Ricardo Azziz has held quite a few government positions in greater schooling and led the merger that resulted in Georgia Regents College, now Augusta College. He’s principal at Strategic Partnerships in Greater Schooling Consulting Group.
He writes the common Merger Watch opinion sequence on company restructuring in greater schooling.
Mergers and consolidations are essential techniques that many schools ought to take into account within the face of great declines in enrollment, huge extra capability and the approaching enrollment cliff starting in 2025, when the college-age inhabitants is predicted to dramatically drop.
Sadly, too many establishments search the choice too late, when their monetary and enrollment place has dwindled past salvage and their worth to a potential associate is proscribed at finest.
It’s important that governing boards and government leaders dispassionately and objectively perceive the approaching greater schooling panorama and the way it could impression their establishment. They should start to hunt companions sooner than they assume is warranted.
Ricardo Azziz
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That is most important for smaller establishments, these with below 5,000 college students, for the sake of sustaining their funds and heritage. Nevertheless it’s additionally essential for bigger establishments whose leaders could need to take into account a merger, or mergers, to quickly improve the competitiveness of their teachers, advertising and dimension.
Nonetheless, one factor that many leaders are likely to overlook when contemplating a merger — they arrive with prices.
Among the many seven important parts for merger success my co-authors and I reported on in our guide “Strategic Mergers in Greater Schooling,” we famous the necessity for schools to have enough devoted sources.
As I communicate with leaders trying to discover a merger — both with an establishment that they’ve already recognized or are nonetheless looking for to establish — the main focus is totally on the political and communication challenges of contemplating after which enterprise the transaction. However having enough devoted sources also needs to be on the forefront.
What are merger prices? They’re each intangible and tangible.
Intangible prices are many. They embrace the potential for employees fatigue and stress, campus and area people confusion, unfavorable impacts on the institutional model, alumni and college disaffection, and the menace to management belief.
Others are tangible prices.
A few of these prices are unattainable to estimate. These embrace potential impacts on enrollment and fundraising, school and employees retention, and the ever-present alternative price, whereby the sources and power invested may maybe be put into different initiatives (e.g. extra advertising, scholar recruitment, on-line programming, and many others.).
However there are additionally estimable monetary prices — prices which is able to impression money circulation.
A few of these happen within the premerger section, together with the prices of enterprise thorough due diligence, authorized opinions and regulatory filings. Put up-merger, some prices are extra mundane, akin to new signage, uniforms, enterprise playing cards and letterhead.
Different prices are operational, together with the price of marrying disparate data expertise infrastructures and safety practices, and establishing a typical human sources and payroll system. Nonetheless others will tackle doable worker compensation and promotion and tenure inequalities.
Extra emotional and tutorial help for incoming college students, who could really feel dislocated and fewer ready within the new campus atmosphere, must be thought-about. The prices of outfitting merged athletic packages, if there are any, will not be trivial.
Some prices that needs to be thought-about embrace common campus celebrations to acknowledge the thrilling potential of the merger and to welcome new companions. It is crucial that leaders of a merged establishment not underestimate the worth of celebrating even small wins to foster the sense of oneness or togetherness.
Leaders also needs to take into account the investments in the way forward for the merged establishment. That features seed funding to foster the event of latest instructional or analysis packages, leveraging the experience and expertise of the merged entity’s school and employees.
There is also investments in creating new traditions, whereas honoring outdated ones. Capital investments may tackle deferred upkeep, together with upgrades and enhancements. And leaders may improve advertising and branding efforts, capitalizing on the excellent news that the establishment is now greater and higher.
We also needs to not overlook funding employees positions on campus that can help in managing the method. A chief merger or transformation officer, as an illustration, would function the purpose individual for all issues “merger.” Faculties may additionally set up and employees a mission administration system and workplace. Lastly, I might be remiss in not mentioning the prices of partaking professional consultants to help in all phases of the merger.
The monetary merger-related prices can vary from a number of hundred thousand to a number of million {dollars}. And the sources wanted will not be solely financial, but in addition contains management and employees consideration, prioritization, focus and power.
Not all these prices must be expended instantly. A few of these sources will be allotted over a interval of two to 3 years (e.g., marrying IT programs and addressing school compensation), whereas others should be obtainable upfront (e.g., unifying HR and payroll).
Cautious planning and an understanding of what these prices are assist with future-oriented budgeting. Nonetheless, it’s also true that the longer it takes to merge programs, peoples, and pictures, the extra possible it’s that the merger will fail to create a unified, synergistic and engaged college group.
When enterprise a merger, leaders ought to acknowledge — and settle for — that these prices are likely to happen earlier than good points are realized. That’s another excuse why mergers needs to be thought-about a lot sooner than most governing boards accomplish that. However these prices, the advantages of a well-selected and executed merger will far outweigh its prices in the long term.
