sectorwatch: corporate it training and educational services...corporate it training and educational...

Sectorwatch:Corporate IT Training and Educational ServicesMarch 2020

2

Corporate IT Training and Educational ServicesMarch 2020

Sector Dashboard [4]

Public Basket Performance [5]

Operational Metrics [7]

Valuation Comparison [10]

Recent Deals [13]

Appendix [15]

7 Mile Advisors appreciates the opportunity to present this confidential information to the Company. This document is meant to bedelivered only in conjunction with a verbal presentation, and is not authorized for distribution. Please see the Confidentiality Notice &Disclaimer at the end of the document. All data cited in this document was believed to be accurate at the time of authorship and camefrom publicly available sources. Neither 7 Mile Advisors nor 7M Securities make warranties or representations as to the accuracy orcompleteness of third-party data contained herein. This document should be treated as confidential and for the use of the intendedrecipient only. Please notify 7 Mile Advisors if it was distributed in error.

3

Overview

7MA provides Investment Banking & Advisory Services to the Business Services and TechnologyIndustries globally. We advise on M&A and private capital transactions, and provide market assessmentsand benchmarking. As a close knit team with a long history together and a laser focus on our targetmarkets, we help our clients sell their companies, raise capital, grow through acquisitions, and evaluatenew markets. We publish our sectorwatch, a review of M&A and operational trends in the industries wefocus.

Dashboard• Summary metrics on the sector• Commentary on market momentum by

comparing the most recent 12-month performance against the last 3-year averages.

Public Basket Performance• Summary valuation and operating metrics

for a basket of comparable public companies

Valuation Comparison• Graphical, detailed comparison of

valuation multiples for the public basket

Recent Deals• The most recently announced deals in the

sector

4

Dashboard

Operating Metrics

Valuation

Revenue Growth Momentum

4.1% 1 - year revenue growth compared to revenue growth

average for last 3 years

Pricing / Gross Margin

-1.4% 1 - year gross profit % compared to gross profit %

average for last 3 years

Profitability

-1.4% 1 - year EBITDA % compared to EBITDA % average for

last 3 years

Current revenue growth rate exceeds the average of the last 3 years by this

amount, indicating that market momentum is increasing

Current gross profit margin is less than the average of the last 3 years gross profit

margins, indicating customer pricing power

Current EBITDA margin is less than the average of the last 3 years EBITDA

margins, which may signal further consolidation

8.8%

14.9%

46.8%

0% 20% 40% 60%

Median LTM Rev. Growth %

Median LTM EBITDA Margin %

Median LTM GP Margin %

0.7x

5.9x

10.1x

12.1x

0x 5x 10x 15x 20x

Median TEV / LTM Revenue

Median TEV / LTM EBITDA

Median TEV / LTM EBIT

Median Price / LTM Earnings

5

Public Basket

Company TEV $mLTM Rev

$m

Rev Growth

YoY GP %EBITDA

%TEV / Rev X

TEV / EBITDA

X # FTEsRev / FTE $k

NIIT Limited (98) 132 5% 46% 6% 0.0 0.0 2,565 51

American Public Education, Inc. 111 286 -4% 62% 13% 0.4 2.9 1,410 203

GP Strategies Corporation 219 583 13% 15% 5% 0.4 5.9 4,856 120

Adtalem Global Education Inc. 1,914 1,270 13% 48% 19% 1.5 7.3 6,113 208

Graham Holdings Company 2,139 2,932 9% 31% 15% 0.7 3.7 12,053 243

Strategic Education, Inc. 2,227 997 57% 47% 23% 2.2 8.5 3,076 324

Grand Canyon Education, Inc. 3,296 779 -8% 60% 38% 4.2 11.0 3,400 229

Average 1,401 997 12% 44% 17% 1.4 5.6 4,782 197

Median 1,914 779 9% 47% 15% 0.7 5.9 3,400 208

6

Public Basket Valuation Trends

Public EBITDA Multiples over Time

Public Revenue Multiples over Time

9.1x

1.3x

0x

3x

6x

9x

12x

15x

May-1

5

Aug-1

5

Nov-1

5

Feb-1

6

May-1

6

Aug-1

6

Nov-1

6

Feb-1

7

May-1

7

Aug-1

7

Nov-1

7

Feb-1

8

May-1

8

Aug-1

8

Nov-1

8

Feb-1

9

May-1

9

Aug-1

9

Nov-1

9

Feb-2

0

TEV/EBITDA - Median TEV/Revenue - Median

TEV/EBITDA - Average TEV/Revenue - Average

0x

5x

10x

15x

May-1

5

Aug-1

5

Nov-1

5

Feb-1

6

May-1

6

Aug-1

6

Nov-1

6

Feb-1

7

May-1

7

Aug-1

7

Nov-1

7

Feb-1

8

May-1

8

Aug-1

8

Nov-1

8

Feb-1

9

May-1

9

Aug-1

9

Nov-1

9

Feb-2

0

TEV/EBITDA - Median TEV/EBITDA - Average

0.0x

0.5x

1.0x

1.5x

2.0x

May-1

5

Aug-1

5

Nov-1

5

Feb-1

6

May-1

6

Aug-1

6

Nov-1

6

Feb-1

7

May-1

7

Aug-1

7

Nov-1

7

Feb-1

8

May-1

8

Aug-1

8

Nov-1

8

Feb-1

9

May-1

9

Aug-1

9

Nov-1

9

Feb-2

0

TEV/Revenue - Median TEV/Revenue - Average

7

Operational Metrics

LTM Gross Profit Margin % LTM EBITDA %

- 20% 40% 60% 80%

Median

GP Strategies Corporation

Graham Holdings Company

NIIT Limited

Adtalem Global Education

Inc.

Strategic Education, Inc.

Grand Canyon Education,

Inc.

American Public Education,

Inc.

- 10% 20% 30% 40%

Median


NIIT Limited


Inc.



Inc.



Inc.

8

Operational Metrics

LTM Revenue Growth %LTM Revenue per

Full Time Employee x 000’s

(50%) - 50% 100%

Median


Inc.


Inc.

NIIT Limited




Inc.


$- $100 $200 $300 $400

Median

NIIT Limited



Inc.


Inc.


Inc.



9

Operational Metrics

Accounts Receivable TurnoverAverage Days

Sales Outstanding

0x 10x 20x 30x

Median

NIIT Limited




Inc.


Inc.



Inc.

0x 40x 80x 120x

Median

NIIT Limited


Inc.



Inc.


Inc.



10

Valuation

TEV / LTM Revenue TEV / LTM EBITDA

0x 2x 4x 6x 8x 10x

Median



Inc.



Inc.



Inc.

0x 4x 8x 12x 16x 20x

Median


Inc.




Inc.



Inc.

11

Valuation

TEV / LTM EBIT Price / LTM Earnings

0x 10x 20x 30x

Median


Inc.



Inc.


Inc.



0x 10x 20x 30x 40x 50x

Median



Adtalem Global Education Inc.

Grand Canyon Education, Inc.



Inc.

12

Valuation

Historical Valuation Multiples versus Gross Profit

Historical Valuation Multiples versus Revenue Growth Rate

3x 4x 6x 7x 9x 11x

61.6%

31.0%

15.3%

47.9%

46.8%

59.7%

0%

10%

20%

30%

40%

50%

60%

70%

0x

2x

4x

6x

8x

10x

12x

LTM

GP%

EBIT

DA(x

)

EBITDA(x) LTM GP%

3x 4x 6x 7x 9x 11x

(3.8%)

8.8%

13.2% 13.3%

57.2%

(7.9%)

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

0x

2x

4x

6x

8x

10x

12x

LTM

RG

R%

EBIT

DA(x

)

EBITDA(x) LTM RGR%

13

Recent TransactionsDate Target Buyer / Investor

Total Transaction

Value Target

Revenue TEV /

Revenue TEV /

EBITDA

7Feb20 Paradigm Publishing, LLC Kendall/Hunt Publishing Company Inc. - - - -

21Jan20 Galvanize, Inc. K12 Management Inc. 165.00 - - -

20Dec19 ePath Learning, Inc. Absorb Software Inc. - - - -

20Nov19 IAPP's Privacy Core® e-learning solution OneTrust, LLC - - - -

14Nov19 Surgent McCoy CPE, LLC (nka:Knowfully Learning Group)

NexPhase Capital, LP - - - -

30Sep19 VitalSmarts, L.C. Leeds Equity Partners, LLC; Leeds Equity Partners VI, L.P. - - - -

30Aug19 Thinkful, Inc. Chegg, Inc. 99.20 14.00 7.1x -

15Aug19 Medical Communications Media, Inc. Clinical Care Options, LLC - - - -

26Apr19 Pelesys Learning Systems Inc. CAE Inc. 7.29 - - -

7Aug19 eLogic Learning, LLC Absorb Software Inc. - - - -

24Jul19 The Learning Network, Inc. Pluribus Technologies Inc. - - - -

17May19 Interactive Communications Solutions Group, Inc. Acendre Pty Ltd - - - -

30Apr19 Assets of Management Mentors, Inc. Engagedly, Inc. - - - -

15Apr19 Corporate Training Group, Inc. SHI International Corp. - - - -

7Apr19 Trilogy Education Services, Inc. 2U, Inc. 750.00 97.00 7.7x -

1Apr19 LeaderQuest Holdings, Inc. MIS Training Institute Holdings, Inc. - - - -

21Feb19 Watermark Learning, Inc. Educate 360, LLC - - - -

1Feb19 Intelliteach, Inc. BV Investment Partners, L.P.; BV Investment Partners Fund IX - - - -

9Jan19 Greycampus Inc. Arrina Education Services Private Limited - - - -

17Dec18 Orbis Education Services, LLC Grand Canyon Education, Inc. 362.50 - - -

4Dec18 edCetra Training Inc. NexTech AR Solutions Corp. 0.09 - - -

7Nov18 Grovo Learning Inc. Cornerstone OnDemand, Inc. 24.00 - - -

28Sep18 JobTrack, Inc./ The Firehose Project Trilogy Education Services, Inc. 6.77 - - -

9Oct18 The Learning House, Inc. Wiley Education Services 200.00 60.00 3.3x 28.6x

31Aug18 CEB Challenger and Effortless Experience Solutions Business of Gartner, Inc.

Marlin Equity Partners, LLC 116.20 - - -

15May18 Total Training Solutions, Inc. OnCourse Learning Corp. - - - -

14

APPENDIX:

Public Basket

Constituents

7 Mile Advisors appreciates the opportunity to present this confidential information to the Company. This document is meant to bedelivered only in conjunction with a verbal presentation, and is not authorized for distribution. Please see the Confidentiality Notice &Disclaimer at the end of the document. All data cited in this document was believed to be accurate at the time of authorship and camefrom publicly available sources. Neither 7 Mile Advisors nor 7M Securities make warranties or representations as to the accuracy orcompleteness of third-party data contained herein. This document should be treated as confidential and for the use of the intendedrecipient only. Please notify 7 Mile Advisors if it was distributed in error.

Corporate IT Training and Educational ServicesMarch 2020

15

Public Basket

NIIT Limited

NIIT Limited, a skills and talent development company,provides training and development solutions to individuals,corporations, and institutions worldwide. The company offersmanaged training services, such as curriculum design andcontent development, learning administration, learningdelivery, strategic sourcing, learning technology, andadvisory services; and various learning and talentdevelopment programs in the areas of banking, finance andinsurance, retail sales enablement, management education,multi-sectoral vocational skills, and digital media marketingand programs, as well as in digital transformationtechnologies. NIIT Imperia, which provides managementprograms in the areas of marketing, sales, finance,operations, HR, law, brand and advertising, internationalmarketing and business, strategy, general management,digital marketing, taxation, and IT. NIIT Limited wasfounded in 1981 and is headquartered in Gurgaon, India.

Date Key Development Haeadline11/14/19 KPMG In India and NIIT Limited Enter into Exclusive

Partnership to Launch the KPMG NIIT Finance Academy in India

8/20/19 NIIT Limited Collaborates with Automation Anywhere to Deliver Comprehensive RPA Workshops to Developers, Students and It Professionals Across India

8/11/19 NIIT Limited (BSE:500304) entered into share purchase agreement to acquire remaining 25% stake in Niit Institute of Process Excellence Ltd from Genpact Consulting for INR 55 million.

0.0x

0.5x

1.0x

1.5x

2.0x

Revenue Multiples - NIIT Limited

TEV/Revenue Average

0x

10x

20x

30x

EBITDA Multiples - NIIT Limited

TEV/EBITDA Average

0x

5x

10x

15x

20x

25x

30x

P/E Multiples - NIIT Limited

P/E Average

16

Public Basket

American Public Education, Inc.

American Public Education, Inc., together with itssubsidiaries, provides online and campus-basedpostsecondary education. The company operates throughtwo segments, American Public Education and HondrosCollege of Nursing. It offers 108 degree programs and 109certificate programs in various fields of study, includingbusiness administration, health science, technology, criminaljustice, education, and liberal arts, as well as nationalsecurity, military studies, intelligence, and homelandsecurity. The company also provides diploma in practicalnursing and an associate degree in nursing; and an onlineregistered nurse to Bachelor of Science in nursing completionprogram. American Public Education, Inc. was founded in1991 and is headquartered in Charles Town, West Virginia.

Date Key Development Haeadline3/12/19 American Public To Seek Acquisitions

0x

1x

2x

3x

Revenue Multiples - American Public Education,

Inc.

TEV/Revenue Average

0x

5x

10x

15x

20xEBITDA Multiples - American Public Education,

Inc.

TEV/EBITDA Average

0x

20x

40x

60xP/E Multiples - American Public Education, Inc.

P/E Average

17

Public Basket


GP Strategies Corporation provides performanceimprovement and learning solutions worldwide. It operatesthrough four segments: Learning Solutions, Professional &Technical Services, Sandy Training & Marketing, andPerformance Readiness Solutions. The Learning Solutionssegment delivers training, curriculum design anddevelopment, digital learning, system hosting, managedlearning, and consulting services to electronics andsemiconductors, healthcare, software, financial services, andother industries, as well as government agencies; andprovides apprenticeship and vocational skills trainingservices. The Professional & Technical Services segmentoffers training, consulting, engineering, and technicalservices, including lean consulting, emergencypreparedness, safety and regulatory compliance, chemicaldemilitarization, and environmental services to themanufacturing, steel, pharmaceutical, energy, andpetrochemical industries, as well as federal and stategovernment agencies, and government contractors. GPStrategies Corporation was founded in 1959 and isheadquartered in Columbia, Maryland.

Date Key Development Headline1/7/20 Cryogenic Industries Inc. acquired Alternative Fuels Division

from GP Strategies Corporation (NYSE:GPX) for $6.5 million.

10/30/19 Bright Horizons Children's Centers, Inc. acquired Tuition Program Management Business of GP Strategies Corporation (NYSE:GPX) for $21.7 million.

0.0x

0.5x

1.0x

1.5x

2.0xRevenue Multiples - GP Strategies Corporation

TEV/Revenue Average

0x

5x

10x

15x

20xEBITDA Multiples - GP Strategies Corporation

TEV/EBITDA Average

0x

10x

20x

30x

40x

P/E Multiples - GP Strategies Corporation

P/E Average

18

Public Basket

Adtalem Global Education Inc.

Adtalem Global Education Inc. provides educational servicesworldwide. It operates through four segments: Medical andHealthcare, Professional Education, Technology andBusiness, and U.S. Traditional Postsecondary. The Medicaland Healthcare segment operates Chamberlain University,which provides pre and post-licensure bachelor's, master's,and doctorate degree programs in nursing through campusand online; American University of the Caribbean School ofMedicine and Ross University School of Medicine, whichprovide medical education; and Ross University School ofVeterinary Medicine that offers veterinary education.Adtalem Global Education Inc. was founded in 1931 and isheadquartered in Downers Grove, Illinois.

Date Key Development Headline1/31/20 Arkansas State University Explores Partnership with Adtalem

Global Education to Deliver First In-State Veterinary Medicine School

10/20/19 Universidade Estácio de Sá executed a share purchase agreement to acquire Adtalem Educacional do Brasil S/A from Adtalem Global Education Inc. (NYSE:ATGE) and Global Education International BV for an enterprise value of BRL 1.9 billion.

8/22/19 Adtalem Global Education To Seek Acquisitions

6/2/19 Adtalem Global Education Inc. (NYSE:ATGE) completed the acquisition of OCL Financial Services LLC from OCL Professional Education, Inc.

0x

1x

2x

3xRevenue Multiples - Adtalem Global Education

Inc.

TEV/Revenue Average

0x

5x

10x

15x

20xEBITDA Multiples - Adtalem Global Education

Inc.

TEV/EBITDA Average

0x

30x

60x

90x

120x

150xP/E Multiples - Adtalem Global Education Inc.

P/E Average

19

Public Basket


Graham Holdings Company, through its subsidiaries,operates as a diversified education and media companyworldwide. It provides a range of certificate, diploma, anddegree programs, as well as online education services; andtest preparation business services in pre-college, graduate,health, and bar review, as well as publishes and sells testpreparation and other books through retail channels. Thecompany also offers training, test preparation services, anddegrees for accounting and financial services professionals,as well as professional training courses; English-languagetraining, academic preparation programs, and testpreparation for English proficiency exams for students; andA-level examination preparation services, as well asoperates three collages, one higher education institution,and one online learning institution. In addition, it owns andoperates seven television stations; and provides social-media management tools designed to connect newsroomswith their users. Graham Holdings Company was founded in1877 and is based in Arlington, Virginia.Date Key Development Headline7/30/19 Graham Holdings Company (NYSE:GHC) acquired Clyde, Inc.

2/14/19 Spotify Technology S.A. (NYSE:SPOT) completed the acquisition of Gimlet Media Inc. from Graham Holdings Company (NYSE:GHC) and other shareholders.

2/5/19 Spotify Technology S.A. (NYSE:SPOT) entered into definitive agreement to acquire Gimlet Media Inc. from Graham Holdings Company (NYSE:GHC) and other shareholders for €170 million.

0x

1x

2x

3xRevenue Multiples - Graham Holdings Company

TEV/Revenue Average

0x

5x

10x

15xEBITDA Multiples - Graham Holdings Company

TEV/EBITDA Average

0x

10x

20x

30xP/E Multiples - Graham Holdings Company

P/E Average

20

Public Basket


Strategic Education, Inc., through its subsidiaries, providesa range of post-secondary education and other academicprograms in the United States. The company operatesStrayer University and Capella University that provideundergraduate and graduate degree programs in businessadministration, accounting, information technology,education, health services administration, nursing, publicadministration, and criminal justice to working adult studentsthrough its 74 physical campuses primarily located in theMid-Atlantic and Southern regions, as well as through online.It also offers an executive MBA online through its Jack WelchManagement Institute. In addition, the company operatesNew York Code and Design Academy that provides non-degree courses in Web and application software developmentprimarily through its campus in New York City. StrayerEducation, Inc. was founded in 1892 and is headquartered inHerndon, Virginia.

0x

2x

4x

6x

8xRevenue Multiples - Strategic Education, Inc.

TEV/Revenue Average

0x

10x

20x

30x

40xEBITDA Multiples - Strategic Education, Inc.

TEV/EBITDA Average

0x

20x

40x

60x

80x

100x

120xP/E Multiples - Strategic Education, Inc.

P/E Average

21

Public Basket

Grand Canyon Education, Inc.

Grand Canyon Education, Inc., together with its subsidiaries,provides education services in the United States andCanada. The company operates Grand Canyon Universitythat offers approximately 225 graduate and undergraduatedegree programs and certificates across 9 colleges onlineand on ground through campus in Phoenix, Arizona; leasedfacilities; and facilities owned by third party employers. As ofDecember 31, 2017, it had approximately 90,300 studentsenrolled in its programs. The company was founded in 1949and is based in Phoenix, Arizona.

Date Key Development Headline1/21/19 Grand Canyon Education, Inc. (NasdaqGS:LOPE) completed

the acquisition of Orbis Education Services, LLC.

12/17/18 Grand Canyon Education, Inc. (NasdaqGS:LOPE) entered into a definitive agreement to acquire Orbis Education Services, LLC for approximately $360 million.

0x

2x

4x

6x

8x

Revenue Multiples - Grand Canyon Education,

Inc.

TEV/Revenue Average

0x

5x

10x

15x

20x

25xEBITDA Multiples - Grand Canyon Education,

Inc.

TEV/EBITDA Average

0x

10x

20x

30xP/E Multiples - Grand Canyon Education, Inc.

P/E Average

22

7MA provides Investment Banking & Advisory Services to the Business Services and Technology Industries globally. We advise on M&A andprivate capital transactions and provide market assessments and benchmarking. As a close-knit team with a long history together and a laserfocus on our target markets, we help our clients sell their companies, raise capital, grow through acquisitions, and evaluate new markets.Securities offered through 7M Securities LLC.

Leroy Davis, Partner 704.899.5962 [email protected]

Tripp Davis, Partner 704.899.5762 [email protected]

Andy Johnston, Partner 704.899.5961 [email protected]

Mark Landry, Managing Director 561.972.0609 [email protected]

Ben Lunka, Managing Director 704.496.2995 [email protected]

John Cooper, Director 704.973.3996 [email protected]

Tim Frye, Director 704.973.3994 [email protected]

Kristina Sergueeva, Director 704.899.5149 [email protected]

Ben Garber, Vice President 412.626.7898 [email protected]

Nicholas Prendergast, Vice President 704.973.3995 [email protected]

Garth Martin, Vice President 704.973.3997 [email protected]

Ariail Barker, Director, Sales & Marketing 704.981.2908 [email protected]

Emily Halstenberg, Marketing & Sales Coordinator 704.409.9912 [email protected]

Marty Johnson, Senior Associate 704.973.3999 [email protected]

Sydney Scadden, Senior Associate 704.973.3998 [email protected]

Steve Buffington, Associate 704.960.1828 [email protected]

Dennis Fox, Associate 704.706.9168 [email protected]

Daniel Kim, Associate 704.912.4584 [email protected]

Olufunke Abass, Associate 704.285.8171 [email protected]

Robin Siegel, Analyst 704.490.4714 [email protected]

CONTACT INFO

sectorwatch: corporate it training and educational services...corporate it training and educational...

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