Private Firm Buys Grand Canyon U.

A private-equity group acquired a small liberal-arts university in Arizona this month with the hope of expanding it into a world-renowned Christian institution.

Significant Education LLC purchased the controlling assets of debt-ridden Grand Canyon University, in Phoenix, for an undisclosed price. The company plans to revamp it on the model of Oral Roberts University or Liberty University, two well-known Christian institutions. The company also wants to raise its 4,100-student enrollment by lowering tuition and increasing the college’s online offerings, two hallmarks of business models adopted by for-profit universities.

“We see great potential for growth both in the campus-based and online offerings of GCU,” wrote Don Pewitt, chairman of the university’s Board of Trustees, in a letter announcing the sale.

Grand Canyon, which was millions of dollars in debt before the sale, “was mismanaged, but we thought that was fixable,” said Michael K. Clifford, founder and chairman of the company and new managing director of the university.

Significant Education will manage Grand Canyon, while the nonprofit organization that established the university will retain ownership of the actual buildings and land. The nonprofit group, which will be renamed the Grand Canyon University Institute for Advanced Studies, will also hold annuities, scholarships, and endowments for the university. The Board of Trustees will continue to approve faculty appointments, and two of its members will sit on the company’s Board of Directors.

The 50-year-old university, which was affiliated with the Arizona Southern Baptist Convention until four years ago, will keep its name and its regional accreditation, Mr. Clifford said.

Although the purchase of nonprofit colleges by for-profit companies is rare, it is not unheard of. One of the best-known examples involved the Apollo Group, parent company of the University of Phoenix. In 1995, it acquired Western International University, then a nonprofit institution, which had been founded in Phoenix in 1978.

http://chronicle.com Section: Money & Management Volume 50, Issue 24, Page A27