Should Your College Merge? An interview with HCS's founder Brian Weinblatt

This is Gary Stocker from College Viability. Today's interview is with Brian Weinblatt, a founder of Higher Ed Consolidation Solutions that is a team of industry veterans representing former college and university trustees, presidents, provosts, vice presidents, state legislators, and more. They have experience in college and university mergers including governance and administration, finance, advancement, enrollment services, and much, much more. This interview is part of a series of college experts that College Viability is hosting. The interviews will help college leaders, students, families, and other stakeholders make more informed college decisions.

Absolutely. I, I would say busier than ever, um, and the ramp-up started late last year. The ramp-up started in late 2021, um, and you know, this is when probably for a number of institutions waiting to see what would be happening coming out of the pandemic. And not surprisingly, they saw that things were not going to be better for them on the other side of the pandemic. So that in combination with probably some of the government relief funding running out, they, they said like, look, pretty soon we see the books and by a certain point in time we're going to either need to be merged or closed. And it's a— I wouldn't wish that situation in that scenario on any college president or board, but this is what a lot of them are encountering right now. Yeah, so, you know, we just wrote a piece on this, one of our team members, Ricardo Aziz, and myself in University Business. You know, the theme of this is that sadly, that there's way more closures that are happening than mergers right now. You know, this is sort of the gospel that we're trying to spread and we're trying to preach is hope is not a plan. Don't wait until it's too late. Right. And we want to help to ensure viability and not just the ability to continue to survive in this market, but to thrive. That's the idea, is not just keep your doors open and just, you know, stay in the black. But we like to see these types of opportunities as ones where you can look at synergies with potential partner institutions, right? So, you know, we found, and this is available through IPEDS data, an average of 100 institutions per year, okay, closing. Far fewer are merging. So this is where the rubber meets the road. It's a very difficult situation. We'd like to do everything that we can to shift that number in the opposite direction. We don't think closures are going to cease, but we would like to help drastically reduce the number of closures and enable the legacy, the tradition, the history, and the opportunities for students to continue to live on through merged institutions going forward? Yeah, appreciate the question. I would say pattern, and yes, as to your question about predominantly a private market, yes, that is what we've seen. Most of so far are inquiries from private institutions. We wish more public institutions would be in the mix. I would say all too often, and we've seen this in certain states where this has happened by a forced consolidation of public institutions, such as in Pennsylvania that we've seen, such as we've seen in Georgia, at the community college level in Connecticut, right? You know, what we would much prefer to this is the public institutions doing this themselves rather than being forced to, right? And that's another reason I was so fascinated about that Toledo merger when I was there. Of course, everyone was hearing the calls in the state of Ohio from the legislature, politicians, and so forth. We want enhanced collaboration. We want enhanced cooperation. But they were not forcing it at the time. These two presidents chose on their own to get together and say, you know what, we're going to do this because it's right. We're going to do this because it's going to help to leverage our strength, our combined strength, so that we're stronger together than apart. But this takes so much courage, Gary. This takes so much courage for two presidents to, first of all, be so bold because they know that this is going to be a, a Herculean lift to do this. Most likely one of them will be without a job, and then that means setting egos aside, at least for one of the two individuals too. And so again, these are big lifts, but we implore more public institutions to consider this, because wouldn't you rather have something done by you than to you? Right? Wouldn't you rather have the control and be able to do this yourself as opposed to someone in the statehouse telling you you have to? So that's, that's the one in terms of your question about public versus private. I would say the other answer to your question about the pattern of colleges that are reaching out to us, two different categories here. One, probably not surprisingly, of institutions that are in severe financial distress, right? And again, this comes back to where we implore institutions to not wait until the 11th hour because you don't have much to sell at that point. You don't have much positive quality and attributes to attract for a potential partner at that point. So that's one, in those institutions that are in severe financial distress. The other, which has been a little bit surprising, is other institutions that are doing relatively well and they're in quote unquote acquisition mode. Okay? They see an opening in the market to target some of these institutions and some of these institutions that may specifically have programs of desired growth for them, i.e., in the health professions. Or engineering. So these are more high-growth areas for certain colleges. And by the way, this is— not only has that been a little bit surprising, some of these really astute presidents are seeing this opportunity in the market. But also, you know, some of them are saying, by the way, we are even open to for-profit acquisitions. This is from the nonprofit world. We're open to for-profit acquisitions so that that can help us to leverage our OPM. Not only would we be gaining additional, you know, programs for our students, but also, you know, it has that whole entire framework that they can then implement with their existing student population too. So that's the other unique model that we've seen developing recently. Yeah, it's funny, you know, in the way that we would do this with our work, you know, with, with an institution that may be more struggling and they're looking for partners, you know, if they don't already have a partner identified, right? Sometimes you do going into a merger, you say, oh, we've decided we're having conversations with XYZ. Institution, but these others that don't know that, you know, they're saying, so we'll do for them what we call like a partner identification study, looking at the landscape and seeing what might be some viable partners for them. You know, we phrase this slightly differently for an institution on the other side that are looking for an, for a quote unquote acquisition. And I know we try to be careful with using too much business terminology here in the nonprofit and higher ed field. But, you know, this notion of a target acquisition analysis. So a client would say, yes, we do. We're looking for opportunities in the market, maybe geographically in this sense, in terms of academic programs in that sense. And then we work to help them to find what fits within those parameters. You know, I really want to say all of the above, both, but I'm afraid, I'm, I'm really afraid. And, and, and I think ashamed in many cases that, that it's the latter of the two that, you know, look, those of us who are, are passionate about this industry in higher education, we, we know, we need to know that it's all about the students and about families. And way too often it's too easy to forget about that, that everything that we do has to be in the best interest of the students and the families. And again, I think otherwise we're sitting here looking at things like balance sheets and enrollment projections, and it's— we look at things as a bunch of numbers and we're not thinking about the student and his or her family sitting in the living room having this conversation Should I be going to college, period? Right. When, before we used to take this for granted. So, you know, it's, it's, it's coming from all directions, all the pressures that institutions have right now. But I think because of the nature of this, when we're talking about transformational change and again, this notion that presidents and board chairs and so forth they're so afraid of transformational change that in way too many cases, they're looking at merger and consolidation as an option of last resort, of absolute last resort, or maybe not even at all. They would rather close doors. I mean, if you ask them, I don't know that they would say that, but they're just simply not even looking at it when you could say, as president, as, as a board member, it's your fiduciary responsibility to look at all potential outcomes. In too many cases, they're just not, you know, somewhat. Um, I think, you know, and, and I certainly applaud the work that you're doing in trying to, to highlight this for students and families. I think it's, it's critically important for, for students and families to see, you know, sort of pull back the curtain on, uh, the institution that they're considering. Uh, all too often, I'm afraid that that doesn't take place. They, they quite simply just see, wow, this is an institution that's in my community or in a nearby community that I want to be in. They happen to have the program, so I'm going to go there, you know. And they don't, right? It's, it's, it's all too often, I think, in some inside baseball stuff. And it is, it is something that I think we need to continue to preach and to talk about in the industry and to help to educate students and families. I think the, the college choice process has been driven by quite simply those factors that I mentioned earlier, regional alignment, cost, maybe US News and World Report rankings. And do they have the program that I'm looking for? I'm looking for, and is it a good program? And maybe are my friends going there, or some of my friends going there? And so, you know, these other factors are extraordinarily important. Can you still graduate from this institution in 4 years? But I think far too few students and families are looking at this information. There's, there's way more closures than mergers that are happening right now. Look, if, if you do, you could do a case study on one institution that closes and, and go and interview students at that institution. You know, did you expect that your, that your college was gonna close when you enrolled as a freshman? I think it's too much to carry. Look, if we're having challenging times getting two institutions to talk to each other, thinking about more, here's where I could see it happening. Not necessarily as a true merger in the way that we think of it, but we could see umbrella organizations that would have, and there have been examples of this in Southern California, in the Northeast where you've had affiliations, shared services, excuse me, consortia. You know, what about institutions that have a religious affiliation? All of the Loyola institutions under one umbrella, all of the Lasallian institutions under one umbrella. Perhaps they could be in that either fully merged or they could, they could at a minimum have shared services for business functions that would have And we talk about shared services having some impact on the bottom line, not necessarily a huge impact on the bottom line, but it could make sense if they're otherwise aligned in that sort of way. So, you know, is it possible for something like 5 or 10 colleges to merge? Well, you know, private colleges, difficult. The only way that we've seen this happen in the public arena is those forced state mergers, such as in the state of Georgia and Pennsylvania and so forth. Yeah, quite frankly, you know, we all know the population shifts have been to the Sunbelt and west, you know, so there's more opportunities most of these institutions in the South and the West are doing quite well, public and private. And the ones that are in the Northeast and the Midwest, a lot of them are really, really struggling. So geographically, I think that's going to be sort of an ultimate— again, probably sadly more closures than mergers. And we'd love to work with more clients in these areas to see what viable opportunities there may be. So if you were to compound, you know, these facts of an institution that's already struggling with, you know, fewer students to draw from, with students don't really want to be in a rural area, you know, it's very, very difficult. So what we would love to do with an institution like that is to try to help them to essentially potentially become like a branch campus of a larger institution, especially if they're public or even if they're private. And there have been examples of some unique public-private mergers. I mean, we saw one in Tennessee earlier this year that was a public-private merger that was fascinating, a private that had a religious affiliation to it. So, you know, don't let anybody tell you that something can't be done if there's examples like this, but, you know, a path for, survival and viability for one of these institutions that's in a small rural area, maybe to come to become a branch campus of a larger institution, that's gonna help to sustain it and add some efficiencies. If they don't look in this direction and don't consider this, then yeah, they're, they're probably gonna be among the, the longer list of closures. Absolutely. So we think, we think that we're pretty unique in the space, that there's really no one else that's quite like us. So this all got the start after I became interested in the subject following the 2006 merger of the University of Toledo and the Medical University of Ohio. I was an employee there at the University of Toledo at the time. I was working on my PhD in higher education And I was just absolutely fascinated at this notion that two institutions could combine. And not only did they do so, they did so with relative ease and smoothness. And this is a public institution, and we all know that colleges and universities, you know, people say so often can be more political than politics itself. Has a background in music before this. To me, it was like the two presidents were orchestrating a symphony orchestra that they were conducting, and it was so smooth. Now, my dissertation advisor always reminded me, Brian, and it's not perfect. There's no perfectly smooth process, and not everyone is going to be completely happy about the processes. But by and large, it seemed to go like that. So I ended up writing my dissertation about this and a couple of other mergers. And then several years later, populating a team that became HCS of other folks who have been through this process elsewhere. So we're talking about former presidents, vice presidents, trustees, deans, and so forth who have been through these exact processes elsewhere. And, you know, again, we're here to say that these transactions are so sensitive in nature You're talking about colleges and universities which are living, breathing organisms of human beings. It's not like you go into a corporation and everything is just top-down and you just make some decisions. All of these decisions have to be really tailored to the specific shared governance models of, of the individual institutions. And so that's why we said there is no one-size-fits-all approach. There is something that we can do in terms of helping with best practices and framework and everything like that. But everything is tailored. And so we're very proud of this team of experts that we've put together, and we're very proud of the work that we're doing with a number of clients now.