Consolidation alone won’t save higher education

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The last year has seen a significant uptick in M&A activity and strategic partnerships as colleges seek to address systemic issues threatening long-term viability. Many of the most pressing issues have been exacerbated by the pandemic: flagging enrollment levels, lost revenue from housing and on-campus activity, and student access to name just a few.  In these cases, consolidation is a logical remedy, and provide smaller institutions in particular an opportunity to create scale. The northeast has perhaps been the most concentrated example of this, with state schools in Connecticut, Pennsylvania, and Massachusetts pursuing various forms of consolidation either within their networks or with regional affiliates.

Most of these issues facing these institutions are more systemic in nature, however, and are unlikely to be solved through regional consolidation and cost-efficiencies alone. They also mask other major universal issues experienced by all segments of the higher-education sector:

  • Remote learning and online education are no longer merely complementary to traditional learning formats, but essential capabilities for the future. Institutions must consider how well positioned they and prospective partners are to navigate this transition.

  • Students and the public at large increasingly demand that their investment of time and money lead to financial return. Alternate degrees and competency-based programming are a key piece of the solution, as are more robust pipelines connecting students with prospective employers.

  • Specialized academic portfolios are the life-blood of most liberal art and private schools, but limit exposure to technical skills required by many sectors driving employment growth. Partnership with institutions whose core offerings complement these disciplines can help expand access across student populations.

These dynamics require more expansive strategic though as organizations approach partner planning. Institutions should consider the following strategic questions as they consider next steps to ensure both parties are able to maximize the value of the relationship, as well as the long-term health of the higher-education sector:


Though this recent spate of consolidation carries a clear near-term focus on surviving the current storm, institutes of higher-education must use it as an opportunity to pursue meaningful transformation in their business models. The opportunity set varies depending on the profile and financial realities of each institution, but the risks of inaction are universal. Without innovation, the sector faces still worsening financial decay and risk to the core mission. 

Authors

Jaime Batista

Jaime Batista

Principal, Santa Barbara

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