Jeffrey Senese, president of Saint Leo University, spoke boldly last summer about his vision of building a national university by acquiring other Catholic colleges, including Marymount California University. The deal was supposed to be buttoned up and final by now. Instead, nine months later, Senese said in late April that the schools are walking away from the deal and Marymount is shuttering in August as a result.
The reasons for the deal falling through are cloudy. Senese told the Tampa Business Journal’s Lauren Coffey that finances were to blame but the school later pointed to timing issues. Saint Leo’s regulator, the Southern Association of Colleges and Schools Commission on Colleges, first denied the deal in December over concerns that Saint Leo could not fulfill its financial responsibilities post-merger.
Both schools have experienced enrollment declines in recent years with Saint Leo reporting a 35% decline in its student population between 2016 and fall 2021 to 9,546 total students. The university’s revenue fell 17% during the same period. Senese declined an interview for this story; Marymount, which enrolls about 500 students, did not respond to an interview request and SACSCOC declined to comment beyond the public record.
Saint Leo’s experience points to growing challenges within the higher-ed sector, especially for small, private schools struggling to maintain enrollment. Federal relief dollars have acted as a Band-aid since the pandemic struck, keeping some schools from closing the doors. Now as those dollars run dry, more colleges see the writing on the wall and are increasingly looking for larger schools to save them, said Larry Ladd, senior consultant with the Association of Governing Boards of Universities & Colleges.
“Schools are facing the fact of not being able to make payroll, not being able to pay their bills and that is very, very real,” said Elmore Alexander, dean emeritus of Bridgewater State University’s Ricciardi College of Business in Massachusetts. “There were a lot of broken business models out there and what (federal aid) did was it kept those schools from having to grapple with those broken business models, and now those brokenness models are coming along.”
Merger talks behind closed doors are up as a result, Ladd said, with schools in growing metro areas or those with strong brand names being the most attractive sellers. But as Saint Leo’s attempt to absorb Marymount shows, mergers don’t always work out as planned. Local news outlets reported earlier this year that merger talks between University of Akron and Cleveland State University in Ohio regarding a unified law school also fell through, though the reasons why are unclear. And a couple months after announcing a merger in 2019, the University of Bridgeport in Connecticut and Marlboro College in Vermont walked away from a deal, which led to Marlboro merging instead with Emerson College in Boston. Likewise, Newbury College in Brookline, Massachusetts, explored merging with an undisclosed institution before shuttering in 2019. The college's president Joseph Chillo said at the time that Newbury’s small endowment made it a less attractive target.
“We wanted to make sure that we were not going to simply merge with another comparable institution,” Chillo said. “You are not necessarily creating a stronger institution.”
The Business Journals recently spoke with Ladd and Alexander about why college and university mergers are likely to fail. Here’s a look at what they had to say:
Colleges and regulators react too slowly to financial challenges
Higher education as a sector isn’t known for moving fast. But moving too slowly can kill a deal, especially when a college is running out of money.
“When you delay, given the financial situation that some of these schools are in, you essentially kill,” Alexander said. “It’s not, ‘Let's wait until we see a perfect scenario set up here.’ Well, that could take a long time.”
Regulators and boards of trustees can slow deals down, Alexander said. He added that state accrediting agencies should prioritize saving small, private colleges at a time when so many are struggling financially. SeaChange Capital Partners, Inc., in Philadelphia, last year started a $2.5 million fund to help colleges explore potential mergers and acquisitions, and ideally speed up the process.
“To me, the real avoidable sin is to spend 18 months to find out that you're not going to do something that you should have known in the first month and then discovering you're sort of out of time,” John MacIntosh, managing partner at SeaChange, said at the time. “I think the prospect of grant money makes it easier to create timely action. If we can do that, it's money well spent.”
Loyalty to college brands
No college wants to lose their identity, Alexander said. Alumni, employees, students and faculty are emotionally attached to their respective colleges and the thought of merging with another institution often sends shock waves across a campus community. Hampshire College, for example, saw its student and alumni community rally to raise funding to stay independent after its previous administration explored a merger with University of Massachusetts Amherst. A UMass spokesman said at the time that the university declined to sign an agreement because of the "preliminary and uncertain terms of the deal."
Hampshire has survived as an independent institution despite the odds since then, thanks to a big fundraising push under a new president. But that attachment to a college brand can lead to a selling institution having expectations set too high, or asking too much of the buying institution, Ladd said.
“There have been mergers that have failed because the partner on the sell side doesn’t want to change and just wants an infusion of money to continue to do what it wants to do,” Ladd said. “That never works.”
College mergers work best when a selling institution’s mission is preserved, Alexander added. He pointed to Boston College’s acquisition of nearby Pine Manor College, which largely served low-income and first-generation students. Boston College now operates the Pine Manor Institute for Student Success, which includes an associate degree program and an enrichment program for students in grades 8-12.
“In reality, (Pine Manor) no longer exists but the vision was preserved,” Alexander said.
The success stories
In addition to Pine Manor, there have been other successful higher-ed mergers in recent years including Boston's Northeastern University's merger with Mills College in Oakland, California. In Philadelphia, Saint Joseph's University recently absorbed the University of the Sciences despite both schools posting enrollment declines in recent years. And back in Boston, Emerson absorbed Marlboro College just before the pandemic and Boston University in 2017 absorbed struggling Wheelock College.
Still, Ladd said that there are few colleges and universities in a strong enough position to acquire other campuses, and fewer still that are interested in doing so.
"Fewer universities are seeking institutions to acquire because it’s hard to build that into your strategy but, as you can tell from BU and Northeastern, they can do it," Ladd said. "If you see two small schools talking about a merger – their prospects are weaker. You have to have (one college) who is strong."
