Are you aware of new changes in the education industry? There are a plethora of higher education organizations that consider their long-standing reputations as the essential thing to hold onto at all values. But, as technology is evolving, the face of education is also changing. And, many colleges are making tough decisions to survive.
Is the acquisition of the perfect decision for any institution? One of the best choices the colleges consider is mergers that may help them avoid the problem of less student base and the quality of education. There are several issues faced by educators nowadays.
People have started viewing education distinguish with the credentials and skills influenced by rising technology and mobility. Some of these modifications disrupt education and force challenging determinations that may change the way we see higher education.
In this article, I will be delivering some of the crucial things you need to consider before jumping into a merger or acquisition game. Here, you will come to know the reason for the merger. In these 10 minutes, I will be talking about the current scenario of the education industry.
A merger or acquisition is a critical situation that demands factors that need to be considered before occurrence. The article will help you know what you can lose in any acquisition. After that, we have discussed how to make decisions on the merger. For that, we have analyzed some of the successful and unfruitful acquisitions as well as mergers.
The main goal of a well-strategized alliance is to offer cooperation. A perfect merger or acquisition does not negotiate the values and mission of the participating organization. For this, you will know how successful mergers look like. And we have also covered how to make an informed decision by giving an example of a massive merger of Thomas Jefferson University and Philadelphia University.
Merging for survival
The merger is an ancient concept, and most industries are familiar with it. Majorly in situations such as financial crisis, the acquisition is a common term. Several industries, such as healthcare, electronics, telecommunications, etc. have performed at a high rate.
Logically, a merger is the best option when various businesses are providing similar sorts of services, and the competition is decreasing the sales across all the leading companies. With mergers, companies and institutions may get a plethora of advantages; these benefits include:
- Enhances the effectiveness of the organization
- Heightening constant impact and growth
- Risen value for shareholders and customers
- Intensified competitiveness
- Bettered chances of long-term survival
- Greater economies of scale
In the education industry, other advantages of mergers associated with the industry leader are that it offers the leaders monetary support required to create new infrastructure, spend on innovations, and offer a stronger curriculum.
However, these expenditures and investments cannot ensure increased admissions for the collection of much-required tuitions.
Evolving Student Pool
Most of the higher educational institutes depend on tuition fees. It does not matter how much support they put; they must continue to magnet students to increase revenue from the tuition fees in the long run. But the choices are significantly less to raise tuition fees and attract more students.
One unfortunate thing is that the student pool is shrinking, and a tuition increase will only reduce that pool. As per the leading education statistics, the number of college students has decreased for five consecutive years.
One of the most important reasons behind the reducing number of students enrolling in colleges is the reduction in birth rates. As per the survey, the number of teens is declining in half of the colleges and universities. That conveys that there are very few disciples to go around and pay fewer fees
Additionally, in recent times, the profile of the typical student has changed completely. One in five students is over 30, 35 percent of the students are part-time, whereas 38% of undergraduates are over 25, and 2 out of 5 are attending a community institute. One of the exciting things to note down from this survey is that more than 1/4th of students choose online education.
Staff Disruption and Losses
Many high school organizations have not acknowledged the truth confronting them. However, trust members have recognized their duty and responsibility to main the operation sustainable. However, there is always a fear that they will also have to remove their roles if an acquisition occurs.
Even the stakeholders and board members admit that costs have to be handled; these cuts have a severe impact on the organization. The board members fear that they have to eliminate their roles, but they know that universities’ expenses are related to human resources. These aspects force trustees and stakeholders to worry about the loss of critical staff members critical to attracting students.
But there is a trust that a giant institution can offer more for its faculty, and students do not get lost in struggling institutes. It can be a motivating inspiration for some organizations that are just starting to see opportunities.
This type of condition could be right for stand-alone universities and institutions with a limited field of specialization like Valparaiso University School of Law, Westminster Choir College, Sweetbriar College, and Whittier Law School.
All these institutes that have faced this type of challenge have been sold or have closed.
Decision to Merge
Institute should take a merger decision only if it thinks it will be beneficial for it and enhance staff and students’ value. The primary focus should be to improve the possibility of growth, increasing the advantages to its stakeholders.
For getting success from the acquisition, only prefer acquisition if you have resources and assets available with you. It will help negotiations get more robust, and there are still so many things to be gained from the school’s current situation.
Intelligent stakeholders always need to strategize plants that offer them the best odds of survival. Thus, mergers are the answer. It is also one of the challenging and long roads as the process contains much negotiation and convincing to keep the standard of every institution high. The merger should continue to offer all the existing advantages to the faculty members and students.
We think that the primary goal of any educational institute is to continue providing high-quality results. The institute should remain responsible for its pupils. Additionally, it should make sure that the students get the best education affordably.
If any educational organization faces problems improving its content, service, and reputation, one of the best steps forward moves is to merge with another similar organization in a mutually beneficial method.
The Well–structured merger
A meaning of a well-strategized merger is to offer a mutual partnership. A perfect merger or acquisition will not compromise the values and mission of the participating organization. Both the organization can initiate a discussion that can guide the organization over alliances. The discussion may contain some strategic points such as trimming expenses, having more aggressive and beneficial student enrollment schemes.
Undoubtedly, a merger needs to go through many challenges. Despite that, we have seen many excellent successful instances that have brought unexpected opportunities like:
- Extensive scale and size
- Excellent monetary savings
- Reengagement and re-deployment of board members
Successful and Fruitless Mergers
We have noticed some of the very successful mergers in the USA involving:
- Thomas Jefferson University and Philadelphia University
- The University of Massachusetts acquired The Southern England School of Law
- Monterey Institute of International Studies and Middlebury College
- Art Institute of Boston and Lesley University
- The University System of Georgia Consolidations
Along with the mergers listed above, the list of the merger of institutions is very long. However, some unfortunate cases have also come in front where merges have been unfruitful or highly problematic.
For instance, in the year 2017, the merger of Boston University and Wheelock College took 43 days to complete; Wheelock College became a part of Boston University. Here is another instance where the merge talk between Lasell College and Mount Ida College broke down in between. Instead, Mount Ida had announced that the University of Massachusetts would acquire it. After that, Mound Ida had to stop their operation and effectively put an end.
In both cases, situations were different. Let’s get into the depth. If we talk about the merger between Wheelock College and Boston University, the college’s name would be the Wheelock College of Education and Human Development. In that case, students could take admission to Boston University. Additionally, there was no layoff for the staff members and faculty of Wheelock College.
Whereas in the case of Mount Ida College, things were not that warming and friendly. As per the acquisition, the campus needs to be divided within the University of Massachusetts system. That caused a problem as the students had to travel 60 miles away to enter the University of Massachusetts Dartmouth campus. As an outcome, many students in Mount Ida founded that their flagship program was not the same and did not match the University of Massachusetts system’s expectations.
These were a few stories that show that the merger does not guarantee a sure shot success.
How to make an informed decision
There are many things for educational institutes to consider before diving into the process of merger and acquisition. The first thing they need to ask themselves is the aspect that drives them towards the acquisition or merger process. As we have seen the examples, many possibilities include the partnership potential or acquisition. Institutes also need to look at several other possible alternatives. The reason is that the interest of faculty members and students need to be protected.
In July 2017, the education industry saw a massive merger of Thomas Jefferson University and Philadelphia University. At that time, Mr. Stephen Spirell Jr. was the chancellor or Thomas Jefferson University. He has shared some beautiful insights into the acquisition. Before the merger, he was the president at Philadelphia University and presented this advice:
- A key can separate you from the same education that students can get anywhere else: differentiation.
- It is vital to find complementary partners so you can offer academics more diversely. Also, it would be excellent if you could avoid eliminating staff members due to overlapping programs.
- Always operate the deal transparently in front of students, faculties, and all those who have invested in the school and the community to get early buy-in and build trust.
- You have to meet the accreditation levels for multiple agencies. So be prepared before you can be acknowledged as one university.
- Focus on the hiring and recruitment process from scratch to avoid confusion by students. It will assist you in attracting the tuitions you need. Because there will be many factors in which you require to do differentiate yourself in the new model.
Before making any decision, you need to remember that a merger is not the only option. There are many other ways, such as collaborative options, shared resources, and joint programs to collaborate to help you gain a stable economic condition. All these vast numbers of opportunities will let you offer an enhanced educational experience.
The digital world is evolving, and the demographic of the new students should also come under consideration. It would help if you considered how the completely new digital education era has opened up new methods to offer education, with geography usually caught out of the mix.
Additionally, it would help if you were looking to add other specialism areas and credentials to the portfolio like analytics and social media. All these factors will help you attract a new pool of students and enable you to enter into a new ed-tech industry and gain high productivity and revenue.
However, mergers are not the only way to get rid of problems. There are various other strategies you should look out for to enhance the future of higher education; they may recommend you an exciting range of potential opportunities.