M&A education report

HYDE PARK CAPITAL
Integrity | Expertise | Results Investment Banking | Mergers & Acquisitions | Capital Raising

John Hill
Senior Managing Director
hill@hydeparkcapital.com
Education
(813) 383-0205

John McDonald
Industry Update
mcdonald@hydeparkcapital.com
March 2012
(813) 383-0206

Keith Hodgdon
Senior Vice President
hodgdon@hydeparkcapital.com
(813) 383-0208

Jeffrey Bridge
Vice President
bridge@hydeparkcapital.com
(813) 383-0204

Michael Mariani
Associate
mariani@hydeparkcapital.com
(813) 597-2649

Hyde Park Capital Advisors, LLC
701 N. Franklin Street
Tampa, FL 33602
Tel: 813-383-0202
www.hydeparkcapital.com
Member FINRA/SIPC

Education – Industry Update
Commentary Stock Price Performance (LTM)
140%
 As of March 6, 2012 the performance of the Education industry’s
sectors: eLearning & Technology (down 27%), Education Services 130%
(down 15%), and Publishing (up 14%), varied in their public
120%
market performance over the trailing 12-month period. 13.7%

110%
 Current valuation multiples, defined as Enterprise Value over LTM 2.5%
100%
EBITDA, remain attractive for the eLearning & Technology and
Publishing sectors at 8.6x and 8.2x, respectively. 90%

14.9%
80%
 As shown in the table below and on the following pages,
investment and M&A activity remained strong throughout the 70% 27.0%
Education industry, highlighted by PLATO Learning’s recently
60%
proposed acquisition of Archipelago Learning (Nasdaq:ARCL) for Mar-11 Jun-11 Sep-11 Dec-11 Mar-12
approximately $305 million (profiled on the following page). S&P 500 eLearning & Technology Index Education Services Index Publishing Index

Select Private Placements – Education Trading Multiples (Enterprise Value / EBITDA)
Transaction 25.0x
Closed Date Target Education Sector Buyer / Investor Value
21.2x
Pending . MyEdu Corp. . Education Services . The University of Texas System . $10

20.0x
Dec-11 . DreamBox Learning, Inc. . eLearning . GSV Capital Corp. . $11

Oct-11 . ConnectEdu, Inc. . Education Services . Allen & Co. . $10
Enterprise Value / EBITDA 14.9x
15.0x
Oct-11 . Inquisitive Minds, Inc. . eLearning . HTC Corporation . $13 12.8x

Oct-11 . Knewton, Inc. . eLearning . Accel Management Co. . $33 10.3x
9.7x 9.8x 9.2x
10.0x 8.9x
8.6x 8.6x
Aug-11 . VectorLearning.com, Inc. . eLearning . LLR Partners . $24 7.7x
8.0x 8.1x 8.1x 8.0x 8.2x
Jul-11 . C2 Education Centers, Inc. . Education Services . Serent Capital . $30 7.4x 7.7x
7.0x 6.5x
5.0x
5.1x
May-11 . Edleun Group, Inc. . Education Services . Vision Capital Corp. . $25 4.3x 4.3x 4.2x 4.2x 4.6x
4.0x

Apr-11 . K12, Inc. . eLearning . Technology Crossover Ventures . $126
0.0x
Q1 '10 Q2 '10 Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11 Q4 '11 March '12*
Feb-11 . Cambium Learning Group, Inc. . Education Services . Undisclosed . $174
eLearning & Technology Education Services Publishing
Source: S&P Capital IQ *As of 3/6/2012

HYDE PARK CAPITAL 2
Investment Banking | Mergers & Acquisitions | Capital Raising

Education – Recent M&A Transaction Profiled
Archipelago Learning, Inc. (Nasdaq: ARCL) Transaction Details

 Archipelago Learning, Inc. is a leading subscription-based, Archipelago Learning, Inc. (Nasdaq:ARCL) to be acquired by PLATO Learning, Inc.
Announced Date: March 5, 2012
software-as-a-service provider of education products used by over Financial Profile Transaction Analysis
14.6 million students in nearly 39,100 schools throughout the ($ in millions)
LTM
United States, Canada and the United Kingdom. Income Statement 12/31/11 Purchase Price (Equity) $294.6

 On March 5, 2012 Archipelago Learning entered into a definitive Revenue $73.3
Net Debt $10.3
agreement to be acquired for $11.10 per share of common stock EBITDA $25.6
by PLATO Learning, Inc., a portfolio company of Thoma Bravo, in
Net Income $11.9 Implied Enterprise Value $304.9
an all-cash transaction valued at approximately $305 million,
including the assumption of debt. As of
Balance Sheet 12/31/11 Implied LTM Purchase Multiples

 The offer represents a 23% premium over the closing price of Cash $64.6 Revenue 4.2x
$9.04 per share on March 2, 2012, the day before Archipelago Debt $74.9 EBITDA 11.9x
Learning publicly announced it was evaluating strategic
Net Debt $10.3 Net Income 24.7x
alternatives. The transaction is expected to close in Q2 2012.

 According to PLATO Learning’s CEO, Vin Riera, the acquisition Premium Analysis

allows the combined entity to “cover the entire spectrum of Share Price Premium Share Price Premium
learning needs from pre-K through postsecondary, as well as reach 52-Week Average $9.49 17.0% One Day Prior $9.04 22.8%
a broader group of students and educators with a product 52-Week High $10.91 1.7% One Week Prior $9.46 17.3%
portfolio that sets a rigorous standard in online education.”
52-Week Low $7.90 40.5% One Month Prior $10.60 4.7%

Source: S&P Capital IQ, PLATO Learning, Inc. press release.

HYDE PARK CAPITAL 3

eLearning & Technology
Public Company Analysis
Enterprise Value /
Closing Price % of 52 Equity Enterprise LTM LTM Margins LTM
Company Ticker 3/6/12 Week High Value Value Revenue Gross Profit EBITDA Gross Profit EBITDA Revenue EBITDA

K12, Inc. LRN $20.85 52% $721 $643 $618 $254 $60 41.1% 9.6% 1.0x 10.8x
Smart Technologies, Inc. TSX:SMA $3.20 30% $396 $605 $765 $356 $122 46.5% 15.9% 0.8x 5.0x
American Public Education, Inc. APEI $38.24 78% $700 $581 $260 $165 $72 63.4% 27.7% 2.2x 8.1x
LeapFrog Enterprises, Inc. LF $6.88 87% $456 $385 $455 $186 $35 41.0% 7.7% 0.8x 10.9x
Archipelago Learning, Inc. ARCL $11.04 98% $293 $303 $73 $67 $26 91.0% 41.8% 4.1x 11.8x
Promethean World Plc LSE:PRW $1.17 87% $236 $202 $347 $149 $41 42.9% 11.7% 0.6x 5.0x
Rosetta Stone, Inc. RST $9.51 59% $198 $81 $268 $219 ($20) 81.7% NM 0.3x NM
Learning Tree International, Inc. LTRE $5.88 56% $79 $34 $133 $72 $10 53.8% 7.2% 0.3x 3.6x

Average 68% $385 $354 $365 $184 $43 57.7% 17.4% 1.3x 7.9x
Median 68% $345 $344 $308 $176 $38 50.2% 11.7% 0.8x 8.1x

Stock Price Performance (LTM) Select M&A Transactions – eLearning & Technology
Enterprise EV / EV /
130% Closed Date Target Buyer / Investor Value Revenue EBITDA

Pending . Super Star Learning, Inc. . AppTech Corp. . NA . NA . NA
120%
Pending . Educational Options, Inc. . PLATO Learning, Inc. . NA . NA . NA

110% Pending . Learning House, Inc. . Weld North . NA NA . NA
2.5% Pending . Connections Education, LLC . Pearson plc $400 NA . NA
100%
Jan-12 . SunGard Higher Education, Inc. . Datatel, Inc. . $1,775 NA . NA

90% Dec-11 . iPal Interactive Learning, Inc. .
The Knightsbridge Human Capital
. NA . NA . NA
Management, Inc.

80% Oct-11 . Renaissance Learning, Inc. . Permira Advisers, Ltd. . $446 . 3.3x . 11.3x

27.0% Oct-11 . Element K Corp. . SkillSoft Corp. . $110 . 1.3x . NA
70%
Oct-11 . Blackboard, Inc. . Providence Equity Partners . $1,776 . 3.8x . 21.3x

60% Oct-11 . Edline Holdings, Inc. . Blackboard, Inc. . NA . NA . NA

Sep-11 . ilinc Communications, Inc. . BroadSoft, Inc. . $11 . NA . NA
50%
Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-11 . Plateau Systems, Ltd. . SuccessFactors, Inc. . $290 . NA . NA

S&P 500 eLearning & Technology May-11 . Schoolnet, Inc. . Pearson plc . $230 . NA . NA

Apr-11 Barbri Leeds Equity Partners NA NA NA
Source: S&P Capital IQ

HYDE PARK CAPITAL 4

Education Services
Enterprise Value /

Apollo Group, Inc. APOL $42.03 72% $5,792 $4,706 $4,585 $2,810 $1,220 61.3% 26.6% 1.0x 3.9x
Education Management Corp. EDMC $16.64 56% $2,199 $3,401 $2,869 $1,551 $600 54.1% 20.9% 1.2x 5.7x
DeVry, Inc. DV $34.09 51% $2,365 $2,085 $2,153 $1,206 $491 56.0% 22.8% 1.0x 4.2x
ITT Educational Services, Inc. ESI $63.05 66% $1,744 $1,516 $1,500 $995 $535 66.3% 35.7% 1.0x 2.8x
Strayer Education, Inc. STRA $96.19 58% $1,149 $1,210 $627 $335 $201 53.5% 32.0% 1.9x 6.0x
Bridgepoint Education, Inc. BPI $23.39 76% $1,336 $1,049 $933 $674 $286 72.2% 30.7% 1.1x 3.7x
Grand Canyon Education, Inc. LOPE $16.69 90% $753 $755 $427 $232 $100 54.4% 23.4% 1.8x 7.6x
Corinthian Colleges, Inc. COCO $4.19 68% $355 $452 $1,716 $656 $125 38.2% 7.3% 0.3x 3.6x
Capella Education Co. CPLA $37.50 64% $574 $448 $430 $258 $93 60.0% 21.6% 1.0x 4.8x
Universal Technical Institute, Inc. UTI $12.71 56% $315 $210 $441 $259 $58 58.7% 13.1% 0.5x 3.6x

Average 66% $1,658 $1,583 $1,568 $898 $371 57.5% 23.4% 1.1x 4.6x
Median 65% $1,243 $1,129 $1,217 $665 $244 57.4% 23.1% 1.0x 4.1x

Stock Price Performance (LTM) Select Transactions – Education Services

Pending . Cortiva Group, Inc. . Steiner Leisure, Ltd. . $33 . 1.3x . NA
120%
Pending . Education Development International . Pearson plc . $168 . 3.5x . 10.1x

110% Feb-12 . Emergency Training Services, Inc. . International Education Corp. . NA . NA . NA
2.5%
Nov-11 . Crisis Prevention Institute, Inc. . Brockway Moran & Partners, Inc. . NA . NA . NA
100%
Oct-11 . Envision EMI, LLC . Gryphon Investors . NA . NA . NA
90% Oct-11 . Global Knowledge, Inc. . MidOcean Partners . NA . NA . NA

80% 14.9% Oct-11 . Schweser Study Program . Sircon Corp. . NA . NA . NA

Oct-11 . LaSalle Computer Learning Center . Florida Technical College . NA . NA . NA
70%
Oct-11 . Literacy First, Inc. . Catapult Learning, LLC . NA . NA . NA

60% Sep-11 . Carnegie Learning, Inc. . Apollo Group, Inc. . $74 . NA . NA

Sep-11 . Drake Beam Morin, Inc. . Lee Hecht Harrison, LLC . $216 . 1.8x . NA
50%
Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Aug-11 . Nobel Learning Communities, Inc. . Leeds Equity Partners . $145 . 0.6x . 8.4x
American University of the Caribbean
S&P 500 Education Services Aug-11 . . DeVry, Inc. . $235 . NA . NA
and Medical Education Services, Inc.

Source: S&P Capital IQ Apr-11 . Youth and Family Centered Services . Acadia Healthcare Company, LLC . $259 . 1.4x . 8.1x

HYDE PARK CAPITAL 5

Education Publishing
Enterprise Value /

Pearson plc NYSE:PSO $18.75 94% $15,036 $16,117 $9,124 $5,040 $1,620 55.2% 17.8% 1.8x 9.9x
The McGraw-Hill Companies, Inc. MHP $45.75 96% $13,908 $14,209 $6,246 $3,846 $1,672 61.6% 26.8% 2.3x 8.5x
John Wiley & Sons, Inc. JW.A $44.63 84% $2,753 $3,181 $1,770 $1,233 $301 69.7% 17.0% 1.8x 10.6x
Scholastic Corp. SCHL $30.15 94% $951 $1,052 $1,951 $1,060 $189 54.3% 9.7% 0.5x 5.6x
School Specialty, Inc. SCHS $3.12 19% $59 $324 $740 $286 $44 38.6% 5.9% 0.4x 7.4x

Average 77% $6,541 $6,977 $3,966 $2,293 $765 55.9% 15.4% 1.4x 8.4x
Median 94% $2,753 $3,181 $1,951 $1,233 $301 55.2% 17.0% 1.8x 8.5x

Stock Price Performance (LTM) Select Transactions – Education Publishing

Pending . Neal-Schuman Publishers, Inc. . American Library Association . NA . NA . NA
130%
Pending . Thomas Nelson, Inc. . HarperCollins Publishers, LLC . NA . NA . NA

Feb-12 . Inscape Publishing, Inc. . John Wiley & Sons, Inc. . $85 . NA . NA
120%
13.7% Feb-12 . Teaching Strategies, Inc. . Chicago Growth Partners . NA . NA . NA

110% Jan-12 . Modern Publishing, Inc. . Kappa Books Publishers, LLC . NA . NA . NA

2.5% Dec-11 . Carus Publishing Co. . ePals Corp. . $25 . NA . NA
100%
Dec-11 . Stalla Seminars, Inc. . Schweser Study Program . NA NA . NA
National Geographic School
90% Aug-11 . . Cengage Learning, Inc. . NA . NA . NA
Publishing, Inc.
Jun-11 . The HW Wilson Co., Inc. . EBSCO Publishing, Inc. . NA . NA . NA
80% May-11 . Nolo, Inc. . Internet Brands, Inc. . NA NA . NA

May-11 . Physicians' Education Resource, LLC . ArcMesa Educators, LLC . NA NA . NA
70%
Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Apr-11 . Key Education Publishing Co., LLC . Carson-Dellosa Publishing, LLC . NA NA . NA

S&P 500 Publishing Mar-11 . FrogDogMedia, LLC . Zuuka! GmbH . NA . NA . NA

Source: S&P Capital IQ

HYDE PARK CAPITAL 6

HYDE PARK CAPITAL
Integrity | Expertise | Results Investment Banking | Mergers & Acquisitions | Capital Raising

Recent Transactions
John Hill
hill@hydeparkcapital.com
(813) 383-0205

has been acquired by has been recapitalized by has been acquired by has been acquired by has acquired
John McDonald
mcdonald@hydeparkcapital.com ADG Acquisition
(813) 383-0206 Harbert Mezzanine Partners
Holdings, LLC

Keith Hodgdon
Senior Vice President
hodgdon@hydeparkcapital.com
(813) 383-0208

Jeffrey Bridge has been acquired by has been acquired by has been acquired by has been recapitalized by has merged with
Vice President
bridge@hydeparkcapital.com
(813) 383-0204

Michael Mariani
Associate
mariani@hydeparkcapital.com
(813) 597-2649

has been recapitalized by has acquired has been recapitalized by has been acquired by has been acquired by

Hyde Park Capital Advisors, LLC Sage Compliance
701 N. Franklin Street Services, Inc.
Tampa, FL 33602
Tel: 813-383-0202
www.hydeparkcapital.com
HYDE PARK CAPITAL Member FINRA/SIPC

M&A education report

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