Strayer and Capella Announce Merger

“For-profit colleges probably face too many challenges, many of them competitive, to come roaring back, even in the favorable regulatory environment created by the Republican Party’s dominance in Washington and most state capitals, experts say,” Inside Higher Ed reports. “Yet the combination of less scrutiny from regulators and the sector’s continued financial and enrollment challenges could lead to more creative partnerships, sales and mergers.”

“‘There’s a window of opportunity for transactions,’ said Trace Urdan, managing director at Tyton Partners and a longtime analyst of the for-profit sector. He said colleges and their holding companies can ‘get deals done that may not be available to them if a Democrat gets elected in 2020.’

For example, Purdue University in April announced an unprecedented deal to acquire Kaplan University. And in February a group of private investors bought Apollo Education Group, the University of Phoenix’s holding company, and took the largest for-profit chain private. Likewise, a religious missionary organization in March announced an attempt to buy the struggling Education Management Corporation.

Those moves followed the collapses (with nudges from the Obama administration) of Corinthian Colleges and ITT Technical Institute. Career Education Corp. also has wound down or sold many of its programs and campuses in recent years.

The transaction trend among publicly traded for-profit universities continued this week, with news that the parent companies of Strayer University and Capella University plan to merge.

The two for-profit universities, which are among the industry’s most respected and successful, will continue to operate as independent institutions under the combined company, which will be renamed Strategic Education Inc.

The U.S. Department of Education, regional accreditors and some state agencies will need to sign off on the deal for it to be approved.”