Report Looks at Mergers' Benefits and Costs

September 29, 2017

Mergers between colleges should be part of a long-term strategic plan and not driven solely by narrow goals like cost savings or growth for growth’s sake, according to a new report released Thursday by the TIAA Institute.

The report also looks at details needed for successful mergers. Its findings include the following:

  • The decision-making process around mergers is almost always costly and painful.
  • Mergers shouldn’t be considered only in difficult situations when institutions have low levels of resources or assets available.
  • Opportunities for financial savings, leveraging scale and re-energizing stakeholders exist with mergers.
  • Costs include branding, opportunity costs and the expenditures of political capital.
  • Costs are immediate in mergers, but gains are delayed.

Seven key elements for mergers are also listed: a compelling unifying vision, a committed and understanding governing body, the right leadership, an appropriate sense of urgency, a strong system of project management, a robust communication plan and sufficient dedicated resources.

The report comes at a time of high interest in merger-and-acquisition activity across the higher education spectrum. Several institutions have announced merger plans recently. Boston University and Wheelock College are in merger talks, they announced in August. In North Carolina, Piedmont International University and John Wesley University are planning a merger next year, they said this month.

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