem, formerly known as DeVry, has announced their plan to divest the entirety of their Brazilian holdings to YDUQS, the second-largest education company in Brazil, for $465 million. The Brazilian assets being sold include 12 institutions that provide education services for approximately 82 thousand students. Adtalem has stated that they are re-positioning the company to be a leading workforce solutions provider and this transaction furthers that goal. Read more insidehighered.com VitalSmarts is Acquired by Leeds Equity Partners VitalSmarts, a provider of communication, execution and leadership development training, has been acquired by Leeds Equity Partners, a private equity firm located in New York that invests primarily in the education industry. This transaction represents the ninth platform investment for Leeds Equity Partners.   Read more prnewswire.com Renaissance Acquires Schoolzilla Renaissance has announced that they have acquired Schoolzilla, a provider of data-driven reports that track a multitude of student metrics including attendance, suspensions, grades and more. Renaissance is a global provider of technology in the pre-K-12 marketplace. The acquisition is expected to compliment Renaissance’s existing technology solutions by providing enabling leaders to make data-driven decisions. Read more prnewswire.com Roosevelt University to Merge with Robert Morris University Roosevelt University, a Chicago based, nonprofit educational institution has announced that they expect to merge with Robert Morris University. Robert Morris is a nonprofit educational institution based in Chicago and is the smaller of the two institutions with 1,800 students, compared to Roosevelt’s program with 4,100 students. The institutions expect to leverage each other’s programs to create a broad range of educational offerings to serve student demand. The merger is expected to be completed in the spring, pending approval from accreditors. Read more insidehighered.com Frontline Acquires Accelify Frontline, a developer of cloud-based K-12 education software for school districts, has acquired Accelify. Accelify is a Brooklyn, NY based provider of technology solutions for the management of individual education plans and the processing of related Medicaid claims. This acquisition is the 14 th completed transaction for Frontline, who is owned by the private equity firm, Thoma Bravo. Read more edsurge.com Calvert Education Completes Divestiture of Online Education Business and Other Assets  Calvert Education Services, a company that assists teachers and students with virtual learning solutions that allow for creative problem solving and other lifelong skills, has completed a divestiture of its online education business to Glynlyon, a national provider of educational technology. Calvert also completed a divestiture of certain assets to the Sterling Partners Education Opportunity Fund. Terms of this transaction were not disclosed.  Read more parchmanvaughan.com Crimson Education Raises $20.0 Million in Series C Round Crimson, a provider of education consulting and tutoring services, has announced the completion of a series C fundraising round totaling $20.0 million. The company has stated that it expects to use the capital to expand its global presence and increase the amount of resources in its network. Crimson was founded in 2013 and is headquartered in Auckland, New Zealand with operations around the globe. Read more techinasia.com Stellic Raises $3.1 Million in Seed Funding Stellic, a startup that provides a platform for students to plan their college careers, has announced the completion of a seed funding round totaling $3.1 million. Investors in the round included Entangled Ventures, Rethink Education, Reach Capital, and Arjun Singh. The company has stated that they plan to utilize the funding to expand their relationships with universities. Read more edsurge.com Korbit Raises Over $2.0 Million Korbit Technologies, an education technology company that utilizes AI tutors to teach students utilizing exercises and based in Montreal, Canada, has announced the completion of a seed round of over $2.0 million. The leading investor in the round was Khosla Ventures, who see great value in the utilization of AI enabled tutoring to fix the shortage of time and resources that teachers have to help students outside of the typical classroom time.  Read more edsurge.com Guild Education Receives Investment from Stephen Curry Guild Education, a company that assists Fortune 1000 companies offer their employees education degrees without utilizing debt, has announced that they have received an investment from Stephen Curry and SC 30. Curry announced that the investment in Guild Education aligns with his nonprofit organization that he launched in July 2018, Eat. Learn. Play Foundation. Read more techcrunch.com

PowerSchool to Acquire Schoology A provider of K-12 education technology solutions for 45 million students, PowerSchool, has announced that they will acquire Schoology. Schoology offers a platform with learning management and embedded formative assessment solutions. The transaction will allow PowerSchool to expand their support for educators through a suite of learning solutions, assessment, and special education needs.  Read more benzinga.com EVERFI, Inc. Acquires EdComs EVERFI, Inc., a provider of a SaaS engagement platform that specializes in social impact education, has announced that it has acquired EdComs, a company that focuses on bringing real-world learning into classrooms and driving social change. This transaction is the first international acquisition to be completed by EVERFI and will allow them to service customers on a global scale. Read more everfi.com Blackstone Acquires a Stake in Aakash Educational Services Global private equity firm, Blackstone Group LP, has announced that it has acquired a 37.5% in Aakash Educational Services at a valuation of over $500 million. Aakash is one of the largest test preparation companies in India for students in grades 8 through 12, providing services across 130 cities, and employing over 2,200 teachers. It is expected that Blackstone will increase its stake in the company to 51% sometime in the future.  Read more dealstreetasia.com Riverside Insights Acquires ESGI Riverside Insights, a provider of educational and clinical assessments that increase a student’s learning potential, has announced an acquisition of ESGI. ESGI provides a SaaS platform that administers, creates, and tracks/reports on teacher-led assessments of students. Riverside is a portfolio company of Alpine Investors and expects to utilize their network of school districts to quicken the adoption of the ESGI product. Read more pehub.com Logibec Acquires Knowledge4You On October 29 th, 2019, Logibec announced that they acquired Knowleddge4You. Knowledge4You is a developer of software for Canadian universities and hospitals to facilitate educational programs in the medical field. Logibec is a private equity backed provider of solutions for clinical and financial analysis for healthcare systems. The CEO of Logibec, Marc Brunet, has said that this transaction will help expand the breadth of their solutions to their existing customs and address their growing educational needs. Read more pehub.com VIPKid Completes Series E round   VIPKid, a Beijing-based provider of an online education platform, has announced the completion of a series E funding round. The round was previously reported to be approximately $500 million in value with and total implied enterprise value of $4.5 billion. The company has provided services for over 700,000 children and has historically been backed by Kobe Bryant and Sequoia Capital China as investors.  Read more dealstreetasia.com Kenzie Academy Raises $7.77 Million in Series A Round Kenzie Academy, a provider of technology training and job placement programs that target students in communities that are not located in tradition tech hub cities, has announced the completion of a series A round with funding of $7.77 million.  The fundraising round was led by Rethink Education and included other participants such as Revolution’s Rise of the Rest Seed Fund, Strada Education Network, LearnStart, Peak State Ventures, Flat World Partners, and Kelly Services. Kenzie Academy was founded in 2012 and has raised $13.6 million in funding to date. Read more edsurge.com Stride Raises $2.2 Million Founded in 2018, Stride operates as a student loan program that only collects from students who earn more than forty thousand dollars per year. Stride has announced that they have recently closed a funding round where they have raised approximately $2.2 million. Participants in the round included Slow Ventures, GSV Ventures, Strada Education, and Sinai Ventures. The funding is expected to expand marketing, business development, and hiring for the startup. Read more edsurge.com Alta Growth Capital Invests in Lottus Education Alta Growth Capital, a private equity firm that focuses its investments in Latin America, has announced an investment in a platform provider of higher education in Mexico, Lottus Education. Alta Growth Capital was joined by Stella Maris Partners, Credit Suisse’s Mexico Credit Opportunities Fund, and several others. Alta has stated that the investment was driven by their interest in Lottus’ growth strategy, strong management team, and value proposition. Read more lavca.org MobLab Receives an Investment from Andrew Nikou MobLab, a company that provides interactive economic and behavioral games that assist students with decisions about their education, has announced that it has received an investment from the Andrew Nikou Foundation. The Foundation has stated that they envision MobLab helping people understand what it’s like to run a small business and expand general economic understandings for young people. Read more businesswire.com

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

We saw this month from our friends at the Association of American Publishers that while textbook sales continue to decline broadly in education, there are bright spots. In addition to “supplemental” resources benefiting (and perhaps for some of the same reasons), children’s trade book sales are increasing. Educators in all curriculum subjects, but especially for teaching reading and creating lifelong readers, have learned the benefits of “balanced literacy,” pairing reading instruction (which may include technology solutions) with authentic texts. Time spent reading matters, and thus so do engaging, leveled, and diverse books. And in a trend for edtech investors to pay attention to, ebook sales are down slightly. Echoing the broader patterns with adult trade books, ebooks appear to have flattened out in terms of market share. Many readers and many teachers simply prefer to use physical books for literature. As an edtech industry participant I know that technology can be a powerful toolset for teaching and learning. But as a parent, it is good to see a balanced approach to screen time.

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 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.