Executive Summary and Main Points
The practice of programmatic mergers and acquisitions (M&A) is demonstrated to be a valuable strategic approach, consistently outperforming competitors who do not adopt this method as per the findings from McKinsey’s Global 2,000 study. Notably, programmatic acquirers focus on four critical strategic actions to drive shareholder returns and value creation. These include moving beyond their core businesses, recognizing broader strategic rationales, prioritizing value creation over acquisition price, and actively divesting non-strategic businesses. These actions lead to superior Total Shareholder Return (TSR) performance. The vitality of a programmatic approach is underpinned by its systematic integration into company strategies and its impact on value creation and growth prospects.
Potential Impact in the Education Sector
In the context of Further Education, Higher Education, and Micro-credentials, the programmatic approach can be pivotal. The education sector, seeking sustainable growth, can mirror actions taken by successful programmatic acquirers by exploring adjacencies and expansions beyond traditional core offerings. Strategic partnerships, potentially through digital platforms or global education initiatives, could expand access and create new revenue streams. The move towards digitalization in the sector can be accelerated by leveraging M&A to acquire innovative education technology companies, promoting value creation over the long term.
Potential Applicability in the Education Sector
The programmatic M&A methodology could significantly contribute to the evolution of global education systems. AI and digital learning tools acquired through strategic acquisitions could expand personalized learning and access. The integration of edtech firms could enhance analytics capabilities and improve student success metrics. Additionally, divesting from non-core assets could allow institutions to invest in more promising areas, such as virtual reality for immersive learning experiences or machine learning models to streamline administrative processes.
Criticism and Potential Shortfalls
Adopting a programmatic M&A approach is not without its hurdles, particularly when considering the diverse nature of international education systems. Culturally responsive and ethically sound integration of acquired firms may face resistance. Varied regulatory environments can also impede the replication of successful M&A strategies from one context to another. The emphasis on shareholder returns might not align with the educational values of public good and knowledge dissemination, potentially leading to criticism from academic communities.
Actionable Recommendations
International education leaders should consider implementing a programmatic approach by seeking strategic adjacencies with a focus on digital transformation. They could prioritize forming alliances with edtech companies to enrich learning environments and facilitate data-driven decision-making. Leaders should also remain vigilant about balancing investments with divestments to optimize their institution’s portfolio for sustainable growth. It is crucial to maintain an ethical framework for tech adoption in education, ensuring inclusivity and equal access across diverse student populations.
Source article: https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights/what-programmatic-acquirers-do-differently