It is a challenging time for independent schools. There is the pending political threat of losing charitable status and VAT being added to school fees, coupled with the perfect storm of increased pension and salary costs, rising prices, inflation and market pressures.
The problem of making ends meet is not a new one. During Covid alone, more than fifty independent schools closed, although Covid was the catalyst rather than the primary cause. Small schools have long struggled to make ends meet and David Woodgate, the chief executive of The ISBA, is approached one or two times a week by schools looking for schools to merge with, either from both a position of strength or weakness. The challenge for governing bodies who are looking to expand or who are faced with possible closure is to know when to begin such discussions.
No two mergers are the same and while economies of scale are often given as the main reason, there are many others offered:
- the purchase of one school by another (Arnold Lodge School and Stratford Preparatory School);
- for the purpose of closer collaboration/sharing best practice, (St Dunstan’s College and Rosemead Preparatory School)
- to ensure financial security (King’s Ely and Fairstead House)
- to become one family of schools with a shared educational vision benefiting both communities (Blackheath Prep and Eltham College)
Even occasionally, as with Sherborne School and Sherborne Prep, it was made explicit that the merger was not driven by financial need, but to enhance the provision of each school.
“Governors are often fearful of being the body responsible for a school losing its long-held independence”
Whatever the reason, the challenges of managing the ethos and expectations of two merging schools are considerable, and rely on the existence of a congruence of ethos and educational philosophy – distinct from the financial benefits or advantages of sharing resources. This can be seen with the pending merger of the charitable trusts behind Hanford and Sherborne Girls, for example.
Of course, there will be practical decisions down the line that may affect this balance, as happens in business mergers, where traditional brands are sometimes jettisoned. This can be seen with the merger between Knighton House and Bryanston that has already moved away from their original announcement that the new school would be called Bryanston Knighton House – it now appears on their website as Bryanston Prep School.
Mergers present a particular challenge to governors who are often fearful of being the body responsible for a school losing its long-held independence. For that reason, the wording of the merger agreement which becomes, in effect, the founding document of the new entity is important. It must weigh up the relative strengths, financial and otherwise, of the two parties, their assets, roll projections, budgets and histories.
“Avoid the temptation to asset strip or weaken the other for quick gains.”
Before concluding a merger, it is important to understand reputational risk and the different costs, staffing needs, curriculum and educational priorities of prep schools which may not always align with the exam-driven ethos of a senior school.
Things for school governors to consider:
- Be aware of the actual and impending threats to the business; ensure your governors are all involved in strategic planning and assessing risk from the outset; be prepared to enter discussions with other schools or potential partners and make the hard decisions.
- Take great care over the wording of your agreement, especially the financial implications. The illusion of economies of scale may be considerably impacted if you retain two distinct and separate sites.
- Understand the ethos, the values, the character, the distinctive identity of your new partner and how to preserve them. Be honest and avoid making comparisons using phrases such as “similar ethos and / or philosophy” when there are clear differences in educational philosophy, in parental and alumni expectations, in the offering and in pedagogy. The same caveats apply when joining an education for profit group or courting overseas’ investors.
- Be well informed as a governing body about the differences, whether the merger is horizontal between two or more senior (or prep) schools; or vertical between a prep and a senior school. Senior schools should always have someone with experience of prep schools on their board.
- Avoid the temptation to asset strip or weaken the other for quick gains. Look for the synergy between the schools and establish how both schools can benefit from the merger while protecting the character and ethos of each.
The way ahead is uncertain; what is certain, however, is the governors need to be thinking strategically in order to ensure they fulfil their primary aim, that of ensuring the existence of their school.TIOB News