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Win-win partnerships

Consolidations make more sense than mergers
University Business, February 2016

Thirty years ago, we knew that larger institutions would consume smaller, more fragile schools - pure mergers as they came to be known. Yet, during the early higher ed merger mania era, many found that consolidations of venerable institutions offered a creative and more equitable non-merger alternative – read as, Azusa Pacific University, Birmingham-Southern College, Carnegie Mellon University, Carson-Newman University, Case Western Reserve University, Clark Atlanta University, University of Detroit Mercy, and William and Hobart Smith Colleges.

While pure mergers once reigned supreme, nowadays, strategic partnership choices include administrative and academic consolidations; joint ventures; program and asset transfers; joint degree and certificate completion programs; co-branding and co-marketing; rotating semesters; collaborative grantsmanship; cross-registration, dual, and concurrent enrollment programs; early college credit recognition; library and online networking; transfer articulations; and student and faculty exchange.

Unlike intrusive mergers, non-merger options can make an organization more nimble, and importantly, bring about shared costs and services; expense reductions and future cost avoidance; and make underperforming assets more profitable. Rather than self-inflicted, irreparable harm, these transaction-based mutual growth partnership models leverage respective competitive market advantages. Inevitably, these several ventures share both risk and return on investment.

Lessons learned

Time will tell whether Sweet Briar’s reversal of fortune will lead to sustainable institutional self-reliance. For now, Sweet Briar sends a clarion call to arms. Already, higher education thought leaders and commentators have argued both sides of the closure case study. That being said, every trustee should recognize their fiduciary responsibility to protect the mission, purpose, and perpetuity of their institution even if that means first exhausting all options – i.e. rightsizing, streamlining, and flattening the table of organization.

One sterling example comes from the consolidation between Concordia University Wisconsin and Concordia University Ann Arbor. Sharing the same venerable faith inspired heritage and mission; both institutions are committed to creating a sustainable, indeed prominent presence across the Midwest. Concordia President Dr. Patrick Ferry believes that this opportunity “can bring the financial strength and experience of CUW and help change the experience in Ann Arbor”. Concordia Senior Vice President of Academics, Dr. William Cario adds that the University is “excited to pursue Concordia’s mission in this new way with a new campus and the additional combined resources of two excellent faculties”.

Through all of this, Ann Arbor has preserved its name, identity, distinctive campus culture, and student body - while streamlining administrative services, and achieving the same economies of scale, efficiencies in operations, and non-duplication of efforts that are expected to come with pure mergers.

What we actually learned from the lessons of Concordia is that a unified and coherent vision for future mutual growth and leveraging unique programmatic and economic synergies is way more important than the short-term hostile takeover targets.

On the West Coast, we are reminded of the Claremont College System – a best practice resource sharing consortium of seven institutions that share facilities, resources, and programs, yet remain largely autonomous. Each school in the System gives their own degree and houses their own administration and admissions departments – while pooling resources for infrastructure, technology, and other shared services for students.

In Chicago, DePaul University and the Rosalind Franklin University of Medicine and Science established a strategic collaboration to help address the exponentially expanding need for health care professionals. This somewhat unique partnership established new health profession pathways for DePaul students to obtain health science graduate degrees at Rosalind Franklin. This collaboration includes a Pharmacy School joint venture as well.

Be proactive

These innovative consolidations send a clear message to fragile schools that they should be proactive in honestly evaluating and predicting long-term financial health, near-term enrollment conversion yield, endowment growth, return on investment, and institutional sustainability.

At the end of the day, successful strategic partnerships are built on trust and respect, mutual risk and rewards, and shared expectations. Though the traditional collegial governance process may seem tangential in early consolidation conversations, these campus stakeholders have their own anxieties about engagement in the strategic partnering process. So, execution, implementation, and post-consolidation planning must err on the side of inclusiveness to inspire champions of the new post-consolidation order.

—James Martin and James E. Samels, Future Shock columnists, are authors of The Provost's Handbook: The Role of the Chief Academic Officer (Johns Hopkins University Press, 2015). Martin is a professor of English at Mount Ida College (Mass.) and Samels is president and CEO of The Education Alliance.

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