Cherry Tree & Associates | September 2022 | Volume XVI, Issue 3

SELECTED NEWS

IXL Learning Acquires Emmersion


IXL Learning, a developer of personalized learning products, acquired Emmersion, a Utah-based language certification platform that utilizes artificial intelligence. Emmersion’s adaptive assessments evaluate and certify speaking, writing, and reading abilities, which can shorten an organization's time-to-hire and improve customer satisfaction scores. Emmersion claims to have conducted millions of automated assessments for corporate and education institutions. The acquisition is expected to deepen IXL’s line of language and literacy products.


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prnewswire.com

Solid Professor Acquired Streamingteacher


Solid Professor, an on-demand training platform for engineering, acquired Streamingteacher, an online training provider of Mastercam. The acquisition is expected to add over 160 hours of Mastercam training content, which was named the most-used CAM software worldwide for the last 27 years by CIMdata, Inc. SolidProfessor’s CEO and co-founder Tony Glocker said, “By adding more Mastercam tutorials to our course library, we can further our mission of sharpening the minds that will our future.”


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businesswire.com

Cadence Education Acquires Little Big Mind Spanish Immersion Preschools


Cadence Education, a provider of early childhood education, acquired Little Big Minds Spanish Immersion Preschools. Little Big Minds' full Spanish immersion program allows students to develop early childhood bilingualism through social and academic interaction. The acquisition expands Cadence Education's presence in the greater Phoenix area and is expected to increase its ability to provide education to more children. Cadence Education has added over 40 schools to its portfolio over the past 18 months and now claims to serve children and families in 30 states across the U.S.


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prnewswire.com

Edlio Acquires SchoolInfo


Edlio, a provider of technology solutions for K-12 schools, acquired SchoolInfo, a creator of mobile apps for schools. SchoolInfo claims to have created mobile apps for more than 2,500 schools, districts, and other organizations, with nearly 3 million teachers, parents, and students worldwide relying on its products. Edlio plans to offer SchoolInfo’s Access app to its clients to round out its technology suite.


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globenewswire.com

KnowFully Learning Group Acquires EMT & Fire Training Inc.


KnowFully Learning Group, a NexPhase Capital-backed company and provider of continuing professional education, exam preparation courses, and digital learning solutions to the healthcare, accounting, and finance sectors, acquired EMT & Fire Training Inc., a provider of emergency medical services and firefighting educational programs. EMT & Fire Training offers a combination of online and in-person instruction with more than 100 courses. Since 2019, KnowFully has added nine healthcare businesses to its portfolio.


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finance.yahoo.com

EAB Acquires Concourse Global


EAB, a provider of education research technology, and marketing and enrollment solutions, acquired Concourse, the creator of an alternative college admissions platform to increase access to higher education. Concourse’s proprietary technology enables schools to compete for students, who have created anonymized profiles on the platform, with proactive offers of admission and financial aid. EAB and Concourse became partners in 2021, working on Greenlight Match, to provide first-generation students and those with lower incomes the opportunity to create free profiles on the Concourse platform and receive offers from nearby colleges in the Chicago area. EAB plans to expand the program to include six more metropolitan areas.


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eab.com

GiveCampus Raises $50 Million Led by Silversmith Capital Partners


GiveCampus, a fundraising platform for nonprofit educational institutions, closed a $50 million minority growth equity investment led by Silversmith Capital Partners, a Boston-based growth equity firm. Several individual investors also participated in the financing including Y Combinator’s Michael Seibel, Stripe’s Claire Hughes Johnson, and founding HubSpot team member, Mike Volpe. The Company was founded in 2014 to advance the quality, affordability, and accessibility of education by providing non-profit educational institutions with a modern platform to reach, engage and mobilize their communities. The capital is planned to be used to accelerate product development and hiring across to organization.


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businesswire.com

Hone Raises $30 Million to Grow its Corporate Learning Platform


Hone, a leadership upskilling and training company, raised $30 million in its Series B, which had contributions from 3L Capital, F-Prime Capital, Cowboy Ventures, and Slack Fund. Hone offers live, small-group, exec-focused instruction to reinforce concepts through real-time practice and feedback. The Company expects to use the funding towards experimentation with “intelligent” recommendations and reinforcements to better the learners’ experience and drive more successful learning outcomes. Hone’s total raised stands at $52 million.


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techcrunch.com

Tract Raises $7 Million in Seed Funding


Tract, an online community where kids teach kids through multimedia, raised $7 million in seed funding led by NEA with participation from Sangha Captial/ACTAI, 23&Me, YouTube, Zynga, and Chegg. Tract is designed to allow kids to learn, create, share, and teach through video in its moderated online community. The funding is expected to be used to further its mission. The Company claims that over 30,000 members joined in its first year.


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prnewswire.com

LDC Invests in Avantis


LDC, a mid-market private equity firm, invested in Avantis, a provider of virtual reality-based learning technology. Avantis has a portfolio of classroom-focused products and services that are said to be used daily by millions of students. The Company recently launched Avantis World, an education VR theme park and Eduverse, a K-12 Metaverse platform, which is expected to drive growth in new market segments and territories. LDC is backing Avantis’ existing management team and plans to further develop its suite of products and services and continue Avantis’ international expansion.


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ldc.co.uk

Rockbridge Growth Equity Makes Strategic Investment in The Nest Schools


Rockbridge Growth Equity, a middle market private equity firm, made a strategic investment in The Nest Schools, an operator of 36 early childhood education centers across Ohio, North Carolina, Texas, Florida, and Virginia. Nest’s curriculum and programs are designed to encourage children to wonder, question, work with their peers, and experiment with different possibilities. The Company is said to have more than 600 team members that deliver its curriculum to over 3,000 infants, toddlers, preschoolers, and school-age children.


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prnewswire.com

Vista Equity Partners Pursuing Acquisition of KnowBe4


KnowBe4, Inc (Nasdaq: KNBE), a provider of security awareness training and simulated phishing platform, has received a non-binding proposal from Vista Equity Partners for $24 per share in cash. This represents a 39% premium to KnowBe4’s closing price on September 16, 2022. The Company has formed a special committee to engage with Vista to review the proposal and other potential value creation opportunities for its shareholders. KnowBe4 claims to serve more than 52,000 organizations around the world.


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globenewswire.com

XanEdu Announces the Formation of Scholarus Learning and Acquisition of PLC Associates


XanEdu, Inc., a provider of educational content and curriculum services for K-12 and higher education, announced the formation of Scholarus Learning, a portfolio of companies that provide products and services across the education value chain. It simultaneously announced that it acquired PLC Associates, Inc., a provider of training, measurement, and advisory materials for the K-12 markets. “The formation of Scholarus Learning is an important step forward in our growth strategy within the education sector as we expand our portfolio of complementary companies that provide industry-leading breadth of products and services,” said Michael Langdon, Managing Director of Frontenac, its financial partner. The addition of PLC Associates, follows its acquisition of Educations Elements and Tripod last year. Scholarus claims to serve more than 1,800 schools in over 350 districts along with thousands of colleges and universities.


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finance.yahoo.com

Discovery Education Acquired Pivot Interactives


Discovery Education, an edtech company backed by Clearlake Capital Group, acquired Minneapolis-based Pivot Interactives SBC. Pivot Interactives is a developer of dynamic cloud-based activities and labs to engage students in the exploration of scientific phenomena. The acquisition is expected to complement Discovery Education’s other digital services that support science education. Pivot Interactives is Discovery Education’s second acquisition this September, having also acquired DoodleLearning.


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prnewswire.com

Scholastic Acquires Learning Ovations


Scholastic, a global children’s publishing, education, and media company, acquired Learning Ovations, the creator of A2i, a literacy screening, progress monitoring assessment, and instructional planning system. A2i is said to be backed by over 12 years of research and more than 2,000 hours of classroom observation and meets all What Works Clearinghouse standards. The program embeds teaching practices aligned with the Science of Reading, which are supported by virtual professional development. The acquisition of A2i is expected to advance the development of Scholastic’s literacy platform.


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seekingalpha.com

CeriFi Acquires Solomon Exam Prep


CeriFi, a Leeds Equity Partners portfolio company, acquired Solomon Exam Prep, a provider of securities licensing exam preparation and review materials for FINRA, NASSA, MSRB, and NFA licensing exams. Solomon is the twelfth acquisition for CeriFi, a provider of financial education, training, and certification solutions. “The acquisition of Solomon further expands the depth and breadth of CeriFi’s securities licensing content and product suite and uniquely positions CeriFi to meet the ever-changing needs of our financial services customers,” said Eric Geveda, Managing Director at Leeds Equity Partners. CeriFi’s product portfolio includes education, training and certification in accounting, financial crime, financial planning, financial risk management, insurance, securities licensing and tax. The Company also offers financial curriculum and courseware to universities.


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prnewswire.com

Edcetera Acquires PrepFE


Edcetera, the Eden Capital-backed provider of continuing education, exam prep, and licensing programs, acquired PrepFE, an exam prep platform that helps engineers pass the Fundamentals of Engineering (FE) exam to become Engineers-in-Training (EIT), which is a required step for aspiring Professional Engineers (PE). According to the Bureau of Labor Statistics, there are more than 1.6 million engineers in the workforce, which is expected to grow 7% over the next 10 years. The acquisition is expected to enable PrepFE to fuel investments in product innovation and the creation of new educational offerings.


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prnewswire.com

THE Acquires BMI


Times Higher Education (THE), a study abroad platform, acquired student recruitment event operator BMI Global Ed. Together, the brands will have an estimated reach of over 20 million prospective international students each year. “Bringing together the world’s leading student recruitment events business with one of the world’s largest and most renowned study abroad platforms is an incredibly exciting development at Times Higher Education,” Paul Howarth, CEO at THE, explained. BMI has been a “trusted partner” of THE Student platform for a long time and will continue to collaborate with THE on event content and unlocking its brand reach.


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thepienews.com

Ocelot Raises $117 Million in its First Outside Funding


Ocelot, a provider of an AI-based platform that facilitates easier communications between universities and their students around applications for financial aid and other services, raised $177 million from sole-investor K1 Investment Management. Ocelot provides services such as texting, chatbots, live chat interfaces, video libraries, and counseling interfaces for financial aid offices to better discovery and customer service style interactions between students and their institutions. The funding is expected to be used to expand the tools for financial aid-related interactions and potentially bring in more services to offer a fuller-suite of solutions for how an institution interacts with its student body.


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techcrunch.com

Nexford University Raises $8 Million in Series A Funding


Nexford University, a U.S.-based online university platform, has raised $8 million in a Series A round co-led by New Markets Venture Partners and Learn Capital. The tech-enabled startup was launched in 2019 with the goal of filling affordability and relevance gaps in education. The university offers several accredited degree programs costing between $3,000 and $4,000. Nexford plans to use the proceeds to take it into new markets, broaden the company’s academic offerings and enhance its technology infrastructure.


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techcrunch.com

Growth School Raises $5 Million in Seed Funding


Growth School, an edtech platform based in Bangalore, secured $5 million in seed funding from Sequoia Capital and Owl Ventures with participation from several angel investors. Growth School has a community-led module system that teaches precise knowledge in a short period for an affordable price. The funding is expected to be used to expand the team and establish a stronger ecosystem, along with venturing into new markets and studying the metaverse for the education industry.


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businessoutreach.in

Kahoot! Announces Strategic Secondary Investment from General Atlantic


Kahoot!, a learning and engagement platform company, announced that General Atlantic, a growth equity firm, bought SoftBank’s full 15% stake in the Company. Kahoot! Plans to partner with General Atlantic to accelerate further growth initiatives, drive innovation, and expand its global footprint in homes, schools, and corporations. The Company claims that its core service has been used by over 8 billion times since its launch. Upon completion of the transaction, General Atlantic is expected to become Kahoot!’s largest shareholder.


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prnewswire.com

OneTen and Multiverse Announces New Partnership


Multiverse, an edtech company building an alternative to college and corporate training through professional apprenticeships, has partnered with OneTen, a coalition of executives and their companies who have committed to upskill, hire, and advance one million Black individuals over the next 10 years into family-sustaining jobs with opportunities for advancement. Together, the two companies plan to connect thousands of Black individuals to job training and full-time careers through tech apprenticeship programs at OneTen coalition member companies.


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prnewswire.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

Long term investors in the K-12 world understand that even more than other markets, distribution is key to success. Educators have limited time, and are inundated with requests for their attention. Meanwhile they sometimes have a skepticism when it comes to for-profit entities, and unlike most industries make decisions for more subjective and non-financial reasons. Vendors need to understand their goals and the environment in which they sell, speak their language, know how to help them find the money to pay for products and services, and have the relationships that get their foot in the door to even have a conversation.


Knowing this, we often get asked mid-year by CEOs looking to benchmark against the industry, how sales are holding up across the market. We are in the fortunate position of speaking with executives in the market nearly every day, and we’ve recently been hearing a common theme in those conversations: this has been an unusual year where sales started strong and stalled for a lot of companies. My colleague Mike Buttry reminds me that “the plural of anecdote is not data,” but he agrees with me that when we hear from enough CEOs saying the same thing we need to pay attention, and this has come from more than just a few.


The common theme is that in late Spring, as we approached the end of the fiscal year, sales became harder and hard to close, or even to get to a decision. Leader after leader in different segments (curriculum, assessment, etc.) have reported that schools weren’t saying “no,” they just weren’t saying “yes.” Reportedly renewals are doing okay, but new business has been especially challenged. Could it be schools are focused on bigger issues, such as the teacher shortfall? Could it be that after two years of pandemic instruction and triaging needs on an hourly basis, they just needed a summer off? Or could it be that after the significant shift to digital resources during the pandemic, they decided to take a step back to evaluate what they need and what they purchased, in a “new normal” back in the classroom? We can’t say for sure, but our bet is all three were factors.  


For insight on the education markets and how they affect your business, via a confidential discussion with one of our experienced investment bankers, please contact us at 952-893-9012.

About Cherry Tree & Associates:

Cherry Tree is a Minneapolis-based investment banking firm with more than four decades of transaction experience, with education being a primary segment focus. Our services include Sell-Side M&A where ownership wants to either realize their liquidity goals or desires to recapitalize their business to better position it for future growth. Additionally, we represent Buy-Side clients in efforts to add acquisitions to complement their organic growth efforts. 

Prepared by:

Chad Johnson, Managing Partner

cjohnson@cherrytree.com | 952.253.6010

www.cherrytree.com

Follow me on Twitter@ChadEricJohnson


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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.