2018 Fall issue of Horizons

A few examples of mergers and acquisitions in higher education in recent years highlight these motivations. However, even when a merger has the potential to achieve the desired motivation, there are potential difficulties to consider in the merger process. Purdue Acquires Kaplan In April 2017, the trustees of Purdue University formed a new nonprofit public benefit corporation of which Purdue is the sole shareholder and named it Purdue NewU, Inc. (in February of 2018, the name changed to Purdue University Global, Inc.). For consideration of $1.00, the new nonprofit agreed to purchase Kaplan University’s institutional assets and operations, which included its online programs and 33,000 students. From Purdue’s perspective the merger with Kaplan helped achieve its desire to expand its market, gaining immediate access to a large adult student population (over 60% of Kaplan’s student-body was 30 or older) and an increased online reach. The merger also helped Purdue defend against industry disruptors. In an interview with Bloomberg Businessweek , Mitch Daniels, Purdue’s president, commented on the potential for e-learning companies to disrupt the traditional on-campus educational experience. In an effort to compete with prominent e-learning companies such as Udacity, Coursera and Khan Academy, Purdue acquired Kaplan to deliver Purdue’s highly regarded brand on an e-learning platform that was already well scaled and established. Berklee & Boston Conservatory Merge In 2016, two prominent Boston area performing arts institutions merged. The Boston Conservatory (the Conservatory), founded in 1867, had an enrollment of about 730 students and an endowment of approximately $15 million. Berklee, founded in 1945, had an enrollment of more than 4,000 students and an endowment of $320 million.

The Conservatory recognized strengths in classical music and musical theater, while Berklee was recognized for its music business and contemporary music programs. After more than six months of exploring the consequences of a potential merger, the trustees of the two schools agreed to combine. In a document posted by Berklee to respond to questions about the merger, Berklee stated that the motivation to merge was not financial (and using publicly available IRS filings, a review of the financial condition of the schools supports that statement), but it was to benefit the student experience. Because the schools’ strengths complemented each other, the trustees believed a combined school could offer more opportunities to students than would otherwise be possible. aggressively consolidated institutions resulting in an estimated $24 million in savings since the consolidations began in 2011. As a chancellor oversees the Georgia system and the system does not require legislative approval to consolidate, the process of consolidation in Georgia for state colleges and universities is not as challenging as it might be in other states. The approach to consolidation has been to follow six principles that the regents of the Georgia system developed in order to objectively evaluate consolidation opportunities. The consolidations that have taken place tend to bring together complementary institutions in the same region or merging two-year institutions into four-year institutions. Due to the pace of consolidation in the state system in recent years, the system is revisiting the results in an attempt to identify inefficiencies from the resulting administrative set up. Georgia State Consolidation The University System of Georgia has

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