Date: November 26th, 2007
Author: Susan Schulz
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Thinking about selling your school? As soon as you start thinking about an Exit Plan and selling your school is one option, it is time to build up your school to look good. As strange as it seems, just when you decide to leave is the time that extra human and financial resources have to be dedicated to increase enrollment, fine-tune policies and procedures, firm up your staff, and much more. In addition to enhancing marketing and even adding new programs, we suggest developing a huge file of student, graduate, and employer testimonials. What better way to represent your school than a roster of satisfied “customers” to validate your business. What other tips do you have for getting your school ready to sell?
Dr. Susan Schulz has more than 20 years of experience consulting with postsecondary career colleges and traditional colleges and universities. Her areas of expertise include compliance, school development, retention, marketing, placement strategies, and mergers and acquisitions. Her doctoral dissertation research project involved determining what factors influenced attrition at a massage therapy school. She is also adjunct faculty member for MaxKnowledge.
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Date: August 14th, 2007
Author: Dave Admire
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Recently our company completed two acquisitions and we are very excited about both. Now let me tell you how we got there and what it takes to get acquisitions completed.
First, take the time to research what type of company to acquire. You can go the route of adding to your vertical and just growing scale, or look at a company that strengthens you through synergies. In our case we did a little of both.
The first company Beauty Schools Directory (www.beautyschoolsdirectory.com) is a company that matches our vertical in that they generate internet leads like we do. However, cosmetology was a program we had not pursued. The second company, Venture Direct Worldwide, is similar to PlattForm when it comes to the Career College industry. One aspect that was exciting to us was the synergistic opportunities in leveraging each company’s strengths while being able to both enhance current service offerings, and add a few new ones to the customer base of both PlattForm and Venture Direct Worldwide. This partnership now enables both companies to better support our clients lead appetites and continue to infuse new admissions support services into the Career College sector.
Once you have identified a company that you feel would be an appropriate target, you have to start doing your home work and pull together as much information about them as possible. After you have made a decision to move forward, based on your findings, you contact the potential company to gauge their level of interest. If they are interested, that’s when the real fun begins.
Be prepared to spend countless hours gathering more information and spend a lot of quality time with your senior management talking about the pros and cons of acquiring the company. Just because they look great on paper and are a successful company that does not automatically translate into a slam dunk deal. You will have to look at how they look on paper AND whether or not their personality and culture will mesh with yours. How do they treat their employees? What is the Senior Management’s leadership style? Are the synergies there to make one plus one equal three?
Our goal when looking for companies to acquire/merger will always be about enhancing our dominance in the industry and our combined ability to better deliver for our clients and theirs. With the two recent acquisitions in addition to the two acquisitions we made in 2006, we have done exactly that. I look forward to improving service offerings to help generate more lead flow and support to all of our clients.
One of the most important things to remember is that it is never personal. It is always about what makes business sense for the two companies. Win lose scenarios are imaginary. If the seller loses, so do you.
Remember once the ink is dry the real work begins. The process itself is the courtship, but marriage is always hard work.
Dave Admire, President, has been with PlattForm for nine years. As President, he is responsible for working with the management of each department to ensure clients' needs are being met and surpassed. Admire's previous titles include Media Buyer, Media Director, Vice President of Media and Chief Interactive Officer.
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Date: October 10th, 2006
Author: Susan Schulz
4 Comments
Deciding to sell your school can be an emotional decision as well as one of the most important financial transactions a school owner will ever make. As part of their business plan, every school owner should have an “exit” strategy that can be put into effect when the time is right. Changed or unforeseen life circumstances, illness, death, marital dissolution, and wanting to retire are among the reasons that can accelerate the decision-making process.
When the time is right, it is important to work with a professional advisor/intermediary who specializes in the career school industry. This is crucial to the confidentiality, marketing and ultimate success of the transaction. A for-profit career school, with its unique characteristics, is also a business and should be handled as such.
When is the best time to sell?
The best time to sell is when the school is operating successfully. It’s not necessary to wait until business has peaked. Almost every school can be sold even if it is not doing too well. Timing and professionalism in handling the transaction correctly will yield results.
How much is my school worth?
When one removes the emotional factors from the equation, the value of a school is dependent on many considerations, including but not limited to:
- A detailed analysis of the school’s past financial statements.
This includes an adjustment analysis of the operating expenses to arrive at earnings before interest, taxes, depreciation and amortization (EBITDA).
- The current programs of study offered, anticipated value of new programs, geographic location, tuition, default rate, future revenue and earnings, the stability of the school and the ability to continue into the future, local competition, the strength of existing personnel and management, a review of industry and sale comparables, accreditation status, government loan and grant programs, enrollment growth potential, and more.
Obtaining a professional third-party valuation report prepared by a profession valuator with knowledge of the school industry can mean a considerable difference in the ultimate pricing, marketing and transaction structure strategy.
What is the best organization to sell my school?
Selling a business is a specialized function. The knowledge of selling a private career school requires even more specialization. The process of pricing, marketing, qualifying potential buyers, negotiating and managing the transaction is different than other commercial business transactions. A school owner may be tempted to try to sell their school themselves or through local business brokers. In most cases the seller’s effort is futile. The frustration, expense and time involved if successful does not yield a cost savings. It is difficult for an owner to work directly with a buyer, maintain confidentiality and remain emotionally unattached. It is natural for a seller to be concerned with their needs. However it is also important to understand the needs and concerns of the buyer.
After the potential sale is agreed to, the buyer will have an opportunity to complete their “due diligence” or review of the financial and operational records, learning materials, regulatory correspondence, educational statistics, personnel records and more.
A qualified professional intermediary is needed to supervise this due diligence process and work with the seller’s attorney and accountant. The intermediary manages the movement of the transaction and the ultimate structuring, financing and closing of the transaction that will meet the test of time.
Dr. Susan Schulz has more than 20 years of experience consulting with postsecondary career colleges and traditional colleges and universities. Her areas of expertise include compliance, school development, retention, marketing, placement strategies, and mergers and acquisitions. Her doctoral dissertation research project involved determining what factors influenced attrition at a massage therapy school. She is also adjunct faculty member for MaxKnowledge.
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