Peek Inside a Higher Ed Merger

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0:00:11.5 Speaker 1: Hello and welcome to Office Hours with EAB. Today’s episode offers an insider’s look into a higher ed acquisition that first made news this summer; Saint Leo University’s acquisition of Marymount California University. This sneak peek is offered courtesy of Saint Leo President, Dr. Jeffrey Senese. Dr. Senese doesn’t fit the stereotype we often associate with a University President, that of a risk-averse academic, his style blends his academic background with a business discipline, many believe is in short supply across much of Higher Education Leadership. Either way, Dr. Senese explains why his business acumen and growth mindset perfectly fit the mission of the school he leads. Thank you for listening, and enjoy.

0:01:05.1 Hersh Steinberg: Welcome to Office Hours with EAB. My name is Hersh Steinberg, and I’m Managing Principal with EAB, which means I occasionally have the opportunity to interact with leaders from colleges and universities from across the country. I’m excited as today, we’re joined by an innovative leader, Dr. Jeffrey Senese, President of Saint Leo University, down in Florida. Dr. Senese, welcome to the podcast.

0:01:27.3 Jeffrey Senese: Great to be here.

0:01:30.2 HS: Lovely to have you. Dr. Senese, your school has been in the news lately, mostly because of your pending acquisition of Marymount California University. What I thought we might do is, talk a little bit about that acquisition, but also talk about what’s driving the growth mindset at Saint Leo, and maybe even explore your journey through higher ed leadership, just so our audience can better understand how you approach your job. Would that be okay for today?

0:01:57.8 JS: Sounds good, let’s go.

0:02:01.1 HS: Alright, terrific. Alright, for those who may not be familiar with Saint Leo, could you tell our listeners about your institution and what made the Marymount opportunity is so attractive as an acquisition partner for Saint Leo?

0:02:14.0 JS: Yeah, Saint Leo University right now is the largest Benedictine University in the world. We are the fourth largest Catholic university in the country and enrollment, we are a distributed University, and in the sense that we have about 19,000 students, and most of our students are on ground, face-to-face, although we have 9,700 of them studying online. We have a distributed University in the sense that we have centers in five states, so we’re used to operating at larger geographies. We have a centralized way of approaching things, so IT, HR, business services and advising financial aid, so forth, are located here just outside of Tampa, on our main campus in Saint Leo, Florida. And then our distributed faculty as well as advisors and admissions counselors live throughout the United States and in our locations. So very different institution. Our economic impact, most recent study, just before the pandemic is about a billion dollars a year of impact nationally. We looked at and have been looking at partners in the Catholic higher ed world, although we’re not limiting ourselves to only the Catholic higher ed world. And Marymount California University came up about two years ago. President Marcotte and I just started a friendly conversation about how we might work together and partner to help them and to help Saint Leo.

0:04:00.2 JS: And all these conversations have been about mutual benefit to the institution. Now, he’s got an institution of under a thousand students, so there’s a differential clearly, there, but there’s a mutual interest in delivering a values-based quality Catholic higher education that we both shared. And as we started to come out of the pandemic, even before starting to come out of it, but it looked like we were coming out of it, President Marcotte and I decided that it was time for us to talk more deeply about how we might work together in partnership, and it ended up being very quickly, a conversation about an acquisition. So this is not a merger in a traditional merger sense, this is more an acquisition where we… Prior to the announcement, we signed a legally binding agreement of asset acquisition. So Marymount California University has donated all land, property, buildings, programs, so on and so forth, to Saint Leo University. What we’re waiting for now is regulatory approval from SACSCOC. So that takes a little bit more time that it’s taken us. It took us about six months of time to get to the asset acquisition agreement. Both institution’s boards came to that decision, both Presidents came to that decision. So that’s kind of where we are and how we got there, in very broad terms.

0:05:35.8 HS: Very helpful. Well, and I think our listeners would be interested to know. Mergers, acquisitions of any kind in any industry, they’re hard, but especially in higher ed. How did you come up with the acquisition, as the Saint Leo strategy, the path that allows Saint Leo to achieve what it’s meant to achieve. Some would call it a deal thesis, but why this path versus other paths?

0:06:03.6 JS: Yeah, no, it’s a great question. And frankly, in my previous institution, I had started thinking about the model. So four years ago before I came here, I was at a place that had learning centers in different locations, but all generally within the same state, or just over the border of that state, and I was talking to other higher ed institutions of similar size and said, “Wouldn’t it be advantageous if we could pool things like our admissions operations or IT operations? Wouldn’t it be advantageous to us all, if we can mutually figure out how to do this?” There’s models for this too. If you look at SEP G in Southeastern, Pennsylvania, or the five colleges up in Massachusetts, there are models of this kind of approach.

0:06:53.3 JS: So I started thinking about that. When I got to Saint Leo and I didn’t know much, quite frankly, about Saint Leo’s breadth and reach. I thought, “Oh, this is ideal for this,” and our scale financially as well as across the country, caused me to say, “Okay, what’s next generation of Saint Leo, so that one of my predecessors created these learning centers and the relationship with the military?” Great job. It was great thinking at the time, but as everybody knows, we’ve moved more towards online education than on-ground for adult students in particular. We’re 75% adult students.

0:07:38.6 JS: So I, myself and some of my senior team, we started noodling about, “Okay, what’s next” And I came up with this based on… I started looking at, “Okay, how many acquisitions have occurred, ever? How much time ever?” So if you go over to Wikipedia, you can search college and university acquisitions or mergers, you use that term, and it’ll produce historically, how many have occurred, and then I started really drilling down. I read some Clayton Christensen work as well, and Christensen, as many of you know, was talking about this great change in higher ed, and I said, “Huh, are there big Catholic universities doing this across the country?” and I couldn’t find anybody doing it, and a friend of mine is Paul Leblanc, up there at Southern New Hampshire, and we’re working together on a project and I talked to him a little bit about it and I said, “What do you think about this model?” He said, “It’s not something for us, but it makes sense to be thinking about it.” So I think a lot of thinking and talking and different sourcing, I… About my third board of trustees meeting, I brought in this model called Saint Leo 2.0, that shows both fully merged institution, partner institutions, as well as affiliates, and even programmatic relationships.

0:09:12.0 JS: So it shows a complicated web of this kind of opportunity, with mergers and acquisitions really being the deepest kind of partnerships. So we’re not thinking only about mergers and acquisitions, although ultimately, that’s sort of our interest, there are other partnerships that make as much sense. I’m talking to an institution, I’ll give you an example, that make that clear. With an institution that has an accredited speech pathology program, if you know speech pathology, takes about six years to get on the accreditation list. So Saint Leo is not gonna start one of those programs, but through this partner, I can deliver their program on my campus. There’s a little bit of revenue for me, there’s a good bit of revenue for them, I have a national network of admissions, which they don’t have, that I can bring to the table. So to me, that’s a mutual partnership. I get something, they get something, it can be long-term based on that. And then you go all the way to the extreme, where Marymount California University was pressured, they knew that their debt and their ability to meet budget and payroll would not be sustainable, long-term. They’re not in trouble in any way, but they knew it wasn’t sustainable because they’ve been running deficits, they’ve been declining in size, the timing was ideal for an acquisition.

0:10:40.3 JS: Their board chair is CFO for Space X. Their vice chair is a local real estate mogul, so they have… And their President in particular is a business guy, so they had a good sense for what they needed to do to preserve Marymount California’s charism long term, and we’re only too happy to work together. The other thing about that one that works… That has worked differently than other conversations we had, is, there’s been a deep appreciation of each other. Both institutions appreciate each other’s culture. Our cultures are similar in a lot of ways, but I think it felt good from day one, in terms of the conversations, and I think that’s a key to any partnership, whether it’s programmatic or acquisition and merger.

0:11:34.2 HS: Well, you hit on a couple of key points there, and thank you. A little bit of the why now and some of the challenges a lot of institutions and peers are facing. Lots of colleges are just trying to hang on right now, but Leo clearly has more ambitious plans, but it needs to be the right situation, right place, right time. You hit on something a moment ago, Dr. Senese. You can go on Wikipedia, you could see the other mergers acquisitions, others in higher ed have tried this, we know, and we’re familiar with some. What gives you the confidence… And you kinda hit on it, but what gives you the confidence that you’ll be able to capture the synergies, meld those organizational cultures across your respective campuses now in opposite coasts, but if you were to continue with this model, it’s hard. Talk to our listeners a bit about that piece of it.

0:12:35.7 JS: It’s not if. We’re going to continue this model and continue the approach in conversations. I think is a great question, and others are trying this. I think what our perspective is, is don’t rush it and do it the right way. So we have a firm that’s helping us do due diligence. So it allows President Marcotte and I from Marymount, California, allows he and I to have very professional and cordial conversations and honest conversations without getting into the difficult questions about financing and how this or that is gonna work. So I think that’s a key, is to have an outside firm that one trusts, that has an ability to work between both institutions. I think, similarly, I have a general counsel’s office, so my general counsel could handle this, but not with all the other things that I asked that office to do. So I have an outside firm who’s doing all the legal work for us. I’ve hired another firm to do the IT assessment. So not only do they assess complete systems on their side, they assess compatibility with our systems, and then on top of that, I said, “Okay, I wanna go forward plan, I want you to tell us what we do first, second, third, and so on and so forth.”

0:14:00.2 JS: So those critical components, and there are other situations… So in Florida, we have hurricanes, in California, they have earthquakes. So there’s a different way you look at physical facilities like Marymount being on the coast and being in LA area. So there are other firms that we brought in, that have better expertise than we do here in Florida, help advise us. And apparently, there is a projection on earthquakes that is between 200 and 1400 years, that’s sort of how they look at projecting the next one that’s going to occur. I would have never known that. I learned a lot about earthquake projections at this point. But my point is, one needs to pretty clearly, bring in expertise to allow the conversation to be mutual, to allow the conversation to continue to be one that melds the cultures, as opposed to one that’s fighting about small things. And there’s an old saw in higher ed that we fight the most over the most smallest details. So if you take that off the table, and Brian and I talk every week, my time 5 o’clock, his time in the afternoon. And there’s no agenda, we’re just talking about, “Okay, how’s things? What’s going on here?”

0:15:30.6 JS: I know what’s going on with, for instance, his director of IT, he knows what’s going on with my admissions people. We know our staff’s names at this point, even though we’re much bigger than they are, we’ve got that kind of relationship, and the reason we do that, we have that relationship is, we brought in the right expertise to help us.

0:15:54.5 HS: Sets you up nicely in that regard, and I think it’s helpful for our listeners to hear from you, in this regard. Let me… I wanna come back to the acquisition piece, but let’s talk a bit about you, Dr. Senese. Anyone who spends time with you and I’ve spent some time with you over the years, you don’t fit the traditional mold of the academic leader or the typical President. Talk to us about your journey from faculty member in Indiana, to your appointment as the 10th President at Saint Leo, just a few years ago. I think it’d be neat for folks to hear that story.

0:16:35.4 JS: Yeah, I’m not a big fan of talking about myself, but I’ll answer your question. I got into academics because I was interested in… My background is, I have a PhD from Michigan State in multi-disciplinary social science, which means I took econometric, psychometrics and social science stats within a criminal justice context, but I was really focused on the tools of statistics. So when I got out of Michigan State, I looked for a place that was research-oriented, and that’s how I ended up at IU. Loved the IU experience, it’s a great place, but my family was on the East Coast and my dad had passed away after, I think, my second year as a faculty member. I wanted to be closer to my mom and help her with closing down my father’s business and so forth. He owned a a construction company. So I moved back east and ended up at University of Baltimore, which is part of the University of Maryland system, and very much an adult-oriented institution. I remember my classes back in the day used to have a law enforcement officers come in, fully garbed with their side arms and weapons and so forth.

0:18:01.9 JS: And when I started teaching criminal justice, it was 90% men, when I ended teaching, it was 50-50 men and women, it was really interesting, over that time frame. I was really interested in research and I… A couple of areas that I focused on, I was interested in prison and jail population forecasting, I was very interested in modeling correctional officer and police officer decisions with respect to use of force. I had a couple of Department of Justice and Department of Defense grants, to study use force. So I was very enmeshed in the scholars life, writing referee-journals, presenting all across the globe. Quite frankly, I had a Fulbright in Hong Kong back in the day. So I was very much in that mentality and I got tenure and I’m accelerating things, but I got tenure.

0:19:00.5 JS: And my Department Chair at the time said, “Okay, now it’s your turn to be Department Chair.” I said, “No, no, no, wait a minute, I got all these grants. I wanna keep doing what I’m doing.” And she said, “No, everybody takes a turn. And you’re gonna get elected anyway, so you have to do it.” I said, “Okay, fine.” So I took it on and I started to really love the administrative side of things, because every day was a little bit different, sometimes every hour was a little bit different. It was very stimulating, and I had 12 grad students at the time that I was supporting with the grants, and I love that interaction with lots of different projects and people, and it seemed to me that administration, I could do even more of that.

0:19:46.7 JS: I did a project where my Dean said to me, “Hey, why don’t you look at the enrollment in the college, ’cause I know you do forecasting work.” So I took every single major and a model, a forecast for every major and said, “I was off by a percent, percent and a half for each one of those.” And he said, “What else can you do?” I said, “I don’t know, Carl, you asked me, What could I do?” So he said, “Look, I’m gonna create an Associate Dean position for you. You come into the Dean’s office and will give you things to do.” So I said, “Okay, great.” So I ended up moving to the Dean’s office, one of the first weeks, faculty member calls me up and says, “Hey, I got this project, I need a computer and a grad student,” and I said, “Okay, how much is the computer cost.” And back then a computer was 4500 dollars. And the grad student was 4500 dollars at the time. So I needed the 9000 bucks. And I said to the Dean, I said, “Okay, where do I get this money?” He says, “Well, you can call the Baltimore Foundation and they may have some ideas,” and I called them right away and I said, “Here’s the project.”

0:21:00.1 JS: And they directed me toward one of their funds. And I called that person up and that person said to me, “Can you come downtown?” And I went downtown, he pulled the checkbook off the shelf, wrote me a check for 9000 bucks, I bring it into my Dean and I say, “Hey, look what I got.” And he was amazed and he said, “Wow, can you do more of that?” I said, “Sure. Give me some projects, I’ll go figure it out.” So I was hooked on administration at that point ’cause it was just so much fun, and I got to say, Yes to people, especially faculty that were working hard and want to do really interesting things. So I was hooked, I never look back at that point to return to the faculty role. From there, I was appointed Chief Academic Officer, at one of the Penn State campuses. I stayed there for a while. From there, I went to a place called Philadelphia University. I went to Philadelphia University because it had a range of graduate programs. I’m originally from the Philadelphia area, so there were some attraction there about going to a city and area that I know pretty well, a great place. Then the opportunity came to be a VPAA of a small private institution in New England that you may know about giving its merger discussions is Mount Ida College, the President at the time, I had known from some of my interactions in Philadelphia, great lady, really sharp, Carol Matteson, really knew what she was doing. Had a business PhD. So ran it like a business.

0:22:44.8 JS: And a lot of my mentality today, to be honest, comes from the way Carol ran things. I think she did… The way it should have been done, it should be done, in a lot of ways where, especially where a President sit, we’re businesses. It doesn’t mean that you don’t translate that into the business of higher ed, and you think about higher ed approaches, but you also gotta think about it as a long-term business operation. Then from there, I went to a place called Johnson & Wales University up in New England based in Providence, and it was just a different challenge at the time, they were just in the planning stages for building their culinary building, 85000 square foot culinary building, LEED certified building. So I got to participate in that whole process. Amazing building. Largest culinary education facility. I think it still is, globally. I did not live in New England, my family, because of where my kids were in high school, it was just… The timing was terrible to move them. So I used to commute back and forth on the weekends when my kids started getting ready to graduate, it was less doable. So I started again looking and saying, “Okay, what’s next? What don’t I have.”

0:24:12.7 JS: And I’m Catholic. I never would have thought being at a Catholic institution, then I started looking around, I talked to some of my mentors and said, “What do you think about going that route?” And they said, “Well, a lot of the religious are not being replaced by religious, but being replaced by lay people, and there is a unique value proposition that the Catholic and religious institutions offer, in the sense of their value, their values and kind of the MLU of the environment.” So I started looking at them and I got the appointment at Cardinal Stritch University, in Milwaukee, my President retired after… Didn’t retire, he went to another position after a couple of years there, and then I started looking because I wanted something a little bit bigger than that. Their scale was 3000 students just above that, and that felt good, but the scale, you didn’t quite have that extra money to do extra projects there.

0:25:23.0 JS: So Saint Leo came in calling through their search firm. I think it was AGB for Saint Leo, and I had no idea who Saint Leo was. And I said to the search firm represented, I said, “Who are they? I go to these Catholic ACCU Association of Catholic Colleges and Universities, and I’ve never heard of them, and they said, “No, no, no. You gotta give them a look,” I get down here and it worked out, where I got a couple of interviews and then got down here, and I saw the campus and there’s more palm trees per square meter than any college or university I’ve ever had.

0:26:02.6 JS: We’re in a hilly area just outside of Tampa, alongside a lake, it is just… It’s idyllic in terms of the environment, and the setting, it was irresistible. And then when I started finding out about its reach and capability across the country. And the model that was cooking in my head about mergers and acquisitions as a possibility. When I saw the bottom line on budget, I said, “Now this place can do this, this has the scale and the capability to move in this direction,” blend and so forth. So it’s an interesting model to work through, which means I’m always on the hustle for new board members.

0:26:44.2 HS: Indeed. Well, and Jeff, thank you for that. It is clear, your journey has informed your approach as President, it’s giving you lots of insight in terms of how you approach the business side of your job, you spoke about the business influences along the way and… I get it, it makes sense. I think if there are listeners who are thinking about their career path and their journey, can they reach out to you for questions, is that an open invitation? Perfect.

0:27:19.2 JS: Sure. No questions. And for anyone, I’ve worked for 10 Presidents. So I’ve worked for seven of the best Presidents. And they were great, all of them. Graham Spanier, being one of those. So yeah, no question. I think it’s my obligation, Hersh. I had somebody reach out this weekend, and I said to her on LinkedIn, I said to her, “Yeah, give my staff a call, and she’ll arrange a conversation because she asked the exact question you just asked,” and I said, “I’m always willing to help, but it’s on you… To make sure you arrange the time because I’m busy, I’m not gonna necessarily pay attention to that, but I can guarantee you in the minute that we’re on the or the minutes that we’re on the call, I’m gonna be focused on the call, my obligation to help people that come after me, for sure.”

0:28:13.9 HS: That’s excellent. Well, and maybe to that end, peers of yours may be thinking hard about the… Let’s bring it back to merger and the acquisition side of the discussion, and what advice do you give to other leaders who right now may be looking to growth through acquisition or maybe looking to partner in some way. You’re talking about earlier with a university that’s perhaps larger, the funding situation is in a better place, and what advice or counsel would you provide to those other leaders.

0:28:49.6 JS: I’ll do a commercial too, so I’ve been invited to do a presentation in this February at ACC&U in Washington, assuming it’s a Live Meeting where President Marcotte and I will be there and one or two of his staff, one or two of my staff will be there and we’ll open the kimono, if you will, on the way it worked this time and we’ll answer questions pretty openly. I had a recent conversation with Ted Mitchell about doing the same at ACE as well. So there’ll be opportunities like that, but I think the important thing about it is, and I’m in the SACSCOC region, which many people across the country know is one of the most rigorous regions in the country on accreditation standards, but also on mergers and acquisitions, they call it, the mergers and consolidations. Where they have a very lengthy time between signing of the acquisition. So legally, Marymount California has donated all campus property, programs, building, so forth. Regulatory, that’s probably another eight mouths of time that we’ve gotta go through or more. Because of the way it works there, not all the regions are like that, HLC, Middle States are a bit quicker than that, and I’ve heard NECI is a little bit quicker than that.

0:30:27.4 JS: I think it suits us. I think it’s good that we have the time to really think it through and make sure things are working right, but I think some of the first conversations, if you’re thinking about this model, is with your liaison on the accreditation side, to find out what the steps are. I would also, as I said earlier, get a good due diligence partner firm, if it’s an outside firm or if you have the internal capability, they really need to be people that can navigate between the two Presidents, between the two boards and staffs. We’re at a point where that firm has moved from due diligence, and I have hundreds of thousands of pages, believe it or not, of due diligence material in our digital share space, and both institutions have access to that. We’re now moving to project management over the last couple of months, really last month or two, into that modality, but you’ve gotta make those shifts, you’ve gotta think very broadly and strategically about what the steps are. So until you sign that really definitive agreement that says, “This is a done deal.” So right now, we’ve put our names on the line on this, there is a penalty if Saint Leo walks away a significant financial penalty. There’s an even more significant financial penalty if Marymount walks away.

0:32:00.4 JS: So we’ve made a commitment to make this work. And SACSCOC is aware of that. And they’ve been supportive. But you’ve gotta get to that point where you say, “Okay, this is a no/go-go decision.” And our board, God love them. They ask great questions, and I think both boards took their fiduciary responsibility very seriously, and we helped them, we got them set up for that, and I didn’t provide them hundreds of thousands of pages, but we provided them a lot of reading material to get to the point where they can make an informed decision. All this takes time, and you need to take that time and say, “Is this right for the institution?”

0:32:48.3 JS: Because what’s gonna happen is, our intention is to call Marymount, California will be Saint Leo University, Los Angeles, Marymount campus, that is gonna change the university. Even though they’re tiny relative to our total population, where we’ll be bi-coastal, we’ll be a Florida institution and a California institution. Think about that, think about… I read the LA Times now, in addition to the New York Times. You think about the politics and culture in Florida versus the politics and culture in California, and I keep telling the senior team that you gotta be able to live and operate in both worlds, you can’t be too much on the Florida side or too much on the California side, that’s a challenge.

0:33:41.2 HS: Jeff, well, you brought up so many good points, I think you’ve helped our listeners understand how much work is involved, how much support is needed. This is daunting, it’s tough. I know we could probably talk for hours about the topic. I know you have a packed schedule but let me first say thank you for the time today, and maybe I’ll make an ask, I’d like to invite you back on the podcast whenever you want, let’s chat more we’d love to pick your brain. But a heartfelt, thank you from EAB Office Hours to be continued with Dr. Jeff Senese.

0:34:20.0 JS: It’s a pleasure. Thank you, thank you. Any time.

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0:34:29.5 Speaker 1: Thank you for listening. Please join us next week when we welcome another University President to the program. Dr. Paul LeBlanc, under his leadership, Southern New Hampshire University has grown from a total enrollment of 3000 to more than 180,000 students today, making Southern New Hampshire the largest non-profit provider of online higher education in the country. Until next week. Thank you for your time.