Higher Education Mergers and the Two-Step Process

Higher education is at an inflection point as colleges and universities face increasing fiscal pressure that threatens their long-term financial viability. 

To address risks emanating from this challenged operating environment, boards and leadership generally implement strategies to: (1) enhance revenue generation (e.g., philanthropy, new programs); and (2) cut costs (e.g., programmatic cuts, defer plant renewal and replacement, debt refinancings).

However, given the challenging operating environment, these strategies will be insufficient for some universities; they will therefore be forced to merge as the only realistic means of mission continuity. Because higher education is a fixed cost business model, scale begets budgetary efficiency.

Recent changes to the regulatory process for university mergers have greatly expanded the time necessary to fully consummate a merger. These changes have sweeping implications on the runway required (and ability) for universities to merge and therefore, how higher education mergers should be approached. 

In this P3•EDU Journal article co-authored by Loeb Corporate partner Neil Lefkowitz, the writers provide an overview of the current guidance provided by the U.S. Department of Education and the downstream implications.

Click here to read the full article.