CHICAGO — Larger schooling consultants have a message for faculty leaders considering a merger: Don’t wait.
By the point a university is in deep monetary misery and going through potential closure, the window for an optimum merger usually has closed way back.
Establishments in hassle typically wait till “absolutely the final minute after which assume, ‘Now it is a good suggestion to discover a merger companion’ — which no one will contact,” Ricardo Azziz, founder and director of the Middle for Larger Training Mergers and Acquisitions, mentioned on the Larger Studying Fee’s annual convention final week.
“No one’s going to merge with an establishment that’s closely in debt, has no branding, has no enrollment,” he added.
Other than scuttling the likelihood solely, a distressed scenario makes it tough to create a mutually helpful merger.
“Folks wait too lengthy, after which find yourself with no negotiating capacity,” mentioned Azziz, who advises on faculty mergers as a principal with SPH Consulting Group.
When negotiating energy is gone, a merger usually quantities to little greater than an actual property transaction, he added.
Extra mergers are wanted, Azziz and his fellow panelists argued, as enrollments and the inhabitants of conventional college-aged college students decline. This state of affairs leaves the upper ed sector with what Azziz described as “huge extra capability.”
The potential for merging with one other establishment might be constructed into a university’s strategic plan, Karla Leeper, vice chancellor for strategic communications and public affairs on the College of Kansas, mentioned on the panel.
Leeper, who went by a merger whereas an government at what’s now Augusta College, in Georgia, mentioned that in lots of circumstances, strategic planning revolves round doing incrementally extra of what a university is already doing. However schools typically fail to execute these plans, with the implications of failure even larger in an setting of falling enrollment at smaller schools.
“If we’re an establishment that is in a difficult scenario, that is devastating,” Leeper mentioned. “You see issues should not going properly. You sit down, you create a plan, you hope that it’s going to enable you, and it would not.”
If schools can discover the appropriate companion on the proper time, they’ll entry extra sources and model recognition whereas the companion would possibly broaden its geographical or programming depth. And most significantly, they’ll forestall closures, which Leeper mentioned are usually abrupt and go away college students “scrambling to strive to determine what to do
Mergers and acquisitions aren’t the one strategy to companion with one other college.
Richard Katzman, a fellow with the Middle for Larger Training Mergers and Acquisitions and is an SPH senior marketing consultant, pointed to networked universities. In these circumstances, establishments collaborate on areas like enrollment, expertise, and course and commencement price enchancment as a substitute of totally marrying their organizations.
He additionally pointed to partnerships with firms, similar to an initiative at Google that gives free educational providers to group schools.
For all of the potential advantages, there are many obstacles and challenges as properly.
Amongst them, panelists pointed to public scrutiny, pushback from campus stakeholders, the complexity of finishing a merger, and the monetary dangers in taking up one other faculty’s liabilities and operations.
“You actually must do sensible, clever due diligence to be able to guarantee that it is not a one-time windfall, and that you simply’re not, in reality, buying issues,” Katzman mentioned.
Editor’s observe: Ricardo Azziz writes a month-to-month column on mergers or Larger Ed Dive. His opinions are his personal.
