The Vietnamese market is witnessing a feverish wave of mergers and acquisitions (M&A) involving private universities.
The conditions for establishing a new private university in Vietnam are currently “unimaginable.” Decree 46/2017 mandates a minimum land area of 5 hectares at the main campus and a minimum investment capital of 1 trillion VND (excluding land value). This is prohibitive for almost any investor. Furthermore, the licensing process for a new university is agonizingly slow, often taking 5 to 10 years (the history of Fulbright University serves as a stark example). Consequently, anyone looking to enter the sector must acquire an existing license through M&A.
Why the recent surge of investor interest? Is private higher education the next “golden goose”?
I. The illusion of the “Super-Profit” industry
Many outsiders and amateurs view education as a “super-profit” industry. This is a naive misperception. Properly run, education is never a high-margin sector. Its only financial advantage is the stable cash flow derived from collecting tuition upfront, meaning investors do not need large amounts of working capital.
A university with scale (e.g., 10,000 students paying $2,000 USD per year) can generate strong revenue (over $20 million per year), potentially yielding a modest 8−10% annual profit margin. However, few schools currently operate at this scale.
The reality is that investing in higher education is not inherently more lucrative than investing in other long-term sectors. The costs are immense—land, infrastructure, high-quality faculty recruitment, and equipment. This is precisely why the rest of the world encourages non-profit models and seeks philanthropic capital for universities.
II. The ‘Degree Factory’ problem and misguided investment
So, what is driving this investment frenzy?
- The sickness of credentials: Investors see the market fueled by the Vietnamese obsession with credentials: everyone wants a university degree, regardless of quality. Since admission to good public and international universities is highly restricted or prohibitively expensive, private universities thrive by catering to this demand. Frankly, a vast number of these institutions operate as “degree factories,” producing low-quality credentials that contribute to Vietnam’s massive underemployment problem (graduates working as waiters, caddies, or retail staff—jobs that do not require a four-year degree).
- Land speculation: Many investors exploit policy loopholes to acquire land cheaply for educational purposes, with the long-term hope of flipping the property or converting it into residential/commercial use (dormitories, university offices that become corporate headquarters).
- The bubble: This current M&A wave is a “university bubble,” where transaction values are inflated far beyond actual earning potential. The government’s simultaneous tightening of licensing requirements and restrictions on upgrading colleges to universities has severely inflated the price of existing licenses, which is highly detrimental to serious, long-term investors.
III. The governance and talent challenges
The difficulties in higher education extend beyond capital:
- Conflict of authority: In a public university, the Principal is the highest authority. In a private university, the Owner/Chairman holds supreme power. This philosophical conflict makes the operational transition for any public sector Principal moving to a private university highly complex and often unsuccessful.
- Talent scarcity: Even with money, it is difficult to find suitable principals who comply with regulations and build a stable, qualified faculty pool.
The current system creates a vicious cycle: If universities are purchased at inflated prices, the new owners will be under immense pressure to recoup capital quickly. This inevitably leads to either lowering educational standards (“selling diplomas”) or facing complete financial collapse, reminiscent of the famous Indian education company, Educomp.
IV. Policy barriers to quality and scale
The market for low-quality domestic degrees is shrinking. In the age of open information, employers and students are increasingly demanding international accreditation and quality standards.
However, Vietnamese policy remains an obstacle:
- Obsolete regulations: Policy on foreign investment and cooperation (Decree 86/2018) is not flexible enough to genuinely encourage robust international partnerships for degree granting and accreditation.
- The micro-credential shift: The future of education lies in micro-degrees and micro-credentials that are flexible and aligned with industry demand. If the government does not adapt its legal framework, the domestic system will become irrelevant.
The current M&A wave is temporary and emotional. If the sector is to genuinely develop and alleviate the burden on public universities, the government must significantly loosen the rigid licensing requirements. This will burst the artificial bubble, reduce entry costs, and allow financially sound, serious investors to participate in the market without being forced into an unsustainable high-cost acquisition game.
We must avoid the scenario where exhausted old owners leave, and new investors jump in based on unrealistic costs, resulting in a market dominated by “diploma sellers” instead of quality education builders.
