Is Buddying-Up the Answer?
Higher education institutions in the United States face unprecedented challenges, including declining student enrollment, financial strain, and increasing costs. Colleges and universities are exploring strategic alliances, partnerships, and mergers to overcome these obstacles and ensure their long-term viability. These collaborations offer a path forward by enhancing academic offerings, improving student outcomes, and increasing financial stability. A July 20, 2023, McKinsey article* describes the opportunities and challenges colleges and universities face when considering “buddying up” with a like-missioned peer. In this blog post, Steve Graham, from Triangle’s higher education practice group, builds on the McKinsey piece and explores the importance of partnerships and mergers in higher education and how they can help institutions navigate the changing landscape.
Declining Student Enrollment. One of the most daunting challenges higher education faces is a decline in student enrollment. Over the past decade, there has been a significant decrease in first-time student enrollment in both private and public institutions. This decline, coupled with the impending demographic cliff, where enrollment is expected to contract even further, poses a serious threat to the financial viability of many institutions.
The Power of Partnerships. Institutions are increasingly turning to partnerships and alliances to address declining enrollment and financial pressures. These collaborations can take various forms, such as practice-sharing cohorts, program reciprocity, research collaborations, joint ventures, and integrated services consortiums. Institutions can often expand academic opportunities, improve student experiences, and operate more efficiently through these partnerships than by going it alone.
Mergers and Acquisitions. While partnerships offer valuable benefits, the most transformative opportunities often arise through mergers and acquisitions (M&A). M&A activity in higher education has increased, with institutions leveraging this strategy to achieve complementary academic programming, expanded geographic presence, enhanced shared services, and improved student outcomes. M&A can be a lifeline for struggling institutions, ensuring financial stability and expanding educational access.
Challenges and Considerations. While partnerships and M&A hold great potential, they are not without challenges. Misaligned objectives, inexperienced negotiators, insufficient due diligence, and complex stakeholder dynamics can hinder the success of any collaboration. However, institutions can increase their chances of success by defining clear goals, conducting thorough due diligence, and thoughtfully planning for implementation.
Conclusion. In the face of declining enrollment and financial strain, partnerships and mergers have emerged as powerful strategies for higher education institutions. By leveraging these collaborations, institutions can enhance their academic offerings, improve student outcomes, and achieve financial stability. However, careful planning, due diligence, and effective implementation are crucial for the success of these initiatives. As the higher education landscape continues to evolve, institutions must embrace innovative approaches to ensure their long-term viability and provide students with the best possible education.
*Retrieved from: https://www.mckinsey.com/industries/education/our-insights/higher-ed-is-consolidating-transforming-the-sector#/
