CHICAGO — Greater schooling specialists have a message for faculty leaders considering a merger: Don’t wait.
By the point a school is in deep monetary misery and going through potential closure, the window for an optimum merger usually has closed way back.
Establishments in bother usually wait till “absolutely the final minute after which assume, ‘Now it is a good suggestion to discover a merger companion’ — which no person will contact,” Ricardo Azziz, founder and director of the Heart for Greater Schooling Mergers and Acquisitions, stated on the Greater Studying Fee’s annual convention final week.
“No person’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 totally, a distressed scenario makes it tough to create a mutually useful merger.
“Individuals wait too lengthy, after which find yourself with no negotiating means,” stated 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 could possibly be constructed into a school’s strategic plan, Karla Leeper, vice chancellor for strategic communications and public affairs on the College of Kansas, stated on the panel.
Leeper, who went via a merger whereas an govt at what’s now Augusta College, in Georgia, stated that in lots of instances, strategic planning revolves round doing incrementally extra of what a school is already doing. However faculties usually fail to execute these plans, with the results of failure even increased in an setting of falling enrollment at smaller faculties.
“If we’re an establishment that is in a difficult scenario, that is devastating,” Leeper stated. “You see issues should not going properly. You sit down, you create a plan, you hope that it’s going to assist you, and it does not.”
If faculties can discover the suitable 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 stated are usually abrupt and go away college students “scrambling to attempt to determine what to do
Mergers and acquisitions aren’t the one option to companion with one other college.
Richard Katzman, a fellow with the Heart for Greater Schooling Mergers and Acquisitions and is an SPH senior advisor, pointed to networked universities. In these instances, establishments collaborate on areas like enrollment, know-how, and course and commencement price enchancment as an alternative of absolutely marrying their organizations.
He additionally pointed to partnerships with firms, similar to an initiative at Google that gives free tutorial companies to group faculties.
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 over one other faculty’s liabilities and operations.
“You actually need to do sensible, clever due diligence as a way to guarantee that it is not a one-time windfall, and that you just’re not, the truth is, buying issues,” Katzman stated.
Editor’s be aware: Ricardo Azziz writes a month-to-month column on mergers or Greater Ed Dive. His opinions are his personal.
