Trusteeship - May/June 2020 - 15

How to Execute Mergers
Fuchko says that the University System of Georgia mergers were
successful in part because they were governed by six core principles that were adopted by the board.
1. Increase opportunities to raise education attainment levels.
2. Improve accessibility, regional identity, and compatibility.
3. Avoid duplication of academic programs while optimizing
access to instruction.
4. Create significant potential for economies of scale and scope.
5. Enhance regional economic development.
6. Streamline administrative services while maintaining or
improving service level and quality.
For trustees in the middle of the situation, addressing some of
the softer sides of mergers, which are often charged with emotion,
may be a logical role.
"Anytime there is a change of this magnitude, there is going to
be skepticism, fear of the unknown, and turf protection," says Philip
Wilheit, Sr., a 10-year regent of the University System of Georgia
who has seen the entire trajectory of that system's consolidation.
"What is the mascot going to be? What is the surviving institution's
name going to be? These are things that don't really affect the students but are still important."
Wilheit, from the City of Gainesville, says such concerns were
operative for the first USG consolidation between North Georgia
College and State University and Gainesville State College. "Governor Nathan Deal was from Gainesville and after an hour and a half
of talking about consolidations with the board, it seems so obvious
that the right thing to do, and to make the statement we needed to
make, we needed to do it in our home town first and allow Gainesville State to be merged into North Georgia State," Wilheit says.
"It worked out well because the president of Gainesville State was
retiring, and most people let go from Gainesville found employment elsewhere in the [University System of Georgia]. We handled
the mascot situation, too. North Georgia was the Saints. Gainesville was the Lakers. We put it up to the students for nominations
and let the student body vote on the mascot and they came up
with something completely different, the Nighthawks. It probably
also helped that these two institutions were the same size. On the
other hand, the retiring president felt like we should not change the
name-she loved "university" and I can't blame her. Still, these are
things that within six months after the merger no one was talking
about it. There is pain with any change you make, and education is
the poster child for that."
And sometimes things don't blow over but there are still fixes.
One common solution to the naming problem is to use a new
name apart from either of the original universities. But that doesn't
always work.
One USG merger was between Augusta State University and
Georgia Health Sciences University. "We changed the name to
AGB.ORG

Georgia Regents University and that didn't go over well with the
Augusta community, so after 18 months the City of Augusta came
to us and said 'if you change the name to Augusta University, we
will pay for the naming costs,' which was not a small sum given the
signage, stationery, and other costs that topped $3 million," Wilheit
says. "We agreed, and they used their private money to pay for that."
It takes strong executive leadership to drive change. "Most of
these interactions are driven forward by the leadership, often the
president, who pushes for a vision to the board," says Lloyd Jacobs,
the president emeritus of the University of Toledo, where he led
the merger of University of Toledo with the Medical College of
Ohio and coauthored the book Strategic Mergers in Higher Education. "It rarely arises spontaneously amongst the board."
Whether boards or presidents initiate the conversation, boards
play a critical role in supporting successful mergers. "If you do not
have a committed governing board, you are dead in the water,"
says Azziz.
There is general agreement that going public with the need to
merge or the possibility of closure can be a mistake that can reduce
support for an institution and that can raise obstacles to potential
deals. Conversations in this realm usually begin confidentially
within boards and between boards and their executive leadership.
It is usually critical that a smaller subcomponent of the board
and administration explore merger and closure options to provide
a team with the right skill sets and to ensure the confidentiality of
such discussions. "This needs to be done confidentially; you should
only go public when the basic parameters of a deal are done,"
Beyer says. "There is no benefit to a higher education institution
announcing your intention to look into a partnership or merger. It
is a sign of extreme weakness."
One advantage of creating an ad hoc strategic committee is to
allow the institutions to review long-term strategic options, Beyer
says.
Institutions that may require mergers may need to realize that
there is a 20-to-1 ratio of sellers to buyers, Beyer notes. Boards
and leadership must work to examine their competitive positions
deeply to determine how they will play into an institution's attractiveness to others.
Beyer says higher education institutions leaders also need to be
realistic about the relative speed at which deals can be executed.
"Once a decision has been made to explore a potential merger, it
can take six months to get the board prepped and at a sufficient
consciousness level," Beyer says. The search itself can take 6 to
12 months. Once a candidate is selected, it will take at least six
months to develop a relationship between the two institutions and
up to another year to execute a definitive agreement, and additional time to obtain regulatory approvals. You are looking at a
two-year window to do it right, which can be a problem if an institution is late in its life cycle," Beyer says.
MAY. JUN. 2020 TRUSTEESHIP 15

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