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A Critical Review of Acquisitions within the Australian Vocational Education and Training Sector 2012 to 2017

Nicholls, Kristina M (2020) A Critical Review of Acquisitions within the Australian Vocational Education and Training Sector 2012 to 2017. Other Degree thesis, Victoria University.

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Abstract

Organisations often look to acquisitions as a means of achieving their growth strategy. However, notwithstanding the theoretical motivations for engaging in acquisitions, research has shown that the acquiring organisation, following the acquisition, frequently experiences a fall in share price and degraded operating performance. Given the failure rates that are conservatively estimated at over 50%, the issue of acquisitions is worthy of inquiry in order to determine what factors make for a successful or alternately an unsuccessful outcome. The focus of this study is the vocational education sector in Australia, where private registered training organisations [RTOs] adopted acquisitions as a strategy to increase their market share and/or support growth strategies prompted by deregulation and a multi-billion dollar training investment by both Australian State and Federal governments in the past ten years. Fuelled by these changes in Government policy, there was a dramatic growth in RTO acquisitions between the period 2012 and 2017. Many of these acquisitions ended in failure, including several RTOs that listed on the Australian Stock Exchange [ASX]. This study investigates acquisitions of Australian RTOs, focusing on the period from 2012 to 2017 [study period]. The aim is to understand what factors contributed to the success and/or failure of acquisitions of registered training organisations in the Australian Private Education Sector. The study uses phenomenology, a qualitative research methodology within the interpretivist paradigm, with the intention to gain insight into the ‘lived experiences’ of the participants who represent a cross-section of key industry stakeholders with first-hand acquisition experience. A central and practical outcome of the study relevant to the pre-acquisition stage is to highlight the primacy of strategic planning. Given the largely opportunistic approach over the study period that reflected the perceived easy access to funds as a result of Government’s policy and initial regulatory inaction, there was a demonstrable gap in terms of local knowledge of the sector and awareness of the pitfalls and risks associated with a sector subject to strict regulatory oversight. The 3-stage acquisition process model may inadequately identify the importance of sound planning and risk filtering based on sector specific information. As a result, the study recommends the revision of the model to include a pre-pre-acquisition stage that emphasised the importance of ‘industry intelligence’. This role is anticipated to comprise a team of industry experts with current inside information and with a wider understanding of the education sector that is subject to stringent regulation. This finding may be relevant to not only RTOs, but could be extended to other businesses that operate in a heavily regulated sector, and ones that are dependent to a large degree on government funding. Historical evidence supports this risk proposition; the Royal Commission into the Home Insulation Program [HIP] that was established in December 2013, bears an uncanny parallel with funding related issues the result of policy decisions in the vocational education sector. The study findings are reported in order of the three-stage acquisition process model: pre- acquisition, integration and post-acquisition, with general strategy and related risk considerations noted, and industry specific red flags [indicator of risk] also highlighted. The study also highlights several issues in the integration stage of RTO acquisitions. The three in-depth RTO case studies, for example, illustrate a lack of strategic planning for the integration of new acquisitions. The rush by a number of acquirer firms such as Vocation Limited, Australian Careers Network and Study Group was in order to access VET-FEE HELP [VFH] loan funding and build student enrolments. This myopic focus, rather than considered process that examined the strategic alignment of their multiple acquisitions, was a key factor in acquisition failure. In the post-acquisition stage, this study highlights the role of government and the industry regulator, Australian Skills Quality Authority [ASQA]. Regulation is a significant sector specific consideration that determines success and failure of the business. By its very nature, government funded industries are subject to volatility associated with changes in political leadership, changes in priorities and policies, and changes in funding priorities. From the findings it is evident that the 2012 expansion of the VET-FEE HELP student loans scheme policy decision to include private RTOs, was a Government policy initiative that was derailed by poor execution. Taking on some lessons learned from the VET-FEE HELP loan policy ‘debacle’ may prevent the loss of Government revenue, as well as protect key stakeholders, such as students and taxpayers, from unjust outcomes in the future and importantly avoid reputational damage in a competitive international education market. This study area may also benefit from further industry specific research to understand the roles of government and regulators and how they can potentially help as well as adversely impact prospective new RTO entrants and associated stakeholders.

Item Type: Thesis (Other Degree thesis)
Additional Information:

Doctor of Business Administration

Uncontrolled Keywords: acquisitions; Australia; private education sector; vocational education sector; VET; registered training organisations; phenomenology
Subjects: Current > FOR Classification > 1303 Specialist Studies in Education
Current > FOR Classification > 1503 Business and Management
Current > Division/Research > VU School of Business
Depositing User: VUIR
Date Deposited: 14 Jul 2020 01:32
Last Modified: 14 Jul 2020 01:32
URI: http://vuir.vu.edu.au/id/eprint/40716
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