College and university mergers are often viewed as last-ditch efforts—a “hail mary” for a struggling institution. However, a well-planned merger can offer a viable path to continued operation.
Mergers have the potential to strengthen colleges, improve resource allocation, and ensure that an institution’s mission continues into the future. Given the negative impact on institutions of enrollment declines and rising skepticism about the value of a college degree , leaders must reconsider their traditional reluctance toward mergers and instead view them as a strategic option for long-term viability.
Overcoming the Reluctance Toward Mergers
Many college trustees and leaders view mergers as a last resort. A report from The Chronicle of Higher Education revealed that many college leaders fear that merging could dilute the essential mission of their institution.
Mergers and consolidations can create larger, more resilient institutions. In that same report, the Chronicle found that the number of Catholic colleges has dwindled from 320 in 1967 to less than 200. Given that decline, one would expect student enrollment to have dropped as well. However, total enrollment at Catholic colleges has grown by 60%.
Extensive Planning is Essential
Extensive planning and a clear understanding of objectives are essential to a merger’s success. Mergers cannot (and should not) be viewed as a last-minute lifeline, as successfully consummating a merger can take several years after taking into account how complicated it is to execute a transaction, as well as the Department of Education’s timeline to review mergers. A school must have sufficient assets to attract a partner, and sufficient cash flow to fund the school until a transaction can be completed. Therefore, the best time to think about a merger is before an institution is stressed – while there is still time to attract a partner institution and execute a transaction.
Practical Steps for a Successful Merger
Institutions considering mergers should take several practical steps to ensure success. Here are five key actions based on insights from successful nonprofit mergers:
- Align on Mission: The most successful mergers are mission-driven. The first step internally is to have a clear understanding of your own mission as well as how a merger can advance that. Therefore, before going out to find a partner, institutions interested in exploring a merger need to do some soul searching: Is the board committed to the process? Is there alignment regarding the mission, core competencies, and cultural values? What aspects of the institution should be preserved post-transaction, and why?
- Find Your Partner: Research conducted by Northwestern University’s Kellogg School of Management on nonprofit mergers in Chicago found that in 80% of the merger cases, a prior relationship or collaboration existed between the merged organizations. And in 60% of the cases, the acquired organization initiated the merger discussion. A potential partner may be hiding in plain sight. Accordingly, it behooves boards and leadership to identify institutions with which they already have a relationship or strong connection (e.g., faith-based institutions founded by the same order). Ideally, the transaction partner will be aligned on mission and core program offerings. A thorough understanding of each institution’s strengths, weaknesses, and values helps build a solid foundation for partnership.
Successful mergers will share common principles: they are mission-driven, grounded in trust, and guided by clear goals. By focusing on trust and mission alignment, institutions can navigate the sensitive aspects of mergers—such as naming, branding, and leadership succession—and build a solid foundation for future integration and impact. Furthermore, institutions that proactively plan for legacy preservation can ensure that a merger honors both the past and the future.
- Involve Leadership and Staff: Leadership, particularly board chairs, must be merger advocates for the process to succeed. Additionally, staff and faculty involvement in pre-merger discussions can enhance buy-in and support for the transition. Not everyone will initially support a major change—and that’s to be expected. Clear and transparent communication will establish trust in the process and will ensure that the entire campus community understands the purpose and potential benefits of the merger. Ongoing and clear communication with different stakeholder groups will ease the transition.
- Seek Outside Expertise: Mergers are complex, and outside experts, such as attorneys, investment bankers, and financial advisors can help institutions navigate planning, legal, financial, and logistical challenges.
- Plan for Cultural Integration: Cultural compatibility is crucial. Merging institutions should conduct cultural assessments and plan for integration to ensure that faculty, staff, and students feel comfortable in the new environment.
Alignment, both with a potential merger partner and within an organization’s leadership and staff, is the critical ingredient for a successful merger. By utilizing outside expertise and creating a detailed plan, higher education institutions can overcome potential obstacles and achieve their goals for a transaction.