BeautyLink - Volume 6, Issue 3 - (Page 31)
THERE IS NO COOKIE-CUTTER APPROACH
BY BEAUTYLINK STAFF
usinesses typically grow
through one of two
approaches. They grow
organically by building
a new location "from the
ground up," or they acquire
another institution. An article in the May 5
Wall Street Journal reported that merger
and acquisition activity in the U.S. set a
record pace in the first four months of 2014.
While growth is good, it often comes
with growing pains. BeautyLink spoke
with a few AACS member schools about
navigating operational and cultural challenges during the acquisition process.
Tricoci University of Beauty Culture has
recently been adding locations to complement and build upon its Chicago-area
schools. Since 2011, the school has added
one location per year and the school plans
to add two to five campuses annually, primarily through acquisition.
Regardless of the size of an acquisition, Tricoci CEO Brian Weed says that
it is important to have the right expertise involved. The specialized knowledge
may come in the form of a consultant, but
schools can often begin with their attorney
and auditor, particularly if the auditor is
experienced in the education arena.
Weed noted four categories that demand
scrutiny before a deal proceeds.
1] Financial Data. School owners must
"The dynamics of each transaction are
going to be unique. Acquiring a struggling
independent school will require a different
approach than purchasing a multi-location
school with solid performance metrics."
- B&H Education CEO Mike Flecker
procedures are far more cash-based.
Acquiring institutions also need to carefully examine student accounts in order to
determine if a good fit exists.
the purchase of IT systems required to
harmonize the two institutions' data.
3] Regulatory Issues. Uncertainty on
the regulatory side may be a prime factor
in calling off a potential deal. A clean bill
determine if the financials reported by the
Operational Diligence. The cost of
organization they are acquiring comply with
the transaction is not complete if it does
of health on the annual audit is a good
what the acquiring institution expects upon
not account for the operational costs
start, but an audit should not serve as the
associated with bringing the acquired
closure of the deal. A discrepancy does not
sole standard for assessing compliance.
necessarily mean an erroneous method or
organization over to the purchaser's operAcquiring institutions must do a thorough
dishonest intentions, but may reflect a difating methods. Operational expenses may
review of student files before finalizing
ference in the accounting approach used
include the cost of new curriculum and
by each entity. For example,
many schools may think
Learn The course ML121 - Negotiation Skills is available on the AACS Online Visit the
they are running on an
Center. Members call AACS at 800-831-1086 for your VIP Discount Code.
accrual basis, but closer
More following URL to learn more about this course: www.aacstraining.org/courses/ML121.
scrutiny indicates their
B E AUT YL I NK | C E L* E * BR AT E | 2 0 1 4 |
Table of Contents for the Digital Edition of BeautyLink - Volume 6, Issue 3
Message From the Aacs President & CEA Chair
The Workings of Washington
The Art of the Consult
A Student’s Perspective
Celebrating Our Graduates
Access and Affordability
And Then There’s Compliance
Are You Ready to Thrive?
Navigating the Acquisition Path
Creating a Marketing Mixture
Culture Trumps Strategy
Beauty Changes Lives
20 Ways to Celebrate You
Battle of the Strands
Students Leaving the Beauty School “Nest''
Why Every Educator Needs to Be at CEA This Year
Step by Step
Voices From the Classroom
People & Places
Create a Recipe for the Future
New Products & Services
Associate Member Profiles: Furniture Manufacturers
New School Members
Upcoming 2014-15 Events
Index to Advertisers
BeautyLink - Volume 6, Issue 3