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Q1 2015 E DUCATION SECTOR OVERVIEW

March 31, 2015

PARCHMAN , V AUGHAN & C OMPANY, LLC


S Y MPHONY C E NTE R , SU ITE 1 2 0
1 0 40 P A R K AV E NU E , B A LTIMOR E , M D 2 1 201
410-244-8971 | www.parchmanvaughan.com

Table of Contents
Overview

Two-Year Education Stock Price Performance by Sector

Q1 2015 Education Public Company Valuation Data..

Select Q1 2015 Education M&A Transactions.

Overview

Parchman, Vaughan & Company, LLC is happy to share with you our quarterly summary of the earnings
and other multiples of publicly traded education firms, as well as select merger, acquisition, and divestiture
announcements.
We caution that many factors affect the valuation of firms and these multiples are, at best, a guidepost for
how the equity market views the industry, specifically only its publicly traded participants. Growth rates,
return on capital invested, visibility of earnings, and a host of other elements influence valuation.

Two-Year Education Stock Price Performance by Sector

210

190

Prices Indexed to 100

170

150

130

110

90

70

50

S&P 500

Educational Content and Services

Corporate Training

Sources: CapTarget; Parchman, Vaughan & Company, LLC

U.S. Post-Secondary

K-12 Education

Other Education

Q1 2015 Education Public Company Valuation Data


U.S. Post-Secondary
Company Name

Ticker

Latest Reporting Date

American Public Education


Apollo Group
Bridgepoint Education
Capella Education
Career Education Corp.
Corinthian Colleges
DeVry
Education Management Corp.
Grand Canyon University
ITT Educational Services
Lincoln Educational
National American University
Strayer Education
Universal Technical Inst.

APEI
APOL
BPI
CPLA
CECO
COCO
DV
EDMC
LOPE
ESI
LINC
NAUH
STRA
UTI

02/27/2015
03/25/2015
03/10/2015
02/12/2015
03/04/2015
02/03/2015
02/06/2015
01/28/2015
02/19/2015
01/22/2015
03/10/2015
01/08/2015
02/06/2015
02/06/2015

Price
Enterprise
Market Cap ($M)
(As of 3/27/15) Value ($M)

$30.78
$19.20
$9.43
$66.81
$5.25
$0.01
$33.18
$0.30
$43.69
$6.79
$2.28
$3.50
$59.93
$9.56
Min
Mean
Median
Max

3-Year
EBITDA
LTM
NTM
LTM
Revenue Growth Margin TEV/Revenue TEV/Revenue TEV/EBITDA

NTM
LTM
NTM
TEV/EBITDA Price/Earnings Price/Earnings

$424
$1,209
$194
$714
$123
$74
$1,786
$999
$1,907
$175
$75
$60
$595
$183

$530
$2,066
$428
$816
$354
$1
$2,117
$38
$2,042
$159
$55
$88
$653
$237

11.6%
(28.9%)
(34.0%)
0.0%
(50.2%)
NA
(8.0%)
(17.7%)
35.2%
NA
(19.3%)
7.5%
(20.6%)
(8.5%)

28.4%
13.1%
19.4%
21.2%
(0.4%)
7.4%
19.7%
18.8%
27.9%
4.3%
23.4%
16.0%
24.5%
12.2%

1.2x
0.4x
0.2x
1.7x
0.2x
NA
0.9x
NA
3.0x
NA
0.3x
0.5x
1.5x
0.4x

1.2x
0.4x
0.2x
1.6x
0.3x
NA
0.8x
NA
3.0x
NA
0.3x
0.5x
1.4x
0.4x

5.1x
2.0x
2.7x
7.7x
NM
NA
5.5x
NA
9.9x
NA
9.0x
4.9x
6.1x
5.1x

5.1x
2.1x
2.4x
7.4x
NM
NA
5.1x
NA
9.9x
NA
7.9x
4.6x
5.8x
5.5x

13.4x
11.4x
24.6x
20.7x
NA
NA
12.8x
6.0x
17.9x
4.6x
NA
13.9x
14.5x
81.8x

13.7x
16.6x
27.7x
18.9x
NA
NA
12.0x
NA
16.1x
4.5x
NA
12.9x
16.9x
66.1x

$60
$608
$309
$1,907

$1
$685
$391
$2,117

(50.2%)
(11.1%)
(13.1%)
35.2%

(0.4%)
16.9%
19.1%
28.4%

0.2x
0.9x
0.5x
3.0x

0.2x
0.9x
0.5x
3.0x

2.0x
5.8x
5.3x
9.9x

2.1x
5.6x
5.3x
9.9x

4.6x
20.2x
13.9x
81.8x

4.5x
20.5x
16.4x
66.1x

Sources: CapTarget; Parchman, Vaughan & Company, LLC

Q1 2015 Education Public Company Valuation Data


K-12 Education
Company Name

Bright Horizons Family


Cambium Learning Group
K12 Inc.
Nord Anglia Education

Ticker

Latest Reporting Date

BFAM
ABCD
LRN
NORD

02/13/2015
03/17/2015
01/29/2015
01/14/2015

Price
Enterprise
Market Cap ($M)
(As of 3/27/15) Value ($M)

$51.69
$3.19
$15.99
$22.47
Min
Mean
Median
Max

3-Year
EBITDA
LTM
NTM
LTM
Revenue Growth Margin TEV/Revenue TEV/Revenue TEV/EBITDA

NTM
LTM
NTM
TEV/EBITDA Price/Earnings Price/Earnings

$4,309
$252
$522
$2,592

$3,187
$145
$614
$2,221

26.3%
(4.6%)
29.8%
73.0%

16.2%
14.6%
15.8%
27.9%

3.0x
NA
0.5x
5.3x

3.0x
NA
0.5x
5.2x

18.2x
NA
3.2x
20.7x

18.0x
NA
3.0x
20.1x

34.1x
NA
21.9x
49.0x

28.7x
NA
32.8x
29.8x

$252
$1,919
$1,557
$4,309

$145
$1,542
$1,417
$3,187

(4.6%)
31.1%
28.1%
73.0%

14.6%
18.6%
16.0%
27.9%

0.5x
3.0x
3.0x
5.3x

0.5x
2.9x
3.0x
5.2x

3.2x
14.0x
18.2x
20.7x

3.0x
13.7x
18.0x
20.1x

21.9x
35.0x
34.1x
49.0x

28.7x
30.4x
29.8x
32.8x

Educational Content and Services


Company Name

Chegg
Houghton Mifflin Harcourt
John Wiley & Sons Inc.
Pearson
Scholastic

Ticker

Latest Reporting Date

CHGG-US
HMHC
JW.A
PSO-US
SCHL

02/24/2015
02/26/2015
03/10/2015
02/27/2015
03/26/2015

Price
Enterprise
Market Cap ($M)
(As of 3/27/15) Value ($M)

$7.99
$23.04
$61.55
$21.95
$40.56
Min
Mean
Median
Max

3-Year
EBITDA
LTM
NTM
LTM
Revenue Growth Margin TEV/Revenue TEV/Revenue TEV/EBITDA

NTM
LTM
NTM
TEV/EBITDA Price/Earnings Price/Earnings

$575
$2,738
$4,080
$20,286
$1,429

$675
$3,275
$3,623
$17,764
$1,326

42.9%
6.7%
(0.4%)
1.6%
(15.2%)

NA
16.5%
26.2%
NA
1.5%

2.0x
2.1x
NA
2.5x
0.8x

1.9x
2.1x
NA
2.5x
0.8x

24.8x
11.7x
NA
16.5x
6.4x

24.2x
11.6x
NA
16.2x
6.2x

NA
NA
19.1x
20.5x
22.3x

354.6x
NA
20.3x
18.4x
19.9x

$575
$5,822
$2,738
$20,286

$675
$5,333
$3,275
$17,764

(15.2%)
7.1%
1.6%
42.9%

1.5%
14.7%
16.5%
26.2%

0.8x
1.9x
2.0x
2.5x

0.8x
1.8x
2.0x
2.5x

6.4x
14.9x
14.1x
24.8x

6.2x
14.5x
13.9x
24.2x

19.1x
20.6x
20.5x
22.3x

18.4x
103.3x
20.1x
354.6x

Sources: CapTarget; Parchman, Vaughan & Company, LLC

Q1 2015 Education Public Company Valuation Data


Corporate Training
Company Name

Ticker

Latest Reporting Date

Franklin Covey
Corporate Executive Board
GP Strategies
Learning Tree Intl

FC
CEB
GPX
LTRE

01/09/2015
02/05/2015
02/24/2015
02/10/2015

Price
Enterprise
Market Cap ($M)
(As of 3/27/15) Value ($M)

$17.18
$78.84
$36.74
$1.56
Min
Mean
Median
Max

3-Year
EBITDA
LTM
NTM
LTM
Revenue Growth Margin TEV/Revenue TEV/Revenue TEV/EBITDA

NTM
LTM
NTM
TEV/EBITDA Price/Earnings Price/Earnings

$313
$3,074
$738
($9)

$291
$2,640
$628
$21

20.4%
46.0%
25.0%
(8.4%)

12.6%
22.9%
11.5%
1.4%

1.3x
3.3x
1.3x
NA

1.2x
3.2x
1.3x
NA

7.5x
14.6x
NA
NA

7.1x
14.2x
NA
NA

17.5x
21.7x
25.5x
NA

17.2x
20.5x
22.0x
NA

($9)
$1,029
$526
$3,074

$21
$895
$459
$2,640

(8.4%)
20.7%
22.7%
46.0%

1.4%
12.1%
12.0%
22.9%

1.3x
2.0x
1.3x
3.3x

1.2x
1.9x
1.3x
3.2x

7.5x
11.1x
11.1x
14.6x

7.1x
10.6x
10.6x
14.2x

17.5x
21.6x
21.7x
25.5x

17.2x
19.9x
20.5x
22.0x

Other Education
Company Name

2U
Graham Holdings Company

Ticker

Latest Reporting Date

TWOU
GHC

02/27/2015
02/20/2015

Price
Enterprise
Market Cap ($M)
(As of 3/27/15) Value ($M)

$22.49
$1,043.00
Min
Mean
Median
Max

3-Year
EBITDA
LTM
NTM
LTM
Revenue Growth Margin TEV/Revenue TEV/Revenue TEV/EBITDA

NTM
LTM
NTM
TEV/EBITDA Price/Earnings Price/Earnings

$634
$6,723

$922
$6,075

97.3%
(12.0%)

NA
17.6%

7.6x
NA

7.8x
NA

NM
NA

NM
NA

NA
6.6x

NA
24.3x

$634
$3,679
$3,679
$6,723

$922
$3,499
$3,499
$6,075

(12.0%)
42.6%
42.6%
97.3%

17.6%
17.6%
17.6%
17.6%

7.6x
7.6x
7.6x
7.6x

7.8x
7.8x
7.8x
7.8x

NA
NA
NA
NA

NA
NA
NA
NA

6.6x
6.6x
6.6x
6.6x

24.3x
24.3x
24.3x
24.3x

Sources: CapTarget; Parchman, Vaughan & Company, LLC

Select Q1 2015 Education M&A Transactions

The recently announced sale of Nobel Learning Communities Inc. to


Investcorp bodes well for the service firms within the sector. While
EdTech deservedly garners attention and capital, the service sector
should not be overlooked. The visibility of earnings for service firms
like childcare, K-12 schools, and providers of services to at-risk youth
can be attractive. These enterprises have the ability to build a reputation
for educational excellence, which is more difficult to accomplish in the
digital world.

Select Q1 2015 Education


Transactions by Sector
9%
20%
6%

66%

Educational Content and Services


Corporate Training
Post-Secondary
K-12 Education

Select Q1 2015 Education M&A Transactions


Announcement
Date
3/30/2015
3/23/2015
3/20/2015
3/12/2015
3/10/2015
3/10/2015
3/9/2015
3/3/2015
3/2/2015
3/2/2015
3/2/2015
3/2/2015
2/26/2015
2/25/2015
2/24/2015
2/23/2015
2/23/2015
2/19/2015
2/19/2015
2/18/2015
2/18/2015
2/16/2015
2/12/2015
2/12/2015
2/11/2015
2/10/2015
2/9/2015
2/4/2015
2/3/2015
2/3/2015
2/2/2015
1/27/2015
1/26/2015
1/15/2015
1/6/2015

Acquirer Company

Target Company

Target Business Type

Investcorp
Scholastic Corporation
Blackboard
Raffles Education Investment Pte Ltd.
PopExpert/Learn Capital Ventures/Expansion Ventures
Cruzeiro do Sul Educacional SA
Educinvest SPRL
iModules Software
Harris School Solutions
FrogTrade Ltd./YTL Education Ltd.
Union Graduate College
Strategic Products & Services/Court Square Capital Partners
Myongji Hospital
Lerner Publishing Group
Radnor House School Ltd./Albion Ventures
Hobsons
Certica Solutions/Brook Venture Management
Renaissance Learning
PeopleAdmin
Abila
Peterson's Nelnet
Oxford City Football Club
Education Corporation of America
Fluent
Alma
Invoke Solutions
Teaching Strategies
Revelstoke Capital Partners
Wey Education
Zenith Education Group/Educational Credit Management Corp.
FF&P Private Equity Ltd.
R.R. Donnelley & Sons Co
University of Iowa
Zaner-Bloser
Brentwood Associates

Nobel Learning Communities


Make Believe Ideas - Minority Stake
Schoolwires
Remaining Stake in Raffles Higher Education Ltd.
Online Marketing Institute
Unio Brasileira Educacional Ltda (2 Universities and 1 School)
Learning Tree International SA
OrgSync
ClassMate Solutions
I Education Ltd.
Clarkson University
ExtraTeam
Seonam University
Egmont USA's Remaining Assets
Combe Bank School
Starfish Retention Solutions
Northwest Evaluation's Formative Assessment Item Bank
Uclass
Netchemia
Peach New Media
Dean Vaughn Learning Systems' Total Retention System
Alvaedu
Kaplan Higher Education's 38 College Campuses
Streak Media
Always Prepped
Academic Management Systems
Tadpoles
Career Step
InterHigh Education Ltd.
Corinthian Colleges' 56 College Campuses
Kallidus Ltd. - Minority Stake
Courier Corporation
AIB College of Business
Superkids Reading Program
Excelligence Learning Corporation

K-12 Education
Educational Content and Services (Int'l)
Educational Content and Services
Post-Secondary (Int'l)
Corporate Training
Post-Secondary (Int'l)
Educational Content and Services (Int'l)
Educational Content and Services
Educational Content and Services
Educational Content and Services (Int'l)
Post-Secondary
Educational Content and Services
Post-Secondary (Int'l)
Educational Content and Services
K-12 Education (Int'l)
Educational Content and Services
Educational Content and Services
Educational Content and Services
Educational Content and Services
Educational Content and Services
Educational Content and Services
Educational Content and Services
Post-Secondary
Educational Content and Services
Educational Content and Services
Educational Content and Services
Educational Content and Services
Corporate Training
K-12 Education (Int'l)
Post-Secondary
Educational Content and Services (Int'l)
Educational Content and Services
Post-Secondary
Educational Content and Services
Educational Content and Services

Sources: CapTarget; Parchman, Vaughan & Company, LLC


9

Acquisition
Price ($M)
$405.0 - Pending
NA
NA
$15.7 - Pending
NA
NA
NA
NA
NA
NA
NA - Pending
NA
NA - Pending
NA
NA
NA
NA
NA
NA
NA
NA
$7.0 - Pending
NA
NA
NA
NA
NA
NA
$1.2 - Pending
$24.0
NA
$261.0 - Pending
NA - Pending
NA
NA

For more information, please visit www.parchmanvaughan.com

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