The Economics of a Merger

 A merger will often involve a large school taking over a smaller school for some sort of strategic advantage. Northeastern's recent assumption of the assets and liabilities of Marymount Manhattan College was probably intended, at least in part, simply to give the University a presence in New York City.

But let’s look at a merger taking place based solely on economics simply by putting together two "average at-risk schools" in The 2024 New England Survey:

Now if you put 2 of these average schools together and simply assume 10% economies of scale in compensation costs by eliminating overlapping and duplicated positions as a starting point:

And to ease the blow of the 10% RIF, it could certainly be spread out to some extent to take advantage of normal attrition and, in the process, perhaps, make the merger transition somewhat smoother. 

The challenges associated with a merger are many. But the potential financial advantages are obvious – particularly for the majority of private, mid-sized tuition-dependent colleges and universities in The 2024 New England Survey that are at-risk and, most likely, their counterparts across the country.

Even without assuming declines in enrollment, the merger affords the combined schools the Staying Power and, therefore, the time they need to deal thoughtfully with potential declines in enrollment rather than facing liquidity challenges almost immediately, even before considering potential declines in enrollment, if they try to go it alone. 

And, leaving finances aside, a merger could make the combined schools more attractive to prospective students and minimize or possibly avoid the risk of declining enrollments altogether.