Synthetic merger could be right elective for higher ed Determine equitable cost sharing A crucial element of successful integration is ensuring that costs are allocated to the appropriate institution. With institutions operating as separate entities but sharing functional support, choose a mechanism for allocating costs to each. Options include a fixed monthly allocation, a variable allocation based on factors such as student enrollment or the number of employees, and direct allocation (e.g., pass-through of third-party costs, such as legal fees). The allocation method should be representative of the underlying cost to provide the services and reasonably easy to calculate on a monthly basis. Economies of scale should result in cost savings. For example, developmental time saved in employee hours will add up as course catalogs and policy manuals are developed just once, with the only difference being the institutional identity. Combining vendor contracts such as security, food service and landscaping should also accrue savings due to greater purchasing leverage. Synthetic mergers offer valuable benefits for preserving your institution’s future.

For key considerations in exploring a synthetic merger, see “When 1 plus 1 is greater than 2” in Grant Thornton LLP’s State of Higher Education in 2015 report (see www.grantthornton.com/highered2015). Contacts Ed Kleinguetl Managing Director National Transaction Integration Team, Transaction Advisory Services T +1 832 476 3760 E ed.kleinguetl@us.gt.com Jennifer Neill Director Transaction Advisory Services T +1 678 515 2325 E jennifer.neill@us.gt.com Mary Foster Managing Director Higher Education T +1 212 542 9610 E mary.foster@us.gt.com Larry Ladd Director Higher Education T +1 617 848 4801 E larry.ladd@us.gt.com This content is not intended to answer specific questions or suggest suitability of action in a particular case. For additional information about the issues discussed, contact a Grant Thornton LLP professional. Connect with us grantthornton.com @grantthorntonus linkd.in/grantthorntonus “Grant Thornton” refers to Grant Thornton LLP, the U.S. member firm of Grant Thornton International Ltd (GTIL), and/or refers to the brand under which the GTIL member firms provide audit, tax and advisory services to their clients, as the context requires.

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