Association for Public Policy Analysis & Management

This research will inform others about mergers and acquisitions (M&As) in higher education, how M&As can be successfully implemented, and when/how to evaluate an M&A after implementation. There has been increased chatter about M&As in higher education in the United States, and while many M&As in higher education have failed this research will provide important information on a case where it was successfully implemented. The timeline and reasons that this case was successful and important to the State of New Jersey will be discussed as well.

Higher education is facing severe financial challenges. State appropriations in the United States for public colleges and universities continue to erode for most states even as they struggle to regain their financial footing after the Great Recession (Zumeta et al, 2012).  States have begun to consider consolidations of public institutions of higher education in the forms of M&As in an effort to expand institutional scope while reducing duplicative expenses (Skodvin, 1999).  Private institutions can also use M&As as a way to manage cuts in their endowments and increase competition (Kastor, 2010). This is particularly the case among institutional M&As that involve schools with medical and/or science, technology, engineering, and mathematics (STEM) programs which can attract additional sources of revenue (Department of Treasury and Department of Education, 2012; Carnevale et al, 2010). Recent examples of these types of M&As include Rutgers University (Rutgers) with the University of Medicine and Dentistry of New Jersey (UMDNJ) in 2013, New York University with Polytechnic University in 2014, and the University of Toledo with the Medical University of Ohio in 2006.  However, the research on evaluating such mergers and acquisitions in the United States is rather limited. The objective of this research is to evaluate the Rutgers – UMDNJ integration as an example of an M&A where a traditional four-year university merged with a standalone medical university, UMDNJ.  Nine schools, including two medical schools, were brought into Rutgers in an effort to become a more competitive institution in the higher education marketplace, with a focus on re-vamping medical education in the state.  An evaluation of the reasons for the merger; its design, and implementation will provide an opportunity to understand whether M&As of this magnitude and among public institutions can be accomplished successfully.