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Mergers, Acquisitions and Partnerships in Higher Ed: A New Model

Facing the need to meet students’ needs for workforce success, more higher ed institutions are considering more student-centric approaches to mergers, acquisitions and partnerships.

The transformation of the higher education sector predicted more than two decades ago is underway. A convergence of factors, including a decline in traditional-aged students and the impact of the pandemic, has left many institutions struggling to the point of closure. To address this existential crisis, heretofore independent schools are developing partnerships, including mergers, acquisitions, affiliations and other long-term contractual agreements, leading to a consolidation phase in higher education.

Partnership Successes Are Rare

Although there are many more partnerships now than in the past and many schools are exploring partnerships, the odds are not in favor of success. From high-profile initiatives such as the University of Arkansas’s attempts to acquire the University of Phoenix to more modest efforts such as Trocaire College exploring a purchase of Medaille University (both Buffalo, NY, institutions), partnership efforts fail for a variety of reasons. Local politics, school leaders, institutional cultures, trustees, regulators, faculty, religious leaders, unions, finances, physical assets and other factors can quickly scuttle a budding deal.

When a deal falls through, it is uncertain if one or both partners can survive. In the case of Arkansas and Phoenix, both institutions recovered quickly from the attempted merger, and a few months later the University of Idaho began efforts to purchase the University of Phoenix. In the case of Trocaire and Medaille, however, Trocaire pulled out of negotiations and Medaille was forced to close.

In the current higher education landscape, institutional partnerships are first and foremost business deals, and if the business fundamentals are not solid the deal will either not be consummated or will fail shortly thereafter. For this reason, it is imperative that institutions looking to be acquired or to merge with another school not wait too long. Holy Names University in Oakland, the College of St. Rose in Albany, and Cazenovia College in Cazenovia, NY, are a few examples of schools that depleted their resources and drove up debt to a level that made them undesirable from the viewpoint of prospective partners. Had they sought partnerships two or three years before they were forced to announce closure, they might have been able to attract partners, survive and eventually flourish. But they waited too long, and by the time they realized they were in dire straits no institution wanted to assume the burden.

Making No Small Plans

When Rahm Immanuel was Obama’s chief of staff and later mayor of Chicago, he liked to say that no good crisis should go to waste. A few schools have decided to explore new opportunities the current higher education crisis created. Excelsior University is one of them. An unusual institution established in 1971 by the New York Board of Regents, Excelsior operated as a state institution until the late 1990s at which time the Regents changed the charter of the school, and it became a private nonprofit. From inception, its focus was on adult learners, and it was an early adopter of online and competency-based education. Today, all classes are online except for nursing clinical experiences.

Excelsior is a midsize school, enrolling about 14,000 students. Unlike many other institutions, it is in an enviable position of strength. Its finances are stable and improving, enrollments are stable and rising, and the institution has minimal debt. Despite these strengths, however, like most midsize institutions, Excelsior has significant vulnerabilities. Although not a small institution, its bulk is not significant enough to withstand turbulent seas indefinitely. Its curricular portfolio, though comprehensive, does not include some of the most lucrative, future-facing degree programs such as professional doctorates; and its reliance on nursing as the primary source of tuition revenue is increasingly making the institution list to one side. In addition, its singular instructional modality, once unique, is now commonplace with competition from nearly every other college and university in the nation.

Excelsior needs to evolve and grow to survive and stabilize. To do so, it must expand its curricular portfolio, offer classes and programs in multiple modalities and grow its share of the market. The challenge, however, is not just one of resources. The main challenge is time. Organic growth is slow: Building programs takes time, and growing enrollments even more so. The problem in the current environment is that the rate of change is faster than the time it takes to adapt to it organically. Hence, Excelsior leaders decided on a different adaptation strategy.

Rather than fighting higher education consolidation, Excelsior is embracing it by exploring opportunities to acquire and merge with other institutions, forge programmatic partnerships, share back-end services and build curricular partnerships with employers to create seamless paths for students from school to work and from work to school.

Excelsior is calling the new model a constellation. And although it resembles a higher education system, it differs in important respects. Most notably, higher education systems are campus- and faculty-centric; they are not student-centric. Excelsior’s model is just the opposite. It focuses exclusively on students’ learning experiences. From students’ perspectives, attending a school within a system usually offers little advantage. Students’ choices of programs, classes and activities are confined to their home campuses. If students want to take classes from sister campuses in a system or to minor in programs not offered at their home campuses but at other institution in the system, they usually face transfer challenges, financial aid hurdles and other bureaucratic obstacles that negate the potential benefits of a higher education system. The SUNY System, the University of Wisconsin System, the University of California System and others are paradigmatic examples of campus-centric models that do not offer any substantive student benefits.

Unlike traditional systems, the goal of the constellation is to create a robust, frictionless learning ecosystem that does not penalize students moving across institutions within the constellation. The focus is not only a wide assortment of classes and programs; the primary goal is a rich and diverse multimodal student learning experience that allows students to take classes from multiple providers and benefit from the curricula and amenities of all partners in the constellation.

Blurring Modalities

Excelsior students are adults. The average age of an Excelsior student is 35, and most students are between the ages of 25 and 45. It is easy to stereotype adult students as busy individuals who juggle work and family obligations and have very little time for education. The natural conclusion is that adult students want to study online with minimal choices or distractions, so they can get through their programs quickly and at low cost.

While convenience is an important factor for adult students, many seek richer learning experiences than what the online modality allows. For example, Excelsior administrators were surprised to discover that a subset of students was interested in studying abroad, so Excelsior forged a partnership with John Cabot University in Rome. Unlike typical semester or year-long study abroad programs, John Cabot offers classes in three-week increments, so working students can take vacation time to attend without completely disrupting their lives. Credits earned at John Cabot count at Excelsior, so students do not risk loss of credits, time or money by exploring their interests.

In-person and virtual field studies, simulated and site-based laboratory and clinical experiences, and engagements with corporate and government entities are all parts of the constellation ecosystem. For example, Excelsior will launch an executive MBA program in the fall that will focus on immersing students in critical business challenges such as the impacts of climate change on business, the regulatory and political environment, and the rapidly emerging role of artificial intelligence. Much of the program will be taught online, but the program will also include intensive, site-based field sessions in partnership with other schools. For instance, Excelsior is partnering with Eckerd College in St. Petersburg, FL, to bring MBA students face-to-face with the consequences of climate change. From mitigating coastal erosion to skyrocketing insurance premiums, Eckerd is an ideal laboratory for how an organization adjusts to the impacts of the changing climate. The partnership with Eckerd allows Excelsior students to remain in their program and not have to deal with the bureaucratic challenges of engaging with multiple institutions.

Mitigating the Higher Education Bureaucracy

The data show that a primary reason why students do not complete their education programs is because their lives become overwhelming, and when they are faced with having to give up something to make their lives more manageable they often sacrifice education. The constellation is intended to remove the hassles and barriers for students, not just in higher education but in finding jobs, interning, ordering books and many other facets of their lives, so they remain enrolled and engaged in school. The seamlessness of the student experience is only the beginning of a new model of higher education in which higher education institutions, employers, associations, NGOs, vendors and other organizations partner to provide an environment that is flexible, supportive and hassle-free for students, so they can focus on the most important things in their lives without sacrificing their education journeys.

A new technology backbone is being implemented for the constellation that will minimize the bureaucratic barriers that students currently face when trying to benefit from multiple higher education providers. The needs of students in the Constellation will be anticipated and addressed without the students having to seek them out, and students and employers will know from the beginning what classes students must take, how much programs cost, and how long it will be before students graduate. Because the learning environment will be ubiquitous across partners, students who want to study on a campus of one institution for a term will be able to do so, followed by studying fully online or perhaps abroad from another school the next term, and so on without having to worry about transferring or losing credits.

The constellation is not limited to higher education institutions. For example, The American Institute of Certified Public Accountants (AICPA) has a strong relationship with Excelsior. AICPA offers professional education certificates, and Excelsior has imbedded those certificates into its undergraduate and graduate business curricula. AICPA also has very close relationships with employers, and several of those employers are now partnering with Excelsior. In the constellation, AICPA courses, certificates and programs dovetail with business and accounting programs partner institutions offer, ensuring a close connection between industry standards and academic curricula. In addition, employers that are members of the constellation and seek qualified employees can shop for employees in the constellation, offer internships to constellation students and have access to program curricula and learning outcomes, so they can determine which programs best align with their employment requirements.

In the future, select vendors will be able to become part of the constellation and, if successful at one institution, vendors will be trusted entities and able to be shared with other constellation partners.

Membership options in the constellation resemble concentric circles. In the center or deepest level, another institution merges with or is acquired by Excelsior. In the next rung out or medium level, institutions form programmatic affiliation agreements, share services, jointly offer programs and more without merging. At the remotest level, institutions reach articulation agreements or collaborations while remaining otherwise independent.

The Current State of the Constellation

Excelsior is in the process of acquiring two institutions. The university also has collaboration agreements with several other schools, articulation agreements with multiple providers and close partnerships with over 200 employers. Excelsior University’s primary programmatic areas are business, technology and health care, and Excelsior has the largest nursing program in New York State. Institution leaders are actively seeking partnerships in allied health and mental health counseling, as well as in graduate programs—especially at the doctoral level. Leaders are also open to partnerships with heretofore programmatically unrelated institutions such as law schools, international schools, pharmacy schools and teachers’ colleges.

The future of higher education will not resemble the past, and students are looking for educational experiences rather than just traditional education. So, if the financial models appear viable, regardless of how unusual partnerships might seem, Excelsior is keen to explore them to build the constellation.