Monday, September 20, 2010

Report Released on Financial Advantages of Mergers

I normally focus this blog exclusively on college and university mergers within the United States, but wanted to share an interesting report recently released in the United Kingdom. There tends to be much debate as to financial advantages of mergers, with efficiencies frequently listed as a top reason for considering a merger by proponents. Historically, there has been little to no conclusive research to show that financial efficiencies have been realized due to university mergers.

PricewaterhouseCoopers suggests that mergers and collaboration "offer UK universities a financial lifeline" and must be considered in this economy. The report continues to offer a "how to" for successfully implementing a merger.

In the end, financial benefits of mergers are difficult to prove, at best, through post-merger analysis. University merger experts James Martin and James E. Samels suggest that if considering a merger for financial reasons alone, it is being considered for the wrong reason. Mergers should be considered for mutual growth, for two institutions to become stronger together than apart. Whatever financial efficiencies result in the end are an added benefit.

The full report is available online here.

Proposal Floated to Merge the University of North Dakota and North Dakota State University

Bill Kiefer, a Fargo, ND financial planner and North Dakota State University alumnus, has proposed a merger between NDSU and the University of North Dakota. He cites potential efficiencies and prestige of having one flagship state university.

have run the gamut, but most feel that an all-out merger is not feasible due to reasons including the physical distance between campuses, political concerns and alumni loyalty.

In the end, a merger question such as this must be boiled down to asking, "Are we better together or apart?" Implementation issues can be resolved. The "frictional" time and costs are not recalled 50 or 100 years down the line. What is recalled is the result of the merger, which can oftentimes allow an institution to take a quantum leap forward in institutional offerings, prestige, research portfolio, student and faculty recruitment and more.

However, serious concerns should be addressed, not the least of which are cultural issues and the deep-rooted notions of institutional identity and alumni and community loyalty. If these issues can be resolved in a way that satisfies most, however, the combined institution may be much stronger as a result.

Kiefer should be commended for his vision and initiating this discussion. One student posting a comment online about the story suggested synergies such as the ability to be enrolled at one institution and taking courses offered at the other. Kiefer's proposal has enabled this type of positive discourse at the very least. Kiefer's only mistake? Coming forward to the public with only a rough idea. If he was serious about bringing this idea to fruition, he should have begun with conversations with the institutions' leaders, state legislators and the University System chancellor. From there a realistic plan could have developed, with the core merger issues addressed, to then be presented to the public. At that point, the merger would have been well on its way, with the remaining task of selling it to the public. There is a major difference between presenting an idea as an individual and presenting it as a unified front of state higher education and political leaders.

Combining two higher education institutions with duplicative programs is always the most difficult type of merger to enact. As opposed to mission-complimentary mergers without the duplication of programs, many hurdles must be overcome. How does one reconcile two English departments, two mathematics departments, two chemistry departments - let alone two athletic departments rife with tradition and nostalgia? People begin to get territorial and dig in. Merging a free-standing medical school or a law school into a comprehensive university entails much less friction.

Credit Kiefer for initiating the discussion, and it will be interesting to see where it goes from here, though it does not seem to have much traction. In the end, what is seen here is a proposed merger that could have enormous potential, difficult implementation and a flawed early-onset approach.