Like you, we have had a busy start to the proverbial new academic year. Our clients, colleagues, and friends throughout higher education are working harder than ever to navigate this most uncommon back-to-school transition. A few noteworthy items from us:
“Is the Board serious?”
Financial pressures, driven by demographic shifts and accelerated by the pandemic, have led a growing number of not-for-profit colleges and universities to contemplate partnership, up to and including mergers. These combinations can provide economies of scale both operationally and programmatically, facilitate the creation of new program offerings, and lead to an enhanced profile for student recruitment and outcomes generally. But the dramatic nature of the change can make the decision extremely fraught for otherwise risk-averse institutions.
The process of identifying, approaching, and negotiating with prospective partners raises complex and interconnected issues of sustainability, mission, autonomy, and pride affecting a wide array of stakeholders including staff, faculty, students, parents, alumni, and accreditors each with a powerful voice in decision-making, and whose buy-in is often critical to a successful transition. As a result, trustees can be notoriously slow to act and ambivalent throughout the process of contemplating a major change.
The result of this ambivalence can be a lot of false starts, dead-end conversations, and wasted time as potential partnerships are tentatively explored. University systems and other institutions of scale, particularly those with an established track record for successfully integrating smaller schools, are often skeptical of these overtures as a result. The first question potential acquirers tend to ask when approached is “is the board serious?” By this, they mean has the board fully accepted the need for a combination and have they sufficiently thought through the criteria by which they will select a new home.
For this reason, we recommend that the very first step in any outreach effort is an assessment that enables the board to finally and firmly answer the question of whether its competitive position can be improved with its existing resources, or whether some type of affiliation or merger, either with a smaller or a larger institution, is necessary. This involves a careful internal analysis of program conferral trends as well as external analysis of competitive program enrollment and labor market trends.
Confronting hard data about an institution’s market position and identifying particular areas of strength and weakness can strengthen a board’s resolve and help to clarify the attributes of an ideal partner. Approaching prospective partners armed with strong data and a unified leadership team and board can make the difference between a successful process and a failed and frustrating effort.
Last month Tyton Partners announced the launch of a new initiative aimed at providing a comprehensive suite of services to colleges and universities grappling with all of the opportunities that the current market turmoil catalyzes. The Center for Higher Education Transformation will draw from expertise in both the firm’s strategy consulting and investment banking practices and the higher education operating experience of its principles, to provide a range of service offerings designed to support higher education institutions seeking mergers and affiliations, revenue growth and diversification, transformative partnerships and capital access.
Fundamentally, we see unprecedented opportunity in the current market environment for institutions of all types and sizes. Our experience working on transformational partnerships across the last decade has helped many institutions plan for and realize successful partnerships. We hope to engage with many of you over the coming weeks as we introduce these services to the market and hear more about where and how we can help your institution address its particular needs. To learn more contact us for a briefing about how we help institutions navigate these transitions.
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