June 4, 2014

Chegg announces acquisition of online tutoring service InstaEDU

A well-planned acquisition can contribute to a company's capabilities in several beneficial ways. By making the right acquisition at the right time, a company can take a step toward being able to generate more revenue and increase its value.

For this to happen successfully, it is essential to have an acquisition strategy that makes sense. For example, Chegg, a company that provides services for students, has recently announced that it will be acquiring a student tutoring marketplace company called InstaEDU, according to Tech Crunch and a press release. 

Chegg's service allows students to rent textbooks and has expanded to include other areas that students might need help with, like homework, internship searches and scholarships. 

InstaEDU provides a way for students to receive convenient and affordable online tutoring. Chegg acquired the company so it could add these tutoring capabilities to its own offerings. The service offers students a variety of tutoring options. 

"Students have been coming to Chegg for years to get homework help using our Chegg Study service when they've been stuck on a subject or need help mastering a concept. Now, they'll have the ability to connect any time, day or night, with an expert tutor who can provide personalized assistance on practically any subject," said Dan Rosensweig, Chairman and CEO of Chegg in a press release

According to the press release, the acquisition will be a $30 million cash deal and it is believed it will be accretive to Chegg's earnings.

Through this acquisition strategy, Chegg will expand its service offerings, and in turn, increase value for shareholders. By making this move, the company looks to put itself in a stronger position in the market. 

With the right strategy, an acquisition can strengthen a company in many ways. Before deciding to move forward with an acquisition, an M&A advisor can help determine a sound strategy.