M&A in Higher Ed with Yves Salomon-Fernández

Work Forces

Dr. Yves Salomon-Fernández is President of Urban College of Boston. With a rich background that spans multiple roles across community colleges and a senior position at Southern New Hampshire University, Yves brings a wealth of knowledge and experience in navigating the complex landscape of educational institutions. She shares her unique perspective on the intricate world of higher education mergers and acquisitions, drawing from her extensive involvement in various due diligence efforts and her leadership roles on several prestigious boards. Join us as we explore how mergers are reshaping the future of higher education and what this means for institutions seeking to sustain their missions in an evolving sector.

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Transcript

Julian Alssid: Welcome to Work Forces. I'm Julian Alssid.

Kaitlin LeMoine: And I'm Kaitlin LeMoine. And we speak with the innovators who shape the future of work and learning.

Julian: Together, we unpack the complex elements of workforce and career preparation and offer practical solutions that can be scaled and sustained.

Kaitlin: Let's dive in.

Julian: Today we're joined by Dr. Yves Salomon-Fernández, President of Urban College of Boston. Yves has an impressive background in higher ed, and a demonstrated commitment to fostering inclusive economies. Prior to joining Urban College, she led several community colleges in Massachusetts and New Jersey, and served as Senior Vice President for Operations Planning at Southern New Hampshire University. Beyond her institutional leadership, Yves holds positions on the boards of the American Association of Colleges and Universities, Mass Humanities, and Double Edge Theater, and contributes to the Federal Reserve Bank's Inclusive Economies Project. She's also been recognized for her inclusive leadership by the AAC&U and celebrated as one of the top 25 women in higher education by diverse issues. A proud immigrant from Haiti, Yves's educational background spans from the University of Massachusetts, Boston, to Boston College, with a notable certificate from the University of Oxford. Her trilingual fluency enhances her ability to connect across diverse communities, underscoring her profound impact on higher education. Welcome, Yves.

Yves Salomon-Fernández. Thank you, Julian. It's great to be with you today. We're enjoying this beautiful sunny day, so it's awesome.

Kaitlin: Thanks so much for being with us today, Yves, and we're really looking forward to this discussion. So as we get going today, can you please tell us a bit about your background and your current role?

Yves: I feel like Julian said so much. So, Kaitlin, I'm not sure how much more you would like me to add, but I will say that I came up through institutional research, which is an unusual background for a college president. But it served me well throughout my career. My academic backgrounds are in political science and international relations, and I've got an econ degree from the London School of Economics, and then statistics. For me, all of these different disciplines have helped me to better understand, one, how to work with people, how to work with people across cultures, and also how to look at data, how to manage finances. So having that econ and quantitative statistics, psychometrics background has worked for me very well. And as Julian said, I am the president of the Urban College of Boston, which is an extraordinary institution that I think right now has even more relevance as we are seeing the increase in migration, immigration, and also the labor shortages that we are experiencing across the country. Urban College of Boston offers instruction in language for students as they develop and master their English proficiency. So the languages that we offer instruction in include Spanish, Mandarin Chinese, and Portuguese as students travel through their courses of study. So it's an extraordinary institution located in Boston, but serving students beyond the city of Boston.

Julian: Yves, you do have a very interesting and unique and I say pertinent background for a college president of today. And one of the areas where you've built expertise is around mergers and acquisitions in higher education. And so we want to learn about that, selfishly, and we are sure that our listeners would like to hear about this as well. What are trends you're seeing in this space?

Yves: Well, I think this is definitely a buzz area right now in higher ed. And I have a background that is primarily in the two-year colleges space, but I've also served at selective private research institutions and public institutions as an administrator, as a researcher, and also as an adjunct faculty. So it's a varied background. And you add in Southern New Hampshire University, and that just makes it a little bit richer. So Urban College of Boston is actually an affiliate institution of Southern New Hampshire University, and it really is a model that is quite unique in that merger and acquisition space. And as you mentioned, I spent some time at Southern New Hampshire University, and that was really an opportunity for me to learn a lot more about that world. At SNHU, I had an opportunity to lead or participate in a number of due diligence efforts where we looked at everything from large, expansive, four-year traditional, really with a lot of students on campus, for affiliation. Also looked at a venture outside of the country, and we also looked at a couple of small colleges, a four-year college, as well as Urban College of Boston, which I ended up leading the due diligence effort for. And that is a unique model. I also have other affiliations in that space through friends and colleagues in the area in Massachusetts. So it's been an interesting area of expertise for me to have developed. But I think overall what we are seeing right now is that there is a trend towards closures, mergers, acquisitions, and they take all kinds of shapes and form. So for instance, between 2004 and 2020, 80% of the closures were for-profit institutions. But today we're seeing something a little different. So since March, 2020, we've had 51 public or nonprofit colleges that have either closed or merged or announced mergers or closures or in affiliation with some institutions. So we're seeing a growing trend in that area. And now that you no longer have federal financial support keeping colleges afloat as the pandemic funds really have dried out for higher ed, we're seeing schools that can no longer sustain themselves financially look at all kinds of options that may be open to them. So it's an exciting time to see how institutions get creative around how to keep their missions alive through not, um, surviving as an independent institution, but really combining with someone who has or another institution that has a like mission.

Julian: Can you speak a little bit more to what that means? You know, sort of practically speaking, what does combining generally, what, what sort of form or forms does that take?

Yves: I mean, I think you see a lot of different forms. You have Marlborough College, for instance, that merged with Emerson right before the pandemic. Emerson College in Boston and Marlboro College was a small college in Vermont, and I know their leader very well and that was to me one of the best examples of a merger. You also have the Wheelock College and Boston University experience and I have two colleagues, Mary Churchill and David Chard who wrote extensively about that in their book, When Colleges Close, and you also have the Montclaire example, you also have the Bloomfield example. So there are a number of permutations that a merger or acquisition can take, and depending on how well institutions do their due diligence, how well they manage the communications, it can either become a public relations nightmare or something that ultimately, you know, they exercise their exit clause, assuming that there was an exit clause in the agreement, and the circumstances are such that one could actually exist. So yeah, lots of different models. And I think in the research literature in the years to come, we'll continue to see more in that area. And yeah, it's interesting.

Kaitlin: So for college leaders who are looking to merge or affiliate, what do they need to think about and know about and consider in this space?

Yves: There is so much to consider. It's a fascinating field that is emerging and where we are seeing people with expertise either in the traditional for-profit world or who are developing that expertise right now for higher ed specifically. For me, having led and been part of these due diligence efforts, there's a lot that the leadership needs to consider. And by leadership, I mean the board, the president, the executive team, and all the other constituencies. It's not just leadership and title, but also leadership around that specific situation. So first of all, assembling a team on each side, whether you are the person with whom that institution is merging or affiliating, or you are the person who is seeking a partner, I think it's very important to have a solid due diligence team and frequent communication certainly. And for that due diligence team, some folks may choose to also include a paid advisor, someone whose job is to do that, make sure it goes well, in addition to having that internal team that is liaising with the potential partner. I think institutions have to ascertain, especially one that wants to be affiliated with, to vet and to determine whether they can do this on their own. And also to make sure Yvesn if you are hiring a firm that you have a critical friend who is not part of the process, who can look at the documents, who can talk to stakeholders and say, yes, I think this is a good idea. This will serve everyone well, or you might want to look at this. You might want to look at that. Here are some red flags that we are seeing all depending on the complexity of the circumstance. So I would say for boards, my most important advice would be don't wait until you're at desperation point to say, hey, we want a partner because at that point it's already too late. And I would also say for presidents who are closest to what's happening on the ground to have the courage to say to your board, you know, things are not looking great. And if we take a longitudinal perspective, both retrospectively and also in terms of what we can anticipate, what we can expect, this does not look great, but we are in the best position that we can possibly be to look attractive to a potential partner. So I would definitely encourage folks to take that approach for both the president to have the courage and the board to say, yes, let's dig into the data, let's see what needs to be done and is this the best course of action? What kind of affiliation would we want to have, and also who are some potential partners? What are the criteria for looking for partners that would be suitable? So there, I would say once that is done and they decide whether or not to engage an external firm, the most important thing I would say is being able to keep confidentiality within the team because we don't want information getting out prematurely that might also affect the negotiations. But you also want transparency. So identifying at what point do you engage and whom do you engage in that process. Culture, I would say, is very important for both institutions. Assessing whether you're an institution that is more of a traditionalist versus an institution that is more innovative, more entrepreneurial, because that might be a divorce rating to happen, right? With the wrong institution. So making sure that there is an alignment there. Does your institution embrace technology or will it be an uphill battle if you merge with an institution where the faculty and staff are not on board? So things like that. I also think within the culture ascertaining what the HR, the people issues have been? Are there conflicts that might lead to long-term issues? Are there settlements in the works from situations that have not worked out? Are there potential large payouts that would have to be worked out? Is the culture such that people are generally getting along? What does that look like? So I think those things are also very important. And then vetting the community. How will the community, the geography, really support the success of the engagement of the affiliation if it were to happen? So all of those things are very important. And within the culture category, I would say talking to the alumni association, getting a sense of whether the alumni would like this or not. You know, we've seen out West, cases where alumni associations stood firmly against potential mergers and what that did to both institutions that were engaged in that protracted engagement, the due diligence process. So making sure that the alumni understands that they've been given sufficient data to understand what you are exploring, that they see it as an opportunity to keep the mission alive or to evolve the mission. Either way, communication is certainly important. And at the leadership level, ensuring that the president is an important and integral part of that, so that they have a succession plan, that they have a transition plan. Most institutions, you don't end up with two presidents, so someone's leaving. And what does that look like? Is the institution poised to have another leader who may not be the president, who's still at the helm, who's able to exercise that level of leadership? Or would the assuming institution engage in that search, either for someone to come from outside or elevating someone inside? And then the president will be the one who builds the case to the campus community and the stakeholders, and they will be managing and overseeing, if not managing that communication. So ensuring that that happens and of course, engagement of the executive team, ensuring that they are on board, that they can keep confidentiality. I also know of some cases where the negotiation took longer than expected. And so having a team, whether it is having them sign an agreement or going on the honor system that can wait until you have sufficient amount of facts and a sense of what things might look like in the future, though you can't predict everything, that they can keep that as they do the work and they engage in that. And in some cases, you might simply just come out and say, we are exploring. So to put yourself out there and everyone knows very transparent. So it really depends on the circumstance. And then I would say the executive team also, once you've decided this is where you want to go, needs to be supportive, because they are the ones who are going to engage their teams around those conversations, who will be soliciting constructive feedback, unintended consequences, other things that may not be visible to an external partner who is helping with the due diligence. So they are the ones who are going to be able to do that. And they're also going to be the ones that see opportunities in that engagement. The president is not that close, right? From their vantage point, they can't see everything. They are things from the ground and in middle management that they're not going to know, not going to see. So I think all of those things are really important. And then the finances, right? That's a big piece of it. So looking at the trends, looking at the potential that exists for everybody in that affiliation, really digging into the costs. What are one-time costs? What are ongoing costs? What are contracts that still have to be paid out? IT is a huge cost. If you have an institution where you're expecting full integration and one is very much, very solid in terms of their student information services, the student information system, their learning management system, and one that isn't. So you can expect a significant cost and security and everything else that that entails. And there is just so much in that space that needs to be considered. And then you have, of course, the US Department of Education communicating that. There is also the regional accrediting agency. So who are the folks who need to know, the departments of higher education, who are the folks who need to be involved. Your attorney general's offices, you know, that also may need to be involved. And of course, at the appropriate time engaging students. How will current students view this? How will you treat them with the care and the support that they deserve? How will you integrate their voices as appropriate into the process? Because students will see things that we don't see. They will also see opportunities that we may not see from our vantage point because we're not students attending our institutions. So it's important to also get all of those perspectives and then figuring out what would, whether it is integration, what would that look like, figuring out what would the new board look like, who would be part of one board versus another. Cumberland County College where I was, that was the first place where I experienced a merger. It is now the College of South Jersey. There was a merger. And so two institutions merged, and you also have to figure out contracts. So are you a public institution where you have multi-year contracts with different unions that are working at the college? What does that look like? How do you treat people with care, with respect, with dignity? And sometimes there are tough decisions that have to be made when you will have to let go of some folks. So how do you make sure that people are taken care of? Our institutions exist because we have faculty and staff who care deeply about students. We have people who take a lot of pride, and having a beautiful grounds for our students to enjoy, beautiful campuses that are clean, that are inviting. How do you treat those people? Folks who work in the cafeteria? Are you transitioning to an external company versus local and in-house sort of staff in your bookstore? And so there are lots of little details that need to be figured out once you agree after the due diligence process that this is the way to move forward. So it can be an exciting opportunity for both institutions. So really thinking through what is the value add for each can be super exciting. But also institutions need to go in eyes wide open and with the possibility that this may not work. And that is the point of the due diligence.

Kaitlin: Wow, so you have covered a tremendous amount of ground. And there are clearly so many considerations here between the financial considerations, legal leadership, organizational change and culture shifts. What does this mean for alumni? What does this mean for students? How do we think about the external landscape in which these institutions are operating? There's clearly, there are so many factors at play here. I have many follow-up questions, but I guess one that comes to mind for me is once the change has been made, what does it look like to make the learner, just focus on the learners for a minute who are at these institutions currently, what does it look like to make that a streamlined experience and one that learners either feel like they're a part of or are aware of, or what does it look like to be transparent and I guess involving in that process?

Yves: Once that happens, there is some cheerleading that needs to happen. People need to feel like our institution has been given a lifeline. There is something exciting to look for in the change that is impending and encouraging students to talk among themselves, asking them what do they feel most hopeful about and what do they feel most anxious about? Right? Change is double-sided. There are things that you will be losing and there are also things that you will be gaining. So from the student perspective, asking them, what are those things? What about our culture that you want to retain that you don't want to see get lost through this? And what do you think we need to evolve? And students are generally very opinionated, as we all know. So I would say definitely, as you rightly point out, getting their opinions, getting their involvement makes a lot of sense. And also I would caution against doing it prematurely before you have the details. And there are some things where, you know, you don't have a crystal ball for, and you won't be able to predict, but you can say, yes, here are the things that we do know, here are the things that we don't yet know, and here are the things that you can help shape. So giving them a sense of agency, letting them know that they matter. At the end of the day, we are interested in keeping institutions alive because we think we have a unique mission. We think we serve students in a particular way that others don't, or that we serve a particular demographic of students that others cannot serve as well. Or whatever that may be that makes your institution unique. Having students engaged in that process, because at the end of the day, we are working for them and with them. So giving them that agency is important and understanding that, you know, taking a sort of a paternalistic route to this will not serve anyone. So you don't know what student, we don't all know what students want all the time. So engaging them is very important.

Julian: It's interesting, you know, I've heard and followed from afar, M&As in the corporate world over the years. And as you talk about doing this in education, of course, there's this whole lot of complexity, particularly with the people, all these people involved, right? But I am interested in, you cited some examples earlier of other higher ed mergers and acquisitions. I'm also interested, given your business background, in the parallels with corporate M&A. How is it the same and how is it different? And are there examples that those of our many learned listeners who might be contemplating a merger or acquisition might want to consider as they think this through?

Yves: So I will say this. My business background really is purely academic. And I probably wouldn't use it strongly as a business background. I would say just an economics background, and just as a student of the field. And so to understand M&As, I've had to learn a lot and to study a lot. And for folks who are interested, I would say that EY Parthenon is a great place to learn from, Deloitte is another great place to learn from. Accenture is also another great place to learn from, KPMG is another great place to learn from.As always, there's the Harvard business review. I mean, there's just so much, you know, Sloan School. Um, that is where I have learned. And also just knowing, um, having experienced it myself twice and also, um, knowing colleagues, both in the corporate world and higher education world who've been through this, I would say there are two groups that I had admitted that are very important. One is the politicians. And they're even more important if you are a public institution. My first experience with an M&A was with a public institution. And so in a system where politicians have a huge voice, perhaps an outsized voice in the running of public colleges, and that was really important. That collaboration, which for me at times was kind of, it was new, let's just say it was new, coming from Massachusetts, where I had not experienced that level of involvement. So making sure that there is communication with the politicians and also the impetus for the merger acquisition may be coming from the politicians. So making sure that you also are reading the tea leaves and there's a lot in the unspoken language. Are you engaging with folks in person? I would recommend engaging in person so you can read the body language. You can read the things that take people aback, right? And things that they would not be willing to concede on. So all of that is important to look at. And then donors, donors are especially important, especially people who've had buildings, schools, endowed chairs, professorships, things like that that are named after them who have a huge stake at the institution.

So ensuring that you're engaging them, they know why we're doing this and also how you will keep their legacy alive. And if your mission will be changing significantly, if those folks gave because of that particular mission, how you are involving the mission, especially with planned gifts or multi-year gifts is really important. And I think a parallel that we can draw here is with schools that are going from being all male or all female and then moving to multi gender schools, right? People have a certain affiliation, especially if those donors were alums, that they know the school to have felt a certain way, they experienced it in a certain way, and now you're saying that you are radically changing it. So those are all things that I would say to consider and two important constituencies, politicians and donors.

Kaitlin: So as a follow up question to that, I'm going to the much more tactical levels for a moment here, Yves. But as you're mentioning all the steps to this, the process of one considering a merger acquisition and then actually going about it, I'm wondering how big are the teams that need to work together to get this done? I imagine it almost as multi-layered, where it's like maybe it starts with a smaller team and then it becomes a much bigger group that's involved, and then maybe it narrows again, or maybe there's certain people who communicate externally versus internally. Can you speak to that from your experience a little bit, just around how to manage, what does it look like to manage this on the inside? And how many people and how many teams are involved?

Yves: How big are the teams to me really depends on the complexity of the institution. And also who is on your board. So I would say in the case of Urban College of Boston, they had an attorney from one of the leading institutions as their board chair. And he knew M&As like the back of his hand, also knew the institution like the back of his hand had been on the board for over 20 years, approaching 25, and had also been the chair of the board for a considerable amount of time. Yet they still hired an outside firm. So it tells you how important that legal aspect of it is. And hiring the right firm is also very important. Topic for another time, we can talk about the attributes of the firm. If your institution is a small institution, you will likely need someone from the outside or a staff who is dedicating significant amount of time to this work. And also remember that people also have other jobs to do. So you will be engaging a big swath of your leaders in this. They still have to keep their day-to-day job going. So the quality of the output that you're going to get from them will be significantly impacted by their ability to do both their current job and take on this high risk significant exploration and ultimately the affiliation. So it really depends. That's my answer. But complexity is one, bandwidth is another, and the quality of the folks that you have also. And also assume that there are leaders, once they hear that this is going to happen, they're going to leave immediately. So I can tell you, I lost my CFO at Cumberland County College. I mean, she said, hey, look, you know, I love this college part of the community. I feel very committed to it, but I have two kids and I need to think about what's going to happen with my family. They are not going to have two CFOs. So she started looking and it turned out it was, she got this tremendous opportunity she could not pass on and it happened very quickly. And so suddenly, I'm out of a CFO to do the CFO job, and I'm out of someone who is highly skilled, who could really vet this for us from a financial perspective. So suddenly you have no one. So if you don't have bench, be ready to spend some serious resources on those issues, not just the immediate cost of attorneys and things associated with that. But as you lose critical folks, what are you going to do? And making sure that you can have temporary help to deal with that.

Kaitlin: Thank you so much. Yeah, really appreciate that diving deep there. I figured you would not say like, you need 10 people, the range, all the considerations.

Yves: Yes, and I will say it's good to have a former president on your team because they've seen everything. A retired president is a great critical friend. Someone with recency of having gone through that is a great critical friend. And then, someone who can also look at the equity aspect of this, right? Like depending on the composition of your team, you could have huge blind spots all over. So really looking at that in particular constituency groups, if you have a particular center where you feel like, people will hear this and say, oh my goodness, a religious school affiliated with a non-religious school, all of that, people are like, what are you talking about? And it might take some time to get them to see the opportunity and at the end of the day, you might say, you know what? Yes, I thought you were a pain in my side, but it turns out you make some really great points. There's a levell of humility that you need to bring into these discussions and being open to it may not work. The smallest things will not make it work. And when I said what I said about being in person, so very important to share a meal with that group, spend a half day with that group, spend a day with them. Get to know people across the hierarchy, not just meeting with the top level folks, that gives you a sense of the culture. Being on campus or being in remote meetings or different constituency groups, your faculty senate, your staff group, and some one-on-one, so you get to hear things, and then each go back, each group go back and say, what did you hear? What did you think? What sense did you make of this? How do you, what's your sense of the team? You've now had severall engagements. How does it feel? And those things are really, really important.

Julian: So as we begin to wind down this discussion, which has been incredibly fascinating, and I feel like we're probably barely scratching the surface here, and you've done some of this, but for listeners who want to step into this field or consider mergers and acquisitions, what are some practical steps that they can take to be forces in this area, in this context?

Yves: Well, I would look at it that way. If I were to hire someone, either as a primary person or a secondary or tertiary person, I would want them to be able to speak the language of higher education. So having some background, recent background in higher education, understanding the field, and there are so many areas we didn't talk about. Your workforce development, Julian. We looked at a school that had a significant workforce development apparatus and funding coming from that as a source of revenue. There's so many things. So I would say one, ensuring that you've got people who have business sense, ensuring that you have people who have higher education experience, higher ed experience, having people who can look at how higher ed is financed and look at the books and really assess the books. People who are not just internally focused, but also externally focused. What does the external landscape look like? As the college that is, or university that is assuming another university, can you actually thrive in that area? How are the economics of the area? So having people who have that sort of ambidexterity, right? That you can look back, you can look forward, you're also multi-disciplinary and you can see not just in your specific area of expertise, but looking at it holistically, what does the ecosystem look like and what does inside of the institution look like? How do the multiple parts make the whole? So those kinds of experiences, people who are also astute people assessors, right? People who have a good, who can engage with others, who can read others, and not misread them. And people who are also, I'm a very, I'm both like a qualitative person and a quantitative person, a feelings person, as well as a very empirical, oriented and empiricist person. So you have to be able to do both. And if you know that's your blind spot as the leader, make sure you hire people who can do that for you. People who can also, as kids say colloquially, who can get the T, right? Are there things that are brewing, right, that you don't know? There's a tea that is brewing and somebody else knows, you know, potentially more than one person knows, but no one wants to let you know. And as the acquiring institution, you want to know. So yeah, so I would say, you know, the same sort of competencies that one looks for in a leader, the same kind of blind spots, and also the same sort of pragmatism, realism that we have understanding that not a single person will have all of the skills that you want, but they are humble enough to know what they don't have and pull in the expertise and perspectives that they don't have.

Kaitlin: This has been a conversation that has, I feel like, raised so many really big considerations and has given, I know it's given me, I guess a new appreciation for all of the complexities here. And so as we close out today, Yves, how can listeners of this podcast continue to follow you and your work?

Yves: Thank you, I appreciate that. Always good to have a little bit of self plug. My Instagram and Twitter handles are @presyves and my website is also the same. So www.prezyves.org. So it's exciting. Thank you for the opportunity, Kaitlin and Julian. You're always fun. I'm a big fan of the work that you're doing, and maybe we'll see you in the M&A space too.

Julian: Thank you. Only if you'll join us. This has been great. Thank you so, so much.

Yves: My pleasure.

Kaitlin: That's all we have for you today. Thank you for listening to Work Forces. We hope that you take away nuggets that you can use in your own work. Thank you to our producer, Dustin Ramsdell. Work Forces is available on Apple, Amazon, Google, and Spotify. We hope you will subscribe, like, and share the podcast with your colleagues and friends. If you have interest in sponsoring this podcast, please contact us through the podcast notes.