It has been a hot minute since I have blogged about international education.  As Melibee Global, the voice of what is quietly being talked about at the water cooler,  it is impossible not to address the “buzz” that SHOULD be on the street these days – private equity swooping in and eating up the study abroad provider world.  The Trump nightmare is occupying the mainstream headlines, but let’s not forget this important topic.

While AI is not always accurate, this gives us a snapshot of what’s been in play this past year:

The little commentary I’ve seen online (and granted, I’m not on Secuss-L anymore, but feel free to update me if there is chatter happening there) is from two outspoken voices in our field – Bill Gertz from AIFS and Tom Millington from Abroadia.  Each has publicly pondered about “who owns who” these days and how people in these companies are being professionally developed as acquisitons go down.

The reality is that mom and pop study abroad providers are being purchased by people who fall under the umbrella of private investment companies.  But what are private equity firms? Are they some nice folks who really care about study abroad and want to invest in it because it matters in the world ?

I think not. Maybe they’re nice folks, but their core purpose is not to purchase study abroad shops because they LOVE study abroad. (Although it is somewhat comforting to see at least a few of them valuing other languages and experiences abroad as part of their bios.)

Private equity firms are made up of very wealthy people (and by this I mean multi millionaires) who fund and purchase companies – pooling their incredible wealth to leverage power to purchase  even more companies to make more money…and then to sell them. They sell companies to make their money – typically keeping them for an average of 5 years. They invest in these companies at levels that the companies would never have been able to prior. They do this for one primary purpose:  to increase the value of the portfolio companies they hold and strengthen those values for sale for more profit. They do it to add to their personal wealth.

Got it?

To be clear, private equity firms are buying study abroad companies to increase values of their portfolios so they can gain more wealth at the sale of companies in their portfolios.

To give you an analogy, let’s talk like study abroad people for a moment:

You work at a provider or university and you are starting a new program in Country X.  You know there is competition out there, but you know there is market demand and you invest your time and funds into this new study abroad program.  It might take three years to see financial returns – but you get there. As a result, you have perhaps invested 100K into the program (a staff person, due diligence, travel, a space to rent, etc) but you are now able to “cover” your costs to run the program.  You continue with the program and as it grows, you improve it with more staff, more “bling” in the programming (excursions, a better office space, etc.)  But you don’t sell this program to a company because it is “profitable” like a private equity firm – you invest in it more. It covers its cost and you are happy because you’re meeting students’ needs with this program. It becomes part of your employer’s culture and offerings. You’re proud of it, you believe in it, you keep it funded and market it well.  You don’t see it as something that is succesful to sell later, like a private equity company does.

In a private equity purchase, the firm comes in (after a lot of financial due diligience – ensuring there is profit to be had). They may initially observe how the operations work and almost immediately will focus on branding/marketing – a new look, new language, new market differentiation.

They seek a new “edge” over the competition and can largely “win” at this because they have more funds to invest in it than most study abroad providers will.  You’ll see new investments in sales of the product (yes, the product is study abroad.).  They’re typically going to carefully watch to see who the people are who are on board (meaning who is strong at selling, creating/innovating, increasing value propositions) and who doesn’t carry their weight.

Investors strategize to increase profit by adding more business but also by decreasing costs. That is where staffing comes in – who will they retain (especially at the future sale)?  When will the staffing changes begin?  How will they handle having duplication of departments as they continue to purchase providers?  People should expect lay offs  – usually up front or just prior to sale – unless there is such rapid, tremendous growth that they need the hands on deck to meet it.

Despite its name, private equity is not about making companies more equitable. It is about making money for the owners and splitting it as agreed in their internal terms to add to their tremendous wealth. Don’t get me wrong – work hard and make money – I have no problem with that.  I’m an entrepreneur, after all.  Yet, international education is a field that people are drawn to because they aim to do positive work in this world through intercultural cross-polination. International educators are clearly not there for the money or they’d be in nearly any other field.

Do these groups match up in terms of value – international educators and private equity owners?  Not necessarily.  If you look at the “people” behind equity firms, they tend to be white male, wealthy, and numbers oriented. They tend to roll in a world most of us haven’t experienced (top of the line everything compared to the average educator, first class all the way.)  Do their bios state anything about their deep commitment to intercultural understanding and world peace, climate security, DEI, etc?

To the nake eye, no, they do not.

So, should we be leary about them?

Absolutely.

Are there any pros to this happening in our field?

Yes, potentially.

In the short term, we will see a tsunami of funds invested in improving operations, websites, marketing, and perception of these study abroad brands.  For educators, this will feel like a wave of generosity, of deep care for the work, of a big WIN for the people we care about – the staff and students.

Be mindful here.  Remember what I said about the purpose of private equity firms – they purchase companies to enhance a porfolio for sale for their profit.

There will be a lot of money floating around which could show up as more training, more investment in resources (tech! customer service! bling!), more travel to conferences and sales opportunities.  That may feel good and a be (innocently) perceived as a sign of deep care for the work.  The benefits of private equity do result in more ideation which can be groundbreaking for our field which tends to lean a bit traditional because of its affiliation with higher ed culture. I’m all for innovation and hope that is where the positive will be in these culture and operational shifts.

If any of this results in a better student, faculty, and host community experience – then wonderful.

But at some point, the aim is to sell the product.  So we have to think of that at every decision point we make as professionals and personally.

What can you do to be mindful in this season of big fish eating up the little study abroad fish and forming a handful of mega study abroad companies?  (As an aside, think back to choice in travel we once had – approximately 12 major airlines are now down to approximately 5.  How has that changed travel, for example?)

Here are some thoughts:

Work for a provider that has been purchased?

1.  Have a faculty member from a local business school or a friend/family member who studied business talk with your staff about the role of private equity.  (This will raise a red flag for your new owners though if they’re aware it is happening. You will want to do this quietly.)
2. Watch what you say and do – at the water cooler, on SLACK, and on social media.  You’re all being looked at for performance…and we’re not talking “higher ed” standards – we’re talking private equity standards. Are you bringing in money at every opportunity?  How are you helping reach THEIR primary goal – providing a service that is growing to make them more money when they sell it?
3. Know that your role may disappear – with notice or none. Keep your resume and rolodex fresh. Not saying this to scare anyone – I’m saying it because it may happen at some point as part of the acquistion/s.
4. Ask for your wish list – they have the money and they’ll spend it if they believe it will increase profit. Ask for what you need to better serve your community. Pro tip – ask in a way that sounds like a product differentiator or financial win for the business. You’ll be more likely to receive this way.
5. Demand DEI hiring for new hires.  This will be unusual for these firms, who largely roll in a white man’s world. Challenge them to hire diverse folks and position this a as a value add to the programs and those it serves.

Work for a university that partners with PE owned study abroad providers?

1.  Have a meeting with the investors who now own your formal partners – one by one. Ask them the following – a.  what are your goals for this acquisition and how will you ensure they will not disrupt quality of service to our communities (here and abroad)?  b.  if you do sell the company, what assurances do we have that staffing will remain in place for at least a year beyond any sale for program delivery consistency?  c.  do you intend to sell any data (and if this is the case, there should be involvement with your university councel to protect student data.)
2. Meet with your “boss” – e.g. Provost/ VPAA, etc – to share information about the private equity’s purchase of your partner/s and assess next steps. This could involve bringing in your university’s legal team to review legal expectations/guidelines for international education.
3. Revisit your approved program list. Invite in those mom/pop shops who have CEOs and Founders who actually write about how international education changed their life and mission for this planet.  See what they can offer that competes with well funded private companies.

Own a mom/pop study abroad company/org?

1.  If approached regarding a purchase offer, receive the information and then immediately get an advisor who specializes in negotiation of sales to VC/private equity/investment companies. Don’t disclose this to the potential buyer. Simply say you will be in touch once you have considered the offer.

2.  Don’t make any quick decisions. If you are in this field, you are prime for purchasing – even if you’re not the “most” successful.  If you say no now, they’ll be back to check in again. Remember, their goal is to eat the smaller fish to make a most profitable big fish.

3. Know that you can say no. (As I have told my past compensation negotiation clients, no is a complete sentence. You don’t need to explain yourself.)  If your mission and values do not align with private equity, then no is a complete sentence!

I have a lot more to say about this topic.  It isn’t all negative, but it isn’t all positive either. As I said, I’m an enterpreneur – I’m not opposed to people making money.  More money invested in our field can result in the freedom to be more creative and innovative, and our field surely needs that.  But keep in mind that it can also simply be a several year stepping stone to an even more profitable sale that is on the backs of your labor.

Stay tuned for more.