Financial and Industry Analysts Views

1. Financial and Industry Analysts Views

2. Speakers Moderator • Jeffrey Fromm, Partner Dorsey and Whitney Panelists • Michael Marchesano, Managing Director, The Jordan Edmiston Group Inc. • Vivek Kamath, Director, Berkery Noyes & Co. • Robin Warner, Managing Director, The van Tulleken Company

3. Global: UK Market Robin Warner, Managing Director The van Tulleken Company

4. UK Market • BECTA: British Educational Communications and Technology Agency • Harnessing Technology Grant (HTG) replaced e-learning credits in August 2008 • Overall ICT (Information and Communications Technologies) budgets are expected to increase in 2009-2010 • However, budgets for Systems and General Software will decline by: • 3.6% for Primary Schools • 5.5% for Secondary Schools (Ages 11-16)

5. UK General Trends FE (Further Education Schools) Whiteboards Web 2.0 Virtual Learning Environments (VLE) Reality Integration challenges SCORM (good) Software not fully standardized Therefore, can only access partial software available League Tables/KPI (Key Performance Indicators)

8. K-12 Market Robin Warner, Managing Director The van Tulleken Company

9. The van Tulleken Company: Experienced M&A Specialist Leading specialized international M&A firm in education, publishing information services & media More than 30 professionals in New York, London and Edinburgh Seasoned executive team with deep sector experience Over 120 transactions completed since 1995; 13 transactions in the last 12 months 70% of our clients are independent, entrepreneurial companies who retain us to explore strategic options Aggressive, individual focus to every deal, with flawless execution and optimal results High close rate on transactions via selective mandates Maintains long-term relationships with strategic, financial and private equity players

10. “It is not the beginning of the end, but the end of the beginning.”Winston Churchill

11. Top-Line K-12 Statistics $15.5 Bn: 2007/08 School Year Sales of K-12 Instructional Materials Textbooks Supplemental Technology 5.5% increase over prior year 36% of IT Spending K-12; 64% is in Higher Ed source: SIIA’s Experts’ Guide to the K-12 School Market, T.H.E. Journal article, etc.

12. Technology Budgets Include: Computer Hardware Internet Services Media Products

13. Customers 155,000 School District Administrators 115,000 Principals 3,300,000 Teachers

14. School enrollments are increasing slightly Technology saw negative growth rates 5 and 6 years ago 5% growth rates technology

15. Supplemental: Challenging Market Approximately 50% of K-12 companies sell supplemental products to K-5: 54% Print CD/DVD (software): 13.5% Online/Digital delivery: 13%

19. Scientific Learning KUE Digital EdisonLearning Rowman & Littlefield Coughlan/Capstone

20. So What Do We Surmise from This? Prominent K-12 strategics are integrating very large acquisitions made last 2-3 years Several deals are getting done by non strategics There are less strategics due to mergers/acquisitions (e.g. HM, Harcourt, Riverdeep) The buyers list we had 5 years ago has changed markedly in the last 2 years

21. So What Do We Surmise from This? The PEs are still actively looking, but not closing deals at the same numbers

22. Never underestimate the strategics!

23. Buyer universe has morphed somewhat

24. Source: TvTCo database

25. The product universe is also morphing

26. Trends/Buzzwords Mobile Computing Blended Learning Online Testing and Assessment Distance Learning Student-Teacher-Administration Portals/LMS

27. Trends/Buzzwords Web 2.0 24/7 Access Global Social Networks Virtual Learning Environment Underlying most of the above: Professional Development

28. Daunting

29. January through July/August K-12 market had not been bad Last 2-3 weeks: “Turtle Heads” Buyers/Districts (to date): willing to pay for technology that looks easy not willing to pay for technology that looks hard, even if they know it works

30. WHITEBOARDS

31. Looking for good, easy-to-use content and integrated systems to be used with Whiteboards

32. Explosive Growth 600,000 Whiteboards installed globally in 2008 1 in 6 classrooms forecasted to use this technology by 2012 (based on 66 countries/37 million classrooms) US, UK and Mexico account for 70% installed base US ranked #1, UK #2 Asia: 150% growth in 2008 (China and India leading the way)

33. Ideas on Where To Focus Interactive, easy-to-use effective Whiteboard Content Online Learning: content for Learning Management Systems (Blackboard, Angel, Moodle, Desire2Learn, PowerSchool) Blended Technology: really blended 24/7: online component to do homework, projects, and collaboration that is easy to integrate into the classroom Products that can plug into Virtual Learning Environments

34. Speaker: Vivek C. Kamath Director Berkery, Noyes & Co., LLC.

35. has acquired has acquired has signed a definitive agreement to acquire Recent Education Transactions Deals span K-20 and corporate, and include publishing, technology, services, and schools has acquired has acquired has acquired a portfolio company of * Has recapitalized with * Palm Ventures Liberty Partners sold to * Completed by professionals currently employed at Berkery Noyes 35

36. has acquired the Professional Services Division of has made a strategic investment in has acquired has acquired has acquired a portfolio company of Including in partnership with Paul Mackler and Ken Fisher has acquired a portfolio company of has sold the assets of a portfolio company of has acquired has acquired has acquired has acquired has acquired has acquired to has acquired has been acquired by a portfolio Company of BG Media Investors Complete Healthcare Communications, Inc. has sold a portfolio company of has acquired to has acquired In the last 20 months, Berkery Noyes has closed 29 transactions has acquired a portfolio company of has acquired a portfolio company of Has sold has acquired has acquired has acquired has acquired a portfolio company of portfolio companies of and to * 2007 2008 Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept has acquired and a portfolio company of have acquired has acquired has acquired * Pending 36

37. sold McGraw - Hill acquired has acquired acquired to a subsidiary of acquired has acquired acquired has been acquired by has acquired acquired $70+ Million $70+ Million Counsel on Education in Management acquired Ripplewood Holdings LLC acquired acquired Cambium Cambium McGraw-Hill acquired Learning, Learning, a unit of certain assets of acquired SmartStuff Software a subsidiary of Inc. Inc. THOMSON LEARNING, INC. acquired has acquired has acquired has acquired has acquired Appleton & Lange a division of has acquired a division of Metropolitan Metropolitan Supplementary Education Group Teaching and Teaching and Learning Co. Learning Co. . acquired McGraw-Hill McGraw-Hill acquired acquired acquired acquired McGraw-Hill School Systems Convertible Preferred Stock acquired acquired EDUCATIONAL ASSESSMENT PUBLISHING CO. acquired a unit of a division of Silver Burdett Ginn, Inc. a division of Simon & Schustera wholly-owned division of VIACOM INC. an affiliate of The Wicks Group acquired acquired has acquired an interest in William C. Brown Company Publishers has acquired acquired has acquired acquired has acquired Select Education Transactions 37

38. Post-Secondary Education Market Overview • For-profit providers continued their market share gains in 2008 as for-profit enrollments increased to greater than 8.0% of total enrollments in 2007, up from 2.0%-3.0% in the early 1990’s and are forecast to reach 9% by the end of 2008 • This increase is expected to continue through 2016 when total enrollment reaches 20.4 million, with for-profit enrollments accounting for 2.8 million students, or 13.6%. Total PSE Enrollment Total For-Profit PSE Enrollment CAGR:1.4% CAGR:7.0% • Several factors are contributing to this growth including: • Economic trends such as the recent economic downturn and outsourcing are driving workers back to school. • Federal funding has more than doubled between 2000 and 2007, with recent legislation aimed at alleviating the illiquidity of the private lending market. Source: DOE, BNC Research, Eduventures, NCES 38

39. Post-Secondary Education Market Characteristics • The PSE industry remains an attractive marketplace for investors for the following reasons: • High barriers to entry • Government Regulations • Accreditation Process • High Start Up Costs • Required Brand Strength Investors have traditionally viewed education as a safe haven in challenging economic environments Growth of For-Profit Enrollment vs. Unemployment Rate (Economic Cycle) • Traditionally post-secondary education has received increased investment during times of slowing economic growth. • In aggregate, for-profit institutions historically have shown non-cyclical and counter-cyclical trends. • Programs that are shorter in length are more likely to see an uptick in enrollment growth during a slower economy. 39

40. Post-Secondary Education Growth Drivers • Value Proposition for Education Remains Strong • U.S. college graduates earn more and are less likely to be unemployed than individuals with less education. • Data from the College Board indicates that professionals with a bachelor’s or associate degree earn 1.6x and 1.3x more respectively than individuals possessing only a high school degree. Expected Lifetime Earnings Relative to High School Graduates Median Income & Unemployment by Level of Education 40 Source: College Board. Bureau of Labor Statistics, Current Population Survey

41. Post-Secondary Education Growth Drivers • For-Profit Providers have established themselves as the industry leaders • Traditionally, public universities lacked distinguishing features relative to their established for-profit competitors, such as digital libraries, collaborative learning software, inter-state accreditation, sophisticated course management systems, online tutorial applications, and trade specific programs. • According to a study by the Parthenon Group, for-profit institutions hold a significant advantage in terms of placement as well. After 6 months, 84% of for-profit graduates reported employment, while after 12 months, or twice as long, only 77% of non-profit graduates reported being employed. • For-Profit Moving Toward Warranty of Employability • The competitive friction that has existed between traditional and for-profit universities for the last 5 to 7 years has: Raised the academic profile of for-profit institutions and strengthened their academic brand; Increased for-profit’s suitability as an employment vehicle; Enrolled countless workers, adults, military and corporate ladder climbers; and Spawned a multi-billion dollar market in lead generation, enrollment management and retention services and forced a dramatic professionalization of marketing services in traditional universities. • Education as a Lifelong Pursuit • The dramatic increase in the number of “non-traditional” university students – typically older, with full-time jobs and, often, family commitments – is producing strong demand for the pursuit of higher education. Many of these students prefer the flexibility that online programs offer and these students are expected to reach 8.0% of total PSE enrollments by 20081. • Growth in Second Careers • A recent AARP survey indicated that 79% of baby boomers plan to work in some capacity well into their retirement years. However, many are opting to switch careers in order to find less time consuming, more fulfilling positions in areas such as allied health and information technology. “The Impact of Higher Education and Lifelong Learning on Economic Development”, Carl Dahlman, Georgetown University; Laureate Education, William Blair

42. Comparable Public Company Analysis • Recent Activity • Grand Canyon University became the first IPO in the U.S. since August and priced at an enterprise value of $500M and LTM revenue and EBITDA multiples of 3.6x and 31.9x respectively. • EDMC is preparing to go public only two years after being taken private by Leeds Equity Partners, Goldman Sachs and Providence Equity Partners. • Over the next 24 months it is expected that Laureate Education and Concorde Career Colleges will also pursue IPO’s after being taken private in the past three years. 42

43. Comparable Public Company Analysis • Over the past six months the universe of publicly traded post-secondary institutions has outperformed the overall market. • As a result, private equity investors are moving swiftly during this economic downturn to identify markets that are expanding and to allocate their investments accordingly. Data Provided by CapitalIQ 43

44. Comparable Transaction Analysis Higher Education M&A Transactions • Represents comparable Post-Secondary Education M&A transactions since July of 2003. • The mean and median revenue multiples over this time period are 2.1x and 1.9x, respectively. • The mean and median EBITDA multiples over this time period are 9.8x and 8.5x, respectively. 44

45. Postsecondary Market View: Online Education Remains Strong Component of Growth Story Students Taking Programs Entirely Online Students enrolled in fully online distance education programs account for nearly 12% of overall enrollments, up from 2% in 2001. Entirely online programs have moved from a niche opportunity to a mainstream growth channel for colleges and universities. CAGR = 28% Source: Eduventures, Online Higher Education Market Update2007

46. Increased Consumer Demand The convenience, cost and flexibility of online programs has proven extremely attractive to non-traditional students who without online options would have difficulty pursuing higher education. Universities Targeting Younger Applicants Online students are comprised mainly of adult learners. However, providers have begun to focus on younger students with little or no college experience through programs such as associate degrees. These are in essence becoming “virtual community colleges” and are expected to draw significant growth from younger populations. Providers that have established associate degree programs are ahead of the curve and provide significant growth opportunities for providers targeting this younger demographic Faculty and Employer Acceptance Constituents throughout the higher education system, but most importantly faculty, have also come to see increasing value in online delivery and have become willing to judge online programs on their merits rather than previous industry bias. After having several years to absorb graduates of online programs employers have begun to realize the value of an online degree. Increasing For-Profit Enrollments While for-profit institutions are seeing increased competition from their non-profit counterparts, they still account for an overwhelming majority of online students. This coupled with the faster enrollment growth in for-profit enrollment indicates that online programs will continue to grow and benefit from the for-profit sector. Post-Secondary Education Market Trends – Online Learning 46

47. Robust technology platform Providers that have specifically tailored online platforms that integrate both Front-End (such as tracking and managing leads, management of the application process and financial aid and payments) and Back-End (such as tracking learners’ grades, schedules, and the facilitation of document distribution) functions creates a key differentiator in the market through ease of use and automation of tasks Development of articulation agreements and business partnerships Developing education partnerships through establishing relationships with corporations, professional associations, and non-accredited educational institutions can have the capability of providing a high volume of referrals, lowering the overall cost per lead Brand awareness and/or differentiated marketing campaigns Through effective marketing campaigns, institutions can build significant brand value and secure higher quality leads Increasing focus on student segments and unique program offerings Providers that target a specific segment of the market, such as targeting the younger than average demographic through associate degree programs, allows providers to carve a niche and build significant market know-how Post-Secondary Education Key Success Factors for Online Providers By maximizing flexibility, providing the highest quality education and offering value-oriented pricing, online providers can drive growth to the bottom-line and differentiate themselves in the marketplace. 47

48. BNC Education Group Team Bios Investment Banking Christopher L. Curran Managing Director Chris, previously the Managing Director at Eduventures, Inc., brings a wide range of education, management, and consulting experience to Berkery, Noyes. Before joining Eduventures, Chris was Vice President of business development at I.COMM, Inc., a software design and network integrator specializing in the education, government and healthcare markets. Chris holds a J.D. from Suffolk University Law School. He also holds an M.A. in Economics from Boston University, and earned a B.A. at St. Lawrence University. Chris serves on the advisory boards of Hosts Learning, Adopt-A-Classroom and EdNet, and previously served on the board of SIIA, and is a frequent industry speaker. Throughout his career Chris has led several of the leading transactions within the education industry including Leeds Equity Partners purchase of ExLibris Group, Excelsior Software’s acquisition by Knowledge Universe, Interwrite Learning’s sale to eInstruction Corp., Edustructures sale to Pearson, Kurzweil Education’s acquisition by Cambium Learning, Leeds Equity Partners purchase of eInstruction, Monotype’s sale to Calvert Street Partners, the sale of Psychological Services Inc. to Abry Partners, the sale of Ellis to Pearson, Questar’s sale to Touchtone Applied Sciences, Edustructures acquisition by Pearson, Hampton-Brown ‘s sale to National Geographic, and the sale of Delta Education to School Specialty Inc. Mark joined Berkery Noyes with long and varied experience in higher education management. He served as chief executive officer/president at Vatterott Education Holdings, a private equity-held for-profit college with 20 campuses in nine Midwestern states. Earlier, Mark served in several senior management capacities with the University of Phoenix (Apollo group), including the opening of University of Phoenix’ first campuses in the northeastern United States. He holds a B.A. from Villanova University and a M.S. and Ph.D. from the University of Southern California (USC). He sits on the board of several education companies, and serves on the executive committee of the board of the Education Industry Association. Mark DeFusco Managing Director 48

49. BNC Education Group Team Bios Investment Banking Vivek is a Director of Berkery Noyes, specializing in the Education, Knowledge Management and Training Markets. He was named to that position in February 2008. Vivek joined Berkery Noyes as an analyst in 1999 and since then has participated in over 100 transactions across all segments of the Information, Media & Technology Markets. Vivek most recently served as Vice President, where he was responsible for managing transactions for the firm’s Education Practice. During his tenure at Berkery Noyes, Vivek has worked on several notable transactions, including the sale of Interwrite Learning to eInstruction, Leeds’ acquisition of eInstruction, the sale of Monotype to CSCP, the sale of Psychological Services, Inc. to ABRY Partners; the sale of the Hampton-Brown Company to National Geographic Society, and the sale of Delta Education to School Specialty. Vivek holds a BS from the Stern School of Business, New York University. Adam Newman joined Berkery Noyes in 2008 as a Director. Prior to joining the firm, Adam served as Managing Vice President at Eduventures, Inc. a leading strategic market research and consulting firm supporting K-12 and postsecondary education businesses, investors, and colleges and universities. Adam ran the firm's Industry Solutions division which worked with executives to develop and drive corporate and growth strategy initiatives. In addition, Adam and his team also provided M&A due diligence support to strategic and financial investors in the education space, offering recommendations and advice on acquisitions, strategic partnerships, and divestitures. As a long-time Eduventures executive, he also helped direct and implement overall corporate strategy for the firm to support its rapid growth. Prior to Eduventures, Adam served as a senior manager at the Corporate Executive Board, working closely with corporate strategy executives at Global 2000 companies. Adam began his professional career as a K-12 educator at schools in Boston, MA and New Orleans, LA. Adam earned an AB degree from Duke University. Vivek C. Kamath Director Adam Newman Director 49

50. Valuation Dynamics in Education Market Mike Marchesano Managing Director The Jordan, Edmiston Group