The Long Game of Higher Ed Mergers

Mergers aren’t easy. In the corporate world, 70 percent of them fail to deliver on their financial promises. In higher ed—with its loyal alumni, invested faculty, deferred maintenance backlogs and all manner of mascots—the deals can be even more complex. According to Paul Friga, a clinical professor of strategy and entrepreneurship at the University of North Carolina at Chapel Hill’s Kenan-Flagler Business School, only 20 to 50 percent of mergers in higher ed succeed. What derails most of them is a lack of strategic and financial alignment or cultural friction. These deals are never a merger of equals.

Still, higher ed leaders are more open to considering mergers than they have been in the past, in part because they see the benefits they hold for expanding academic programs, acquiring more real estate or enhancing revenues.

Every year for the past few years, in our annual survey of college and university presidents, Inside Higher Edhas asked leaders if they’ve had serious internal discussions in the previous 12 months about merging with another institution. Since 2022, the share of surveyed presidents who say they’ve had those conversations has stayed relatively flat—15 to 20 percent.

But we’ve noticed a variety of motivations for these kinds of talks. In this year’s survey, more presidents cited proactively ensuring financial stability (58 percent) and optimizing resources (55 percent) than imminent closure (8 percent) as the reasons why. Mergers are one way to get leverage in a tough market. One surveyed president told us, “We would rather eat than be eaten.”

But considering a merger is very different from actually going through with one. In a recent webcast for Inside Higher Ed, Friga and I spoke with two leaders who have been on the front lines of successful higher ed mergers: Ali Malekzadeh, president at Roosevelt University, and Cynthia Shapira, chairperson of the Board of Governors of Pennsylvania’s State System of Higher Education (PASSHE).

Roosevelt’s acquisition of Robert Morris University Illinois in 2020 has had “phenomenal results,” Malekzadeh said. The number of student athletes has grown, boosting its enrollment and reputation; overall enrollments have grown for the past six semesters; and the institution has received more federal funding through its new minority-serving status.

The decision to consolidate six campuses into two in PASSHE came after more than a decade of steep enrollment declines across the 14 campuses. The 2023 deal has increased system efficiency, Shapira said, and will save the group $120 million over five years.

Both Malekzadeh and Shapira are quick to count the wins, but they also shared a handful of things nobody told them going into the multiyear process. Here is what they wish they had known.

• The up-front cost in people and time resources is tremendous. Shapira said over 1,100 people—from the chancellor and the board chair to the presidents and HR teams—worked on the implementation plan to consolidate the PASSHE campuses. “We set up task forces on everything on each of these consolidations for curriculum and program review and merging of students services and obviously tech and the back office,” she said.

The system also sought real-time suggestions for the plan from the public. “Every time there was a reasonable suggestion, we incorporated it,” she said.

For Roosevelt’s acquisition of Robert Morris, 37 cross-institutional task forces were set up to cover the integration of every function and help prevent an “us vs. them” mentality among staff. One of their biggest challenges? Combining their tech platforms.

“We had 97 different pieces of hardware and software, and only seven of them were compatible,” Malekzadeh said. “Our charge to the committees and task forces was to choose the best one.”

• A mergers, affiliations and partnerships strategy will keep you on course. After seeing signs of declining enrollments across the Midwest, Roosevelt developed a MAP strategy years before it acquired its Chicago neighbor. Malekzadeh credited that strategy for giving Roosevelt the luxury of choice and leverage when the acquisition opportunity arose.

The acquisition process took two years and was finalized in March 2020—just a few days before the campuses closed in response to the COVID-19 pandemic.

You cannot control the external environment, Malekzadeh said. “COVID, federal policy, enrollment cliff, accreditation policies, inflation, recession—we have no control over those. However, what we do control is a MAP strategy.”

• Institutional finances require a forensic look. “Whether you’re talking about MAP or not, it’s critical,” said Shapira. Her advice to trustees is “Don’t take enrollment projections for granted—don’t take anything for granted. You’ve got to do the work.”

“The first step in even considering [a merger] is to truly understand your financial situation,” she added. Any financial weaknesses will follow you into the new institution, Shapira warned.

Malekzadeh advised discounting any enrollment projections by 30 to 50 percent, and if the numbers still work, “go for it,” he said.

Shapira agreed. “You have to look at the numbers underneath those [financial] projections to see if they make any sense and what they are based on,” she said.

• Plan for postmerger management—lots of it. Even after six years, cultural issues, financial alignment questions and stakeholder concerns continue to surface at Roosevelt, Malekzadeh said. Leaders should plan for 18 to 24 months of active postmerger management, including reactivating a MAP plan.

Roosevelt is now looking for another partner, Malekzadeh said. “After we did so well, the response from some administrators and deans and faculty and others was ‘OK, it was very successful, who’s next?’” he said. “I’m having those discussions now with all my colleagues, nationwide as well.”

Colleges are complex organizations, and combining two of them to any degree can take longer and be more expensive than leaders realize. Keeping these lessons in mind won’t guarantee success, but it may increase the chances.