If you follow the headlines about college and university mergers and acquisitions, you could be forgiven for thinking that they are little more than last-ditch maneuvers—hail marys thrown by institutions already on the brink of closure.
The narrative is familiar: declining enrollment, mounting deficits, depleted endowments, and a desperate attempt to salvage something—anything—before the lights go out.
And if your only knowledge was the college and university narrative, you’d again be forgiven for thinking that the mergers and acquisitions story is always that of a sad company divesting itself of what few assets it has left before going gentle into that good night.
Outside of higher education, however, failure is not the overarching mergers and acquisitions narrative. In the corporate world, “M&A” is a routine strategic tool, deployed by thriving organizations seeking growth, scale, and diversification, aided by a small army of well-heeled investment bankers and lawyers.
Sure, there are non-strategic mergers in the corporate world as well, where boards are required to do what’s best for shareholders: generally, wringing out every last dollar to give as much money to equity investors as they can.
But colleges and universities aren’t for-profit companies, and their constituents aren’t shareholders. They don’t exist to make a profit, and their constituents are those who seek and benefit from higher learning.
Mergers and acquisitions for the wrong reasons
So the wisdom of looking to the corporate world isn’t in looking at its failing companies—it’s in looking at the thriving ones. When we do that, we are inspired to see that mergers can be a strategic option for strengthening institutional missions and advancing educational purpose.
Indeed, in the nonprofit sector outside of higher education, we see mission-driven organizations regularly combine forces to extend impact and better serve constituents and communities.
The problem is that colleges often approach mergers for the wrong reasons (financial desperation), or too late (once financial desperation is unavoidable), or without confronting the hard realities involved in seeing a successful merger to completion (that financial urgency alone cannot successfully merge institutions of higher education).
So let’s be clear. Financial urgency alone is an insufficient rationale for a merger. A tidy closure with thoughtful and caring teach-out and transfer plans is better for students (and everyone else) than being jerked around by the promise, but ultimate failure, of an institutional merger.
Sustainable mergers are anchored in a clear academic and educational value proposition and alignment. They may also capitalize on economies of scale and the strength of combined resources, but they do so for a reason: expanded or strengthened programs, improved student pathways, deeper regional or disciplinary impact.
They advance the mission and purposes of the merging institutions and of higher education more broadly. A successfully merged institution is a gestalt: the whole (merged) institution is greater than the sum of its parts.
Transformations, not transactions
This is not to say that the path to success is easy. Governance tensions must be resolved. Cultures must be aligned. Every imaginable constituency group must be prepared. Due diligence must (ugh) be conducted.
Accreditors, state authorizers, bondholders, and the federal government must be satisfied. The list goes on. Mergers are not for the faint of heart.
Nor are mergers the only option. Institutional partnerships, affiliation agreements, shared services arrangements, acquisitions, and other viable paths can also strengthen and further an institution’s work and mission in incredibly impactful ways. Indeed many of the less radical alternatives have been in the higher education tool belt for some time and used strategically and successfully by institutions of all kinds.
Complete institutional upheaval isn’t necessarily required. What is required is the courage and realism to take a hard look at whether and in what form collaboration is right.
We know about historical epochs in American higher education marked by waves of institutional failure and reorganization, and each year comes with a prediction about how many colleges are projected to close.
Today’s environment, however, demands more than a back-footed, reactive approach to the challenges facing higher education. Our students, and our nation, deserve it.
The ultimate measure of any school’s success is not whether it preserves itself as it once was, but whether it better serves its students and society in the future. Mergers have the possibility to be a powerful tool to serve this purpose when they are understood as transformations, not transactions.
