IBA, as the premier business brokerage firm in the Pacific Northwest, is firmly established as a respected professional service firm in the legal, accounting, banking, mergers & acquisitions, real estate, and financial planning communities. Periodically, we will post guest blogs from professionals with knowledge to share for the good of owners of privately held companies & family owned businesses. The following blog article has been provided by Harry Roma of Oretrack Industrial Strategy Group ( www.oretrackstrategy.com):
Buying or Turning Around a Private School: Where the Real Value Sits
A practical framework for evaluating enrollment, facilities, approvals, and student obligations before a transaction closes.
When I look at a school acquisition, I start with one practical question: What will this buyer actually be able to operate after closing?
A private career school, technical institute, language school, or training provider can be an attractive acquisition. The buyer may be stepping into established programs, an experienced faculty, employer relationships, and recurring enrollment. But a school cannot be evaluated from its financial statements alone.
Its value also depends on state registration or licensing, accreditation where applicable, SEVP certification if it enrolls international students, and Title IV participation if it offers federal student aid. The facility, faculty, programs, and commitments already made to students matter just as much. If any of those pieces changes with the ownership, historical revenue may tell only part of the story.
For buyers and sellers, five questions can bring the real risks—and the real opportunity—into focus.
What is the school’s regulatory status?
A U.S. school may be registered or licensed by its state, accredited by an institutional or programmatic accreditor, certified by SEVP to enroll eligible F-1 or M-1 students, or approved to participate in Title IV federal student-aid programs. These are separate statuses. A school may have some and not others, and an occupational program may need another approval from its licensing board.
I would not rely on a certificate in a data room or a seller’s assurance that everything is current. Confirm which legal entity, location, and programs each approval covers, when it renews, and what the agency or accreditor requires when ownership changes. That conversation should happen early, with counsel who knows U.S. education transactions.
This is one reason an education acquisition cannot always be structured like the purchase of an ordinary service company. A change in the operating entity, ownership, campus, or programs can affect the school’s standing even in an asset sale.
Can regulatory review and closing move on the same clock?
The buyer and seller may be ready to close before the agencies are ready for them. That timing gap is manageable, but only if it is identified before everyone commits to an unrealistic closing date.
Washington offers a useful local example. The Workforce Training and Education Coordinating Board says a private career school may need to reapply when it is sold or when ownership changes for people holding 10% or more. The Board says review of a complete application averages about 60 days. A Title IV school has separate federal notice and post-closing application requirements, and an SEVP-certified school must follow the Form I-17 process for an ownership change.
Sixty days is not a universal rule. The point is to build the transaction calendar around the requirements for that school. The purchase agreement, financing, student communications, and outside closing date should reflect the same plan.
Is enrollment diversified—or dependent on one channel?
A healthy enrollment total can still hide a fragile business. I want to know which programs are producing the students, where those students come from, who pays the tuition, and how much enrollment depends on one recruiter, employer, country, or funding source. Starts, retention, completion, placement, and refunds often tell more than the headline number.
International students can remain an important part of the school. The risk comes from depending too heavily on one visa market, recruitment agent, or country. Immigration policy, travel patterns, exchange rates, and geopolitics can change faster than a school can rebuild its enrollment pipeline.
A turnaround should therefore test domestic demand as well. For a career school, that might include employer-paid training, apprenticeships, workforce-board referrals, veteran education benefits, or contract programs. The right choice depends on actual job openings, wages, employer needs, faculty, equipment, and the approvals required. A fashionable program name is not a market study.
Does the facility support the next enrollment model?
In turnaround work, the building is one of the first places I look. A school may own valuable property and still be carrying far more space than its current enrollment supports. A leased campus brings a different set of questions: Can the lease be assigned? Does the landlord have to approve the buyer? How soon does the rent increase? Can the school reduce its footprint?
The answer is not automatically to move everything online. Labs, technical shops, simulation rooms, and specialized equipment may be essential to the programs students are buying. General classrooms and administrative space may offer more flexibility.
Before planning a sublease, relocation, or hybrid program, check the lease, zoning and occupancy rules, state requirements, accreditor standards, and any SEVP implications. Also check what the school promised its students. Right-sizing works only when the operating model and the educational model still fit together.
What student obligations cross the closing table?
Students are not ordinary prepaid customers. Tuition collected before closing may be cash in the seller’s account, but the buyer may still have to deliver the classes. Unearned tuition, deposits, refunds, scholarships, student records, pending complaints, leaves of absence, and the cost of finishing current cohorts need to be reconciled before the price is finalized.
Teach-out obligations also require careful treatment. A teach-out is not automatically required in every sale, but closure, loss of required state registration or licensing, loss of accreditation, cessation of operations, or certain location and program changes can trigger formal plans or agreements. Buyers should request current teach-out materials, regulator and accreditor correspondence, student rosters, completion costs, record-retention arrangements, and any financial protection associated with closure.
These obligations can affect the price, escrow, working-capital adjustment, and transition plan. They also protect the students, who have little control over the sale but carry much of the risk if the transition is handled poorly.
A turnaround test before a sale
An owner who is not ready to sell can use the same five questions as a turnaround plan. Put the regulatory records in order. Understand which enrollment channels are working. Decide whether the facility still fits. Make student obligations visible and funded. A buyer should not have to reconstruct the school from scattered files and unanswered questions.
A school that has done this work is easier to understand, finance, and transition. A school that has not may still be worth buying, but the buyer is taking on a turnaround—and the price and deal structure should recognize it.
The opportunity
Education businesses can be durable, mission-driven companies with real barriers to entry. That can make a well-run school valuable. It can also make a poorly planned acquisition difficult to repair.
The practical approach is to examine the regulatory status, enrollment model, facility, and student obligations together. When those pieces support one another, a buyer is acquiring a platform that can grow. When they do not, the gaps show where the turnaround must begin—and where value may still be created.
About the Author
Harry Roma advises businesses and institutions on growth strategy, operational improvement, turnarounds, acquisitions, and transitions through Oretrack Industrial Strategy Group.
If you have questions relating to the content of this article, Harry Roma of Oretrack Industrial Strategy Group would welcome the opportunity to answer them. Mr. Roma can be reached at (202) 487-9418 and [email protected].
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