Mergers, acquisitions and partnerships—oh my! In today’s higher education landscape, a plethora of schools face razor-thin revenue margins and are exploring innovative ways to serve their students through strategic alliances.
The playbook for any given institution’s alliances can vary wildly. For example, Lewis University and St. Augustine College announced this week their plans to merge. Two weeks ago, Drexel University and Salus University decided to explore an “affiliation.”
Alliances can be highly individualized depending on each institution’s unique set of challenges and the temperament of its leaders. However, here are some throughlines explaining most alliances.
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Why are schools joining alliances? And who are they?
Josh MacIntosh, director of the Transformational Partnerships Fund, identified a few key long-term problems most of these schools cite as their rationale for an alliance:
- Demographic changes: Colleges face lower enrollment numbers due to a smaller pool of traditionally aged college hopefuls.
- Market pressures: Online, digital-first learning environments.
- Student preference: Change in what students and parents are looking for in a degree.
These new challenges facing higher education generally seem to impact under-resourced, private institutions in regions with depleted recruitment pools and that lack the brand recognition to attract outside prospects. Without significant state funding or endowments, they are reliant on tuition revenue to survive, but their lack of enrollment restricts their financial capital, making them incapable of updating antiquated systems or funding new academic programs that meet market demand.
Benefits of an alliance
Michael Thomas, president of the New England Board of Higher Education, has witnessed “a notable increase” in higher education institutions open to exploring new models of alliances. Here are some of the key benefits these institutions take advantage of:
- Brand boost: Mergers can improve brand, reputation and institutional identity of one or both institutions
- Diversify offerings: Alliances can broaden and enrich courses, programs, degrees, activities and resources available to students and faculty.
- Slash costs: Institutions can expand their course offerings while eliminating duplicates, which lowers the burden of each institution’s expenses. They can consolidate academic, administrative and support assets to achieve economies of scale.
- Avoid insolvency: In the worst-case scenario, a merger alliance allows the institution to survive and dodge disrupted operations.
How to corral leadership support
Of the alliances MacIntosh has helped facilitate, he’s noticed that some institutions can be held back by frays in leadership solidarity.
“I’ve been impressed with the quality of presidential leadership,” he says. “I think more often than not the presidents who are trying to do the right, courageous thing are held back by their boards. That seems to be the case more often than not.”
One important word of advice MacIntosh believes can ease one’s concern over the prospect is to remember that exploring different options is not binding.
“Whether they go through with it or not, most will come out of the experience having learned something about themselves,” he says. “If you start early and you manage the process right, I think the discussion you have going forward can be quite the positive thing. It’s certainly not a disaster.”
It’s also important to remind oneself what the priorities are when considering alliances.
“Part of student-centric, mission-driven leadership is to be able to take yourself out of the equation and say, ‘What’s the right thing to do?'” MacIntosh says.
Recent examples of strategic alliances
Lewis University and St. Augustine College
Lewis University will acquire St. Augustine College when the two merge, pending approval of the Higher Learning Commission, Illinois Board of Higher Education and the U.S. Department of Education.
Capitalizing on Chicago’s growing Hispanic population, students will have access to a broader range of academic programs in a bilingual format, according to Patch.
Montclair State University and Bloomfield College
Aside from curriculum, leadership must consider what a merger can do for a school’s brand and identity.
As New Jersey’s largest Hispanic-serving institution, Montclair State University sympathized with Bloomfield’s mission to “empower first-generation students from diverse backgrounds,” according to NJ.com. Now with the backing of a publicly funded university, Bloomfield can continue to fulfill its mission with a revamped, robust set of resources under a new banner: Bloomfield College of Montclair State University.