Tag: mergers

  • 10 things universities can learn from mergers in the FE sector

    10 things universities can learn from mergers in the FE sector

    • James Clark is a Managing Director at Interpath Advisory, the UK’s largest independent Restructuring and professional advisory firm. James is co-lead of Interpath’s Education Team and has advised on over 20 mergers and potential mergers in the FE and HE sectors. In this blog, James explains 10 things universities can learn from mergers in the FE sector.

    Few people connected with the sector would contest that higher education institutions are coming under increasing pressures: a reduction in overseas students due to visa changes, inflationary pressures caused by macroeconomic factors and government policy, increased competition via alternative routes for 18+ students and plain and simple population patterns.

    Many of these headwinds were experienced by further education (FE) colleges not that long ago, and many would agree these have not vanished completely. The Area Review process, led by the FE Commissioner, sought to remove inefficiency across sixth forms and colleges – as this author would put it (admittedly in crudely simplistic terms) – by taking colleges that are half full, removing excess capacity and leaving fewer college groups which are full. Is it time for higher education (HE) to follow suit? Is it inevitable that HE will do so, though perhaps not on the scale seen in the Area Review process? Should we be seeing more mergers, more economies of scale, and more collaboration to navigate the gales?

    I’m not suggesting FE and HE are directly comparable. But they are both in the business of education, both have people at the heart of their institutions (on a major scale), both manage big cost bases and both suffer from similar issues around competition and government policy. So are there things that higher education institutions can learn from a major upheaval started in FE in 2015?

    10 things we can learn from FE mergers

    1. Are the cultures of the merging institutions aligned? One of the major obstacles to mergers (which either create an upfront barrier or mean that post-merger difficulties arise) is that the institutions have very different values and cultures. Existing relationships may help parties understand whether they are a good fit for each other. Management teams contemplating mergers would help themselves by reaching out and starting a dialogue or by increasing the frequency of their catch-ups.
    2. Understand the regulatory landscape. Navigating the regulatory landscape and remaining compliant with educational policy is complex and will be breaking new ground for many management teams. Knowledge of precedents and other case studies will be helpful. Advisor relationships are helpful here. A number of advisors, both in the financial space and legal space, emerged as market leaders during the Area Review process.
    3. Understand your stakeholders and take them on a journey. Banks, governing boards, the Department for Education, the Office for Students, pension scheme trustees. Do not underestimate the different angles each will be coming from. Each will want to know ‘what’s in it for me?’ and care will be needed to ensure each stakeholder feels supported by the merger. Poor communication and a lack of engagement could lead to opposition and unwanted obstacles.
    4. Agree a governance structure at an early stage. Effective and committed leadership is essential for a smooth transition. Conflicts in governance will create unnecessary barriers from the off. Successful mergers I have worked on have had Chairs who have worked together from the off – being like-minded, especially in the desire for success, to leave a legacy and preserve for the next generation has been key,
    5. Grip & Control. Create a steering committee. Set milestones and deadlines and be held to account. Clearly identify what’s on the critical path. If planned well, mergers typically happen on 1 August. Delays to the process could see management teams having to manage critical parts of the merger in term time. Many of the mergers I have worked on have had turnaround directors managing the process.
    6. Don’t assume the plan ends on day 1 of the merger. A 100-day post-integration plan will also be required, with dedicated resource to deliver operational control, as well as the expected benefits of the merger. Failure to plan for this could result in significant operational disruption, for example, if administrative, curriculum support, and IT systems need to be merged. The Area Review process made the 100-day plan part of its requirement for merger support.
    7. Clearly understand the rationale for the merger. Educational improvement? Cost savings? Revenue protection? This may then determine your chosen merger partner.
    8. Crunch the numbers and make sure it stacks up financially. Exploring and delivering a merger will not be cheap, with significant input from legal and financial advisors required, both before, during, and post-integration. Ensuring tangible benefits can be secured from a merger is crucial. Again, those successful mergers involved specialist financial personnel, often interims with expertise in education, to examine the potential benefits prior to the merger.
    9. First mover advantage. Don’t leave it too late to determine that a merger is right, or even essential to your survival. Be front-footed – the more time given over to the proposed merger, the smoother the process will be, and the more optimal the decisions made.
    10. A merger might not be right, but other structures may be available.  Whilst a number of FE institutions decided to abandon merger plans, this gave the institutions time to properly examine their long-term strategy, their cost base, and other potential “alliance-type” shared services models.

    Some would argue that the FE mergers have provided an opportunity for a reset, benefitting from a huge Government funding pot. Many (and not without great leadership) have successfully turned around the fortunes of financially and educationally stumbling colleges.

    One beacon that shines for me, which I had the pleasure of supporting, is the merger of Telford College of Arts and Technology and New College Telford. Within a short period of time, its financial health was upgraded to Outstanding, and its Ofsted upgraded to Good. A remarkable turnaround and testament to a focused and forward-thinking management team and governing body that, when faced with the task, grabbed it with both hands and drove it hard.

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  • Campus closures, mergers, cuts, and crises at the start of 2025 (Bryan Alexander)

    Campus closures, mergers, cuts, and crises at the start of 2025 (Bryan Alexander)

    Today, while Trump continues to flood the zone, I want to establish a
    sense of what the higher education baseline was before he cut loose. 
    As the new administration goes even more energetically after academia
    I’d like to share some data about our sector’s standing.

    Last year I tracked cuts and crises afflicting dozens of campuses.  I
    posted roughly every months, noting program cuts, institutional
    mergers, and campus closures, as well as financial crises likely to
    cause same: March 1March 20March 28, April, MayJuneJulySeptember, November. Today I’ll continue that line for the reasons I’ve previously given:
    to document key stories in higher education; to witness human suffering;
    to point to possible directions for academia to take.  In addition, I
    want to help paint a picture of the world Trump is starting to attack.

    Some caveats: I’m doing this in haste, between the political chaos
    and a stack of professional deadlines, which means the following will be
    more telegraphic than usual.  I may well have missed some stories, so
    please let me know in comments.

    Closing colleges and universities

    Philadelphia’s University of the Arts closed in 2024. Now different
    actors are angling for its physical remains.  Temple University purchased an iconic building, Quadro Bay bought another, and while more bids appear.

    Mergers

    Gannon University (Catholic, Pennsylvania) and Ursuline College (Catholic, Ohio) agreed to merge by this December.  The idea is to synthesize complementary academic offers and provide institutional stability, it seems.

    Seattle University (Jesuit, Washington state) and the Cornish College of the Arts (private, Washington) also agreed to merge.  As with the Lake Erie schools, one motivation is to expand curricular offerings:

    Emily Parkhust, Cornish’s interim president, said the deal opens new doors for the tiny school’s nearly 500 students.

    “This strategic combination will allow our students opportunities
    that we simply weren’t able to offer and provide at a small arts
    college,” she said. “Such as the opportunity to take business classes,
    computer courses, pursue master’s degree programs, engage in college
    sports — and even swim in a pool.”

    Financial problems also played a role: “Cornish declared it was undergoing a financial emergency in 2020, and this year, Seattle University paused hiring as it faces a $7.5 million deficit.”

    The Universidad Andres Bello (Universidad Andrés Bello; private, Chile) purchased Post University (for-profit, Connecticut).

    Campuses cutting programs and jobs

    In this series I’ve largely focused on the United States for the
    usual reasons: the sheer size and complexity of the sector; limited
    time. But in my other writing I’ve noted the epochal crisis hitting
    Canadian higher education, as the nation’s decision to cut international
    enrollment has struck institutional finances.   Tony Bates offers a good backgrounder.  Alex Usher’s team set up an excellent website tracking the resulting retrenchment.

    British higher education is also suffering, partly for the reasons
    that nation’s economy is hurting: negative effects of Brexit, energy
    problems stemming from the Ukraine war, and political fecklessness. For
    one example I find the University of Hull (public research) which is combining 17 schools into 11 and ending its chemistry program, all for financial reasons. Cardiff University (Prifysgol Caerdydd; public research) cut 400 full time jobs, also for financial reasons:

    Vice-Chancellor Professor
    Wendy Larner defended the decision to cut jobs, saying the university
    would have become “untenable” without drastic reforms.

    The job role cuts are only a
    proposal, she said, but insisted the university needed to “take
    difficult decisions” due to the declining international student
    applications and increasing cost pressures.

    Prof Larner said the
    university is not alone in its financial struggles, with most UK
    universities grappling with the “broken” funding system.

    Back in the United States, Sonoma State University (public university, part of California State University system) announced a massive series of cuts.

    “approximately 46 university faculty – both tenured and
    adjunct – will receive notice that their contracts will not be renewed
    for 2025-26. Additional lecturers will receive notice that no work will
    be available in fall 2025… Four management positions and 12 staff
    positions also will be eliminated.”

    The university will shut down a group of departments: “Art History,
    Economics; Geology; Philosophy; Theater and Dance; and Women and Gender
    Studies.”

    (These are the kind of cuts I’ve referred to as “queen sacrifices,”
    desperate moves to cut a school’s way to survival.  The term comes from
    chess, where a player can give up their most powerful piece, the queen.
    In my analogy tenured faculty represent that level of relative power.)

    There will be some consolidation (“The college also plans to merge
    the Ethnic Studies departments (American Multicultural Studies, Chicano
    and Latino Studies, and Native American Studies) into one department
    with one major”) along with ending a raft of programs:

    Administrative Services Credential in ELSE; Art
    History BA; Art Studio BFA; Dance BA; Earth and Environmental Sciences
    BA; Economics BA; Education Leadership MA; English MA; French BA;
    Geology BS; German Minor; Global Studies BA; History MA;
    Interdisciplinary Studies BA; Interdisciplinary Studies MA; Philosophy
    BA; Physical Science BA; Physics BA; Physics BS; Public Administration
    MPA; Spanish MA; Theatre Arts BA; Women and Gender Studies BA.

    Additionally, and unusually, SSU is also ending student athletics:
    “The University will be removing NCAA Division II athletics entirely,
    involving some 11 teams in total.”

    What lies behind these cuts?  My readers will not be surprised to learn that enrollment decline plays a role, but might be shocked by the decline’s size: “SSU has experienced a 38% decrease in enrollment.”

    More cuts: St. Norbert College (Catholic, liberal arts, Wisconsin) is planning to cut faculty and its theology department. (I posted about an earlier round of cuts there  in 2024.)  Columbia College Chicago (private, arts) will terminate faculty and academic programs.  Portland State University (Oregon) ended contracts for a group of non-tenure-track faculty.

    The University of New Orleans (public research) will cut $2.2 million of administration and staff.

    The University of Connecticut (public, land grant) is working on closing roughly two dozen academic programs.  According to one account, they include:

    master’s degrees in international studies, medieval
    studies, survey research and educational technology; graduate
    certificates in adult learning, literacy supports, digital media and
    design, dementia care, life story practice, addiction science and survey
    research; a sixth-year certificate in educational technology, and a
    doctoral degree in medieval studies.

    It’s not clear if those terminations will lead to faculty and staff reductions.

    Budget crises, programs cut, not laying off people yet

    There are also stories of campuses facing financial pressures which
    haven’t resulted in cuts, mergers, or closures so far, but could lead to
    those. Saint Augustine’s University (historically black, South Carolina) is struggling to get approval for a campus leasing deal, while moving classes online “to take care of deferred maintenance issues.”  SAU has been facing controversies and financial challenges for nearly a generation.

    The president of another HBCU, Tennessee State University, stated that they would run out of money by this spring.  That Higher Ed Dive article notes:

    TSU’s financial troubles are steep and immediate. An FAQ page on
    the university’s website acknowledges that the financial condition has
    reached crisis levels stemming from missed enrollment targets and
    operating deficits. This fall, the university posted a projected deficit of $46 million by the end of the fiscal year.

    The Middle States Commission on Higher Education agreed to hear an accreditation appeal from Keystone College (private, Pennsylvania), while that campus struggles:

    Keystone college front page 2025 Feb

    From the top of Keystone’s web page right now.

    The board of William Jewell University (private liberal arts, Missouri) declared financial exigency
    This gives them emergency powers to act. As the official statement put
    it, the move “enables reallocation of resources, restructuring of
    academic programs and scholarships and significant reductions in force.”

    Brown University (private research university, Rhode Island) is grappling
    with a $46 million deficit “that would grow to more than $90 million,”
    according to provost Francis J. Doyle III and Executive Vice President
    for Finance and Administration Sarah Latham.  No cuts are in the offing,
    although restraining growth is the order of the day. In addition,
    there’s a plan to increase one sort of program for revenue:

    the university will work to “continue to grow master’s
    [program] revenue, ultimately doubling the number of residential
    master’s students and increasing online learners to 2,000 in five
    years.”

    KQED reports
    that other California State University campuses are facing financial
    stresses, notably Cal State East Bay and San Francisco State
    University.  The entire CSU system and the University of California
    system each face massive cuts from the state’s governor.

    Reflections

    Nearly all of this is occurring before the second Trump
    administration began its work. Clearly parts of the American
    post-secondary ecosystem are suffering financially and in terms of
    enrollment.

    It’s important to bear in mind that each school’s trajectory is
    distinct from the others in key ways. Each has its history, its
    conditions, its competing strategies, resources, micropolitics, and so
    on. Each one deserves more exploration than I have time for in this
    post.

    At the same time I think we can make the case that broader national
    trends are also at work. Operating costs rise for a clutch of reasons
    (consumer inflation, American health care’s shambles, deferred
    maintenance being a popular practice, some high compensation practices,
    etc) and push hard on some budgets. Enrollment continues to be a
    challenge (I will return to this topic in a future post). The Trump
    administration does not seem likely to ameliorate those concerns.

    Note, too, that many of the institutions I’ve touched on here are not
    first tier campuses. The existence of some may be news to some readers.
    As a result, they tend not to get much media attention nor to attract
    resources.   It is important, though, to point them out if we want to
    think beyond academia’s deep hierarchical structures.

    Last note: this post has focused on statistics and bureaucracy, but
    these are all stories about real human beings.  The lives of students,
    faculty, staff and those in surrounding communities are all impacted. 
    Don’t lose sight of that fact or of these people.

    (Seattle University photo by Michael & Sherry Martin; thanks to Karen B on Bluesky, Karen Bellnier otherwise, Mo Pelzel, Peter Shea, and Siva Vaidhyanathan for links; thanks to IHE for doing a solid job of covering these stories)

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