Don’t Close on a Higher Ed Deal Unprepared
Higher education transactions come with compliance obligations most buyers don’t know exist. Our M&A services provide the due diligence, projections, and ongoing support to make sure nothing blindsides you after the deal closes.
Buyers and their attorneys tell us they seek us out specifically because of our reputation in Title IV audits. Our knowledge of how the Department of Education evaluates institutions gives their clients confidence going into a deal.
Same Day Balance Sheet Ratio Projections
Federal regulations require a same-day balance sheet (SDBS) to be submitted to the Department of Education on the day that ownership changes. Based on that submission, the Department calculates a few ratios when considering approval of the transaction. Approval often comes with conditions. The most common is a letter of credit requirement based on a percentage of the school’s prior-year Title IV revenue, and the percentage is mostly based on passing or failing the SDBS ratios which can tie up millions of dollars the buyer didn’t account for in their initial deal modeling. We prepare same-day balance sheet projections in advance to help buyers know how much capital will be needed.
Sale Preparation
If you’re selling a postsecondary institution, how your financial records look going into the process matters. We help sellers prepare accurate, well-organized financial documentation so the transaction moves efficiently.
- Financial statement review and cleanup
- Composite Score analysis
The Institutions and Investors We Work With
Every client we work with is navigating real regulatory pressure, whether it’s the strict scrutiny that comes with being a for-profit school, the unique risks facing nonprofit institutions with stretched financial aid teams, or the compliance complexity that comes with acquiring or investing in a postsecondary institution for the first time. We built our practice entirely around higher education because this industry demands a specialist.
M&A Services FAQs
The OPE ID (Office of Postsecondary Education identifier) is the number the Department of Education uses to track a school’s Title IV participation. When you acquire a school, you take on its OPE ID and all the liabilities attached to it.
Even past financial aid errors, fines, or repayment obligations become yours. That’s why thorough due diligence is so critical before a deal closes.
The Composite Score is an annual calculation based on a school’s financial statements, measured on a scale of -1 to +3. A score of 1.5 or above is considered passing and enables full Title IV participation without conditions. When a school’s Composite Score falls below 1.0, which is common post-acquisition, the Department of Education typically requires a letter of credit, often representing 25% of the institution’s prior-year Title IV revenue. We model Composite Score projections as part of our M&A services so buyers understand the full financial picture before they close.
The earlier, the better. We often get referred in by attorneys at the due diligence stage, which is well before closing. The more lead time we have, the more thoroughly we can assess the institution’s compliance history and help you model what requirements will look like post-acquisition. That said, if you’re already under LOI or further along in the process, we can still provide significant value
Yes. We work with private equity firms, strategic buyers, and individual investors on the acquisition side, and with existing school operators preparing for a sale. We also frequently work with clients who are already in our audit portfolio and expand into new acquisitions; in those cases, we bring continuity and institutional knowledge that makes the process more efficient.
Most transaction clients engage us for ongoing audit and consulting services after the acquisition. We stay involved as the new ownership works toward achieving and maintaining a passing Composite Score, and we support any Department of Education follow-up requirements through that process.
Let’s Talk About Your Compliance Needs
Connect with our team to discuss how we can support your institution’s compliance and financial health.
Higher Ed Compliance Insights
