BROADCASTS.com

Many higher ed institutions are struggling with finances due to COVID and other reasons, and some higher ed leaders are\\xa0seriously\\xa0contemplating a merger with or acquisition of or by another institution. These processes can be a win-win proposition, allowing for increased capacity,\\xa0services\\xa0and efficiencies\\xa0for students.\\xa0\\xa0

One example of this process is Delaware State University, which is in the process of merging with Wesley College.\\xa0This merger began earlier this year and is spearheaded by Dr. Tony Allen, who became Delaware State\\u2019s 12th president in January. He previously served as the institution\\u2019s provost.\\xa0\\xa0

But that isn\\u2019t the two story with Dr. Allen \\u2013 his career spans both higher education and corporate. This broad career has benefited him significantly, as he brings his experience from outside of higher Ed to tackle some of its biggest challenges.\\xa0 For example, in this,\\xa0his first year\\xa0as Delaware State\\u2019s president, he has had to deal with COVID and moving to online education.\\xa0\\xa0

This merger/acquisition is the latest major issue that he is tackling.\\xa0Dr. Allen believes that growing\\xa0a very proud Black institution that has faced its challenges and\\xa0focused on developing innovative programs\\xa0is the most important thing he can focus on doing at this moment\\xa0because these efforts\\xa0will grow capacity and opportunity for\\xa0students\\xa0who are often underserved.\\xa0\\xa0

Merging with a Neighbor\\xa0(or Anyone Else)\\xa0

An advocate for both the State of Delaware and the\\xa0University,,\\xa0Dr. Allen has always believed in the institution\\u2019s possibilities. He said that Delaware State has an amazing story to tell but\\xa0has\\xa0not had enough storytellers. He wants people to know the institution\\u2019s rich history\\xa0\\u2013 and to grow it.\\xa0\\xa0The merger is part of the institutional\\xa0strategy to make that happen.\\xa0\\xa0

Dr. Allen, who has participated in a higher education merger before, said that\\xa0going through a merger\\xa0is a very interesting process. Delaware State\\u2019s vision is to be the most diverse HBCU in America. The institution\\u2019s leaders would like to increase enrollment from the current number (5,000 students) to 10,000\\xa0students\\xa0in the next 5-7 years.\\xa0To accomplish\\xa0that, the school needs\\xa0not only more students, but also\\xa0more physical infrastructure to attract those students and to make sure that the faculty and staff feel like Delaware State is a first-class institution.\\xa0Thus, a merger is a very sound strategy by which to accomplish this.\\xa0

Wesley College, which primarily serves minority students, is literally two miles from Delaware State University. The college\\u2019s campus\\xa0has about 20 buildings on 50 acres of land near downtown Dover.\\xa0 In watching Wesley College\\u2019s\\xa0decision-making processes\\xa0related to the institution\\u2019s future, Delaware State leaders believed it was an interesting opportunity to approach their neighbors\\xa0about the possibility of a merger. The college\\u2019s leaders were interested and\\xa0are working\\xa0with their Delaware State counterparts\\xa0to make the merger\\xa0happen.\\xa0The\\xa0merger\\xa0agreement was recently\\xa0signed.\\xa0\\xa0

One of the\\xa0critical first pieces of any kind of merger is the due diligence of finding the correct partner. As you can see in the following paragraphs, Dr. Allen and his team have done their homework to make sure\\xa0that Delaware State and Wesley are good partners for a merger.\\xa0

Merger Due Diligence\\xa0\\xa0

Wesley and Delaware State share a similar student demographic. Delaware State has about 55% in-state students while Wesley has 57%. Both\\xa0institutions serve minority students and their\\xa0programs have many similarities and synergies, especially in the health sciences.\\xa0\\xa0

Wesley\\u2019s location and physical lay-out is exactly what Delaware State needs in Central Dover. Dr. Allen believes that once this merger is done, it will help the combined institutions rival sister institutions across the region\\xa0and country.\\xa0\\xa0

From a purely\\xa0financial place, Wesley is valued at approximately $34 million and has reasonably little debt. Through this merger, Delaware State leaders are creating a broader organization model that can support the institution moving forward.\\xa0\\xa0

Organizational Culture\\xa0

Dr. Allen noted that cultural fit is key to the success of a merger. He believes it\\u2019s important to find the best of both institutions and then combining it to make the merger successful.\\xa0\\xa0

The next step in the\\xa0Delaware State/Wesley\\xa0merger involves\\xa0combining the two organizational cultures.\\xa0Dr. Allen\\xa0said that Wesley has great brand equity in Dover and\\xa0the\\xa0State.\\xa0While that brand equity is important, he wants to build capacity for Delaware State to expand its footprint more thoughtfully.\\xa0

This requires\\xa0getting to know\\xa0the people on the other side of the table, and then sharing the hopes and aspirations from\\xa0each institution\\u2019s perspective. Dr. Allen believes by sharing this information, parties can work together to build new and better structures and\\xa0a strong organizational\\xa0culture for the future.\\xa0

Getting\\xa0Governing Boards\\xa0Buy-in\\xa0

Dr. Allen noted that the Delaware State/Wesley contract\\xa0was more of an acquisition than a merger of equals.\\xa0During the negotiation process, Delaware State\\u2019s leaders\\xa0were able to\\xa0\\u201csell\\u201d this deal\\xa0to\\xa0its\\xa0trustees and some key stakeholders across the community.\\xa0The\\xa0university\\u2019s significant track record of graduating some of the finest students in the state, especially students of color, over the past 130 years,\\xa0helped make the\\xa0case. In addition, Delaware State has grown a serious research portfolio across a number of disciplines.\\xa0\\xa0

Dr. Allen\\xa0stated\\xa0that the institution wants to have more students when the agreement\\u2019s effective date arrives, but also wants to be able to grow into its institutional \\u201cskin.\\u201d He noted that Delaware State\\u2019s student enrollment\\xa0has grown 40%\\xa0over the past decade\\xa0whereas during\\xa0that same period, colleges in the aggregate have seen declining enrollments.\\xa0While Delaware State has been able to buck this trend, Dr. Allen noted that space restrictions have created issues with this growth\\xa0that this merger will help alleviate.\\xa0

In thinking about the right business model, the optimal student enrollment mix of residential vs. international vs. online as well as the right program mix, Dr. Allen noted that\\xa0the acquisition of\\xa0Wesley offers a very good opportunity to\\xa0move\\xa0a significant part of the residential mix of students and health services on the program side\\xa0to that campus. Making these moves could build something very special.\\xa0

Dr. Allen also noted that he and his staff have watched Wesley closely over many years and appreciated the\\xa0quality\\xa0of the\\xa0institution\\u2019s programs.\\xa0Wesley\\xa0has\\xa0faced many similar concerns that many private liberal colleges have faced this century and\\xa0have been trying to find someone who could partner in a thoughtful way in order to preserve the students that are enrolled and also help the institution grow holistically.\\xa0\\xa0

Working on\\xa0Organizational Redesign\\xa0

Leaders are taking this year to evaluate different options of\\xa0organization design and configuration\\xa0to determine what would be best in moving forward and what would attract quality faculty and staff as\\xa0well as students.\\xa0Dr. Allen\\xa0said\\xa0a number of different configurations between the two institutions\\xa0are being considered, including\\xa0a Wesley campus at Delaware State University as well as a new Wesley College of Health and Behavioral Sciences at Delaware State University.\\xa0This will expand Delaware State\\u2019s footprint across a wider region.\\xa0

The real work begins now that the deal is signed. Dr. Allen has gone through this process as part of the acquired institution. He said that if you do it well, you\\u2019re taking the best of both institutions while also shedding things that beleaguered both institutions.\\xa0Therefore, institutional leaders are being thoughtful about what they think is great about Wesley, where Delaware State can be more efficient and effective, and how to serve more students and give them more opportunities.\\xa0

Creating a Merger\\xa0

This was not the first time that Wesley had considered a merger\\xa0\\u2013\\xa0Wesley\\xa0had\\xa0considered several other partners, but those deals didn\\u2019t work out. Delaware State approached Wesley\\u2019s leaders with a deal that offered the best path forward for the institution. Additionally, this public-private partnership offers many additional benefits because it means Wesley will become a public institution.\\xa0\\xa0

Trying to find a merger partner can be difficult, but can succeed through identifying synergies. According to Dr. Allen, this is currently happening in his institution\\u2019s merger and that it\\u2019s important to be deliberate and realize that there are going to be surprises.\\xa0He\\xa0stressed the importance of having consultants who can help guide this process. He also believes that it is important to be thoughtful and really hopeful about\\xa0creating\\xa0a business model that can really change an institution and its service area.\\xa0

Dr. Allen had a strategic vision when he assumed the presidency. His vision was helped because he grew up in Delaware\\xa0and also served\\xa0as the institution\\u2019s provost for two years before\\xa0accepting\\xa0the presidency.\\xa0As he assumed the presidency, he contemplated\\xa0the vision as well as what is right around the institution that can be amplified.\\xa0Delaware State\\u2019s close proximity\\xa0and regular collaboration\\xa0to\\xa0Wesley\\xa0made this merger/acquisition make sense.\\xa0Early reports indicate that stakeholders are seeing this effort favorably.\\xa0

Communications\\xa0

Communications are critical. The\\xa0two institutions\\u2019\\xa0presidents are trying to answer questions in a uniform fashion. Both presidents meet regularly\\xa0and coordinate\\xa0communications, including\\xa0the announcement of the merger/acquisition through\\xa0a press release and press conference. They tried to articulate messages that would help individuals\\u2014students, faculty, staff and alumni\\u2014on both sides understand what this partnership would offer.\\xa0\\xa0

The next step is \\u201cstanding and delivering in front of these audiences,\\u201d Dr. Allen said. This\\xa0will\\xa0encourage\\xa0Wesley stakeholders to talk\\xa0about their needs and anxieties and also communicate the opportunities that are being created for both institutions.\\xa0\\xa0Dr. Allen believes that leaders need\\xa0to\\xa0communicate messages multiple times and then follow through on any promises that are made.\\xa0

Four\\xa0Recommendations for Higher Education Leaders\\xa0

Dr.\\xa0Allen\\xa0suggested several takeaways for higher education leaders:\\xa0