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Mergers, affiliations and collaborations in higher education

As far back as 1873, higher education institutions have embraced the concept of partnering or affiliating with other colleges or universities to more effectively advance mission objectives. Since Boston University’s acquisition of Boston Female Medical College that fateful year, institutions have deployed these strategies to maintain financial viability, add depth and breadth to academic offerings, enhance reputation and brand, and reposition themselves for long-term success. In addition to considering the various benefits that could result from joining forces with another institution, preparing for such a major endeavor — evaluating the alignment of objectives, communicating with stakeholders and prudently performing due diligence — has proven critical in attaining eventual success.  

Positioning for the future
In recent years, many large colleges and universities across the United States have taken deliberate action to identify smaller, specialized schools with the potential for adding strategic value to their academic and programmatic portfolios. In an era when top-line pressure and escalating costs are creating a challenging operating environment for entities of all sizes, larger players generally have greater scale and ability to successfully navigate such conditions. Operating from a position of relative strength and stability, larger institutions can typically make a compelling case to their smaller, more resource-constrained peers that a combined entity will better position both institutions for the highest probability of success. Some recent examples of such partnerships include:
  • The consolidation of Thunderbird School of Global Management into Arizona State University (2014)
  • Polytechnic University’s affiliation with and subsequent acquisition by New York University (2008–2014)
  • The consolidation of the University of Medicine and Dentistry of New Jersey (UMDNJ) into Rutgers, The State University of New Jersey (2013)
  • The University of Massachusetts-Dartmouth’s acquisition of the Southern New England School of Law (2010)

Mutual gain from collaboration
Until recently, smaller, more specialized institutions — whether focused on international business, engineering/technology, dentistry, law, or the like — have been the ones drawn to such affiliations; however, we anticipate this interest expanding to a broader pool of liberal arts colleges. It is important to recognize that exploring alternate operating models should not be viewed as a sign of defeat, but rather as a proactive and strategic assessment intended to help an institution better fulfill its mission objectives. Irrespective of discipline, institutions are drawn to an affiliation because of one or more anticipated benefits:
  • Improved ability to attract students when aligned with a highly ranked, well-regarded institution
  • Opportunities to enhance academic and programmatic offerings (e.g., interdisciplinary studies)
  • Reduced costs and efficiencies across administrative functions
  • Access to financial support and resources to improve financial position (debt coverage, financial ratings or ratios, etc.), enhance facilities, upgrade technology infrastructure and systems, and fortify recruitment and advancement functions  

Large institutions are typically driven to explore such collaborations for a variety of reasons. Attempting organic program development is usually a slower, more costly, time-consuming and riskier growth strategy. Integrating operations with an established institution with a strong track record enables the larger player to diversify its operations and expand its reach in a fairly turnkey manner. As opposed to building from the ground up, collaborations enable institutions to readily acquire the expertise, infrastructure and credibility of a fully functioning program to provide students with access to greater academic variety (e.g., new minors, specializations, electives), enhanced infrastructure and expanded degree options (e.g., joint degree programs such as JD/MBA, MD/MPH).

Key considerations in exploring compatibility
No matter why an institution is interested in exploring a partnership with another entity, it is important to consider the significant level of effort required to implement such a collaboration. These initiatives require a tremendous amount of time, energy and commitment to accomplish the spectrum of required activities, including exploring the alignment of mission objectives, outlining the principal objectives of the partnership, assessing anticipated synergies, considering constituent feedback and receptivity, developing financial projections, drafting the necessary legal documents, and receiving the requisite approval from various accrediting bodies.


1.    Discuss what’s best for the mission.

What is distinct about collaborations in higher education is the focus on maximizing the attainment of mission objectives. As compared to M&A activity in the for-profit space — where the principal focus is typically on maximizing stakeholder value — higher education boards and management must consider how to position their institution for mission, versus strictly financial, success in the future.

While maintaining tradition is often a key priority for any board or institution, it is important that a well-intentioned appreciation for the past does not impair leadership’s ability to look to the future.  

University leaders who have implemented successful collaborations have paid careful attention to the sensitivities inherent in combining institutions and have found ways to establish agreement on new or revised institutional objectives. It is essential to
perform a very thorough analysis of potential impacts to mission, stakeholders and finances, and to clearly articulate the vital importance and key advantages of a new direction going forward.

2.    Communicate with stakeholders: Listen and inform.

When exploring such ventures, it is critically important to solicit input from various stakeholders, including prospective and current students, faculty, administration, alumni, donors and governing/accreditation bodies. Identifying the various constituent groups that may be affected by or have opinions about an endeavor is an important first step to effectively informing and engaging the community.    

Anytime a collaboration, affiliation or merger is announced — even at the earliest stages of exploration — constituents will have opinions and concerns about the likelihood of success, anticipated benefits, risks, institutional motives and potential drawbacks. Open and transparent communication is critical while leading an institution through a period of transition. There are numerous examples of merger attempts that stalled due to stakeholder pushback; understanding constituent views and navigating this process with thoughtfulness and sensitivity are key to developing and executing an appropriate strategy.   

3.    Be realistic in estimating anticipated benefits.

In exploring a potential collaboration, it is easy (and natural) for those individuals most in favor of the “marriage” to think about the many benefits that could result. As in the for-profit sector, nonprofit and higher education collaborations typically do not yield the full range or extent of benefits originally anticipated and outlined in the due diligence process. Those who are overly eager or enthusiastic about the prospects of such relationships are quick to evaluate possible outcomes and performance with an overly rosy view. Financial and nonfinancial benefits and costs should be evaluated with a critical eye and from an expected-value standpoint, with appropriate sensitivity analyses performed to foster an understanding of risks in potential outcomes. Cost savings, synergies and efficiencies frequently take much longer to materialize than expected.

Although many believe M&A activity in the higher education sector is a relatively new or infrequently occurring phenomenon, such partnerships and collaborations have been taking place for over a century. With varying objectives for pursuing these endeavors and many lessons learned over the years, boards and institutional leaders should remain open-minded about the prospect of collaborations as a means to better position their colleges and universities for future success. Finding the right partner, engaging constituents in the process and performing well-grounded due diligence are key to a smooth process.  

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