From Janney's Higher Education & Not-for-Profit Financial Advisory Group: Merger and acquisition activity and strategic partnerships have been on the rise in the higher education sector.
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Janney Higher Education & Not-for-profit Financial Advisory Group
Merger and acquisition activity and strategic partnerships have been on the rise in the higher education sector. Competitive pressures, revenue constraints, and shifting demographics have challenged institutions to guard their current and future resources more closely. A newly minted example is California private nonprofit, National University’s acquisition of Northcentral University, a for-profit online university. On February 7th, National sold tax-exempt and taxable bonds totaling $170.7 million to fund the acquisition. In addition to being one of the first tax-exempt bond issuances to finance intangible assets, it adds to a growing list of strategic transactions crossing the for-profit and nonprofit sectors.
Many nonprofit institutions continue to evaluate public-private partnerships (P3s) related to assets such as housing, parking, and utilities, though some are looking to outsource core functions, such as admissions and program development. Transactions like the Purdue-Kaplan example, highlighted in the table below along with other examples, can be viewed as a P3 for academic programs. Understanding each party’s perspective and motivations, including business strategy, higher education delivery methods, and the current regulatory environment is key.