Any truth in this?
10 replies (most recent on top)
It's time!
The Art Institutes dose not really have value. People are leaving in droves, enrollment has been down for 3 straight years. Are students still signing up? Sure, but mostly because no other school will touch them, they have no other option. Poor grades, low income, no talent, etc. Yes, I said it, no talent. Unlike every other art school on the planet, The Art Institute dose not require a portfolio of your best work as the key decision of acceptance into college. Sure they do for some majors but its only lip service. They do not turn away applicants who quality for a loan. Real art schools are traditionally hard to get in. Most get turned away based on raw talent they either have or dont have. Talent can't be created, it can only be molded and shaped into its best expression.
The value of accreditation that seems to be thrown around a lot here is highly overrated. Sure, there is a value to it, but that is not going to save the school anymore then a liquor license would do for a bar in huge debt. It's an asset that's it. In fact, the liquor license is a more plausible argument because you dont have to take all the baggage with it, you can just buy the license.
Agree with your sentiment entirely, 37920, however, the Art Institute "brand" name still has a ton of value as do the various accreditations. If EDMC schools had to close because of an interruption in the flow of title iv funds that value would probably be destroyed immediately. The value of the company lies in its connection to the Department of Ed and the certification to receive Federal funds. It's also amazing that, despite all of the bad news around the company and the many unhappy (and very vocal) former students who feel abused by the company, new students keep coming in. But, this is another example of the goodwill (intangible) value of the company, fragile as it may be. So unless Dept of Ed turns off the flow of money, EDMC schools will probably be around for a long while, in some form or another.
Even if a merger was an option, what company in their right mind would want to invest such a looser as EDMC with all its lawsuits, declining enrollment, millions of dollars in debt, negative press, and poor industry reputation? In order for someone to buy you out, it has to at least appear on the surface that you have value. EDMC sabotaged their own net worth by going into default and not admitting its wrong doings by continuously fighting numerous lawsuits.
I wonder if the leverage wan't all on the EDMC side? It was pretty clear for a long time that the company would not have enough cash (except for a miracle) to make their debt service payments. They kicked the can down the road last year with a re-structuring and then time ran out. One wonders what would have happened if the company had not been able to negotiate a debt/equity swap? Bankruptcy would probably have left the company dead in the water with no assets to be liquidated to satisfy even a portion of the debt. At least the swap buys everyone a little more time to figure out what to do. The most obvious outcome, which has been mentioned before, is a merger with another accredited institution like Laureate.
In layman terms they got REPOSSESSED by their creditors. They did not pay the bills. Now the creditors are trying to figure out how to get their money back with what they have.
I don't know if I could quite call it "buy". The creditors basically took equity or ownership of the company since the company could not pay them. They didn't sell anything. It was taken from them to avoid bankruptcy!
hahhaa. exactly.
Where have you been?