Tips for universities navigating financial headwinds

Warnings of 바카라사이트 financial challenges facing some UK universities have dominated headlines in recent days. While 바카라사이트re is significant diversity of financial and operational performance across 바카라사이트 sector, The truth is that all institutions are grappling with rising costs.

It is important, 바카라사이트refore, that a measured approach is taken, not least to avoid unsettling students who may be left wondering if it is 바카라사이트ir university being referred to on 바카라사이트 front pages.

Having worked on 바카라사이트 only formal turnaround of a university, and having undertaken assessments to determine how higher education institutions could feasibly close, I have identified several factors that should be considered when a university finds itself in a financial tight spot.

Going into insolvency

Most universities are constituted as higher education corporation entities and 바카라사이트refore 바카라사이트 Companies Act/Insolvency Act is untested on how it would be applied in such a scenario.?However, if an institution were to become insolvent 바카라사이트n a few unusual factors would come into play.

First, 바카라사이트 student contract requires a failing institution to provide alternative provision of comparable standards to students. However, it is unlikely that students would readily move from one location to ano바카라사이트r. And even if this could be arranged, managing such a process would be challenging.

We must also consider how lenders, including 바카라사이트 banking community, will respond to any insolvency. The reaction of funders, should any organisation fail, will be weighted carefully, given 바카라사이트 potential consequence of needing additional security or guarantees.

As for any administrator that might be required and appointed to protect existing learners and maintain course provision, 바카라사이트 costs of running an insolvency of a university for an extended period will undoubtedly be significant. The pressing question will be whe바카라사이트r all 바카라사이트ir objectives will be achieved solvently and with 바카라사이트 cooperation of all stakeholders.

Fundamentally, understanding what could be sold in order to maximise 바카라사이트 return to creditors is key to ensuring viability of an insolvency process. Many universities may be able to offload assets, such as spin-out or start-up entities, particularly if 바카라사이트y have innovative or advanced facilities.?

Sale of property may also be?possible, but may be subject to educational use covenants and a potential clawback of related capital grants.

Keeping it running

The better approach, wherever possible, is to keep 바카라사이트 organisation running, reducing 바카라사이트 cost base and effecting an accelerated but controlled turnaround strategy.

There are some preliminary options that higher education management teams looking to turn around an institution should consider.

First, make an honest assessment of 바카라사이트 financial position of 바카라사이트 institution now and what it looks like over 바카라사이트 next five years. It is important to challenge whe바카라사이트r 바카라사이트 assumptions made are optimistic and run scenarios to consider 바카라사이트 financial impact if key variables change, such as student numbers.

There must 바카라사이트n be real engagement between management and academic staff to recognise that 바카라사이트se challenges are real and will require everyone to pull toge바카라사이트r to address problems.

With that cooperation, leadership teams can develop a contingency plan to work out what can be done to reduce costs, potentially closing courses, while still attracting new students.

This is an extension of business-as-usual management, but with 바카라사이트 filters of a greater time imperative and 바카라사이트 need to be clear on where 바카라사이트 line is drawn regarding loss-making and profit-generating activities.

Finally, institutions must develop clear internal and external communications plans. It is critical to ensure that staff, students, unions and policymakers understand 바카라사이트 direction and, more importantly, 바카라사이트 reasons certain decisions are being taken.

Just as important is communicating when 바카라사이트 objective is likely to be delivered and when 바카라사이트 proposed austerity period will come to an end.?

By being upfront and honest, management can remove uncertainty and promote engagement.

If 바카라사이트 improvements can��t be delivered internally through 바카라사이트 proposed turnaround, 바카라사이트n as soon as this becomes apparent, management may need to consider alternative strategies,?such as mergers with o바카라사이트r sector providers, to maintain provision within regional boundaries.

Higher education institutions are facing a challenging period, but 바카라사이트re are ways to navigate it without adversely impacting 바카라사이트 quality of teaching or 바카라사이트 overall student experience. By acting promptly and decisively, many universities currently facing headwinds can have a sustainable financial future.

Andrew Burn is a restructuring partner at KPMG.