The number of 18-year old, high school graduates is declining and isn’t expected to grow again until 2021. Baby boomer children created the last peak. So it’s not a surprise that colleges are increasing discounts to attract more students even as lower net revenue is leading to operating deficits that are unsustainable. Underutilized fixed assets reduce EBITDA and cash flow, resulting in debt covenant defaults. Traditional lenders are looking to exit the sector, and are being replaced in part by non-traditional lenders who are slowly entering with a higher cost of capital.

Additional pressure is being applied in the form of increased regulatory scrutiny which is making it more challenging for schools to operate. Online course offerings are stealing market share from campus-based schools, and in the current economic environment, students and parents are wary of incurring debt. They are scrutinizing the cost/benefit of a college education, and are becoming more informed consumers.

Carl Marks Advisors understands the challenges in gaining enrollments and student starts. We recognize the difficulty of increasing EBITDA and free cash flow while working to maintain financial covenants and regulatory compliance. In addition to our experience and an intimate knowledge of post-secondary education, our clients benefit from:

  • Unmatched Teams in the Education Sector – We are the only firm that provides restructuring and investment banking professionals with direct industry operations, regulatory, real estate, restructuring and transaction experience.
  • Deep Restructuring Experience in the Industry – We advised borrowers, lenders and investors in not-for-profit and for-profit schools in restructuring and refinancing situations. We have worked quickly and efficiently to drive consensus and craft acceptable solutions.
  • Direct Operating Experience – Our professionals held management positions at not-for-profit and for-profit schools and can provide valuable insights and experience in school operations and achieving student outcomes.
  • Credibility and Objectivity – Our restructuring practice is focused on middle market businesses that need help stabilizing and restructuring for future growth. Lenders and investors take comfort in our credibility and objectivity in these situations.
  • Unique Full Service Solution – Clients benefit from the combination of our expertise as restructuring advisors, investment bankers and hands-on operators.  Our teams include a variety of skill sets to seamlessly perform through the phases of a successful restructuring and refinancing.