Horizon Advises Mathway on Acquisition by Chegg

Earlier this month (6/4/2020), one of Horizon’s clients, Mathway, was acquired in a nine-figure transaction by Chegg, Inc. (NYSE: CHGG). This acquisition marks an important milestone for the Mathway team as it prepares to dramatically scale its business and reach millions more students through its first-ever strategic partnership.  The transaction comes at an ideal time, as online learning platforms have become increasingly important while the Covid-19 pandemic has kept students at home and outside of a formal classroom setting. For Chegg, Mathway is expected to bring additional subject coverage, languages, and international exposure, significantly expanding Chegg’s total addressable market.  Please see the joint press release from Chegg and Mathway for more commentary on how they view the partnership.

Mathway, founded in 2002 by middle school friends Frank Balcavage and Jake Kuehner, is a leading, online math solver platform, which has been purpose-built to eventually become the first fully-automated online math tutor. The platform is used by students, teachers, parents and tutors globally in K-12 and higher education environments alike. Through the platform, students can access the world’s easiest-to-use mathematics solver with optical character recognition and step-by-step instructions to learn 400+ unique topics ranging from pre-algebra to advanced calculus. To date, Mathway’s solver is offered in 13 languages and used by more than 9 million monthly active users in 100+ countries. In 2019, Mathway solved more than 1.3 billion problems for learners.

Mathway’s exceptional product execution along with a highly efficient distribution strategy has fueled largely inbound customer demand as well as strong operating profit margins. The Company’s operating leverage has allowed Mathway to build an industry-leading platform centered around an exceptional user experience.

Horizon Partners initially reached out to Mathway in March of 2014. Over our 6+ year relationship with Mathway, Horizon was able to add value both informally and formally once engaged. For example, we advised on various initiatives to drive growth, stepped into interim CFO and analytics roles when needed, and built out key aspects of the Company’s corporate backend, documentation, and environment necessary to close.

Horizon’s unique approach to M&A resulted in a highly-competitive, flexible process and ultimately a successful, efficient close. Given the coinciding Covid-19 pandemic and other unique factors, it was important that Horizon’s data-driven, highly-credible and comprehensive closing process was able to deliver a transaction that was affected entirely remotely over video calls with no in-person meetings between the Company and ultimate acquirer.  The carefully architected process  allowed for streamlined due diligence interactions and for both companies to appropriately safeguard and respect the health of their respective teams while executing a key combination within the industry.

Please let us know if you’d like to learn more about this transaction and the Horizon process. The transaction represents the culmination of years of working together with Mathway’s founders in areas ranging from business strategy, analytics, pricing, and user retention to this specific financial transaction. Our multi-year relationship with Mathway is an excellent representation of Horizon’s strategic, long-term approach to creating exceptional outcomes for bootstrapped technology entrepreneurs.

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