Mergers & Acquisitions

The education sector is experiencing unprecedented financial pressures as institutions seek to secure immediate stability and future sustainability. With M&As offering both, more institutions are now considering the possibility of strategic consolidation with a compatible partner.

Drivers of M&A activity include:

• Financial sustainability through scale economies reducing per-pupil operational costs
• Shared services, such as libraries and laboratories, which eliminate duplicated functions
• Financial resilience through diversified revenue streams
• Ability to diversify and expand curriculum breadth and subject choices
• Geographic expansion into new catchment areas
• Combining teaching and leadership talent

While mergers can be the ideal solution for two or more establishments looking to pool resources and enhance their offerings, it is vital that this type of transaction does not simply involve two struggling institutions coming together and combining weaknesses. Ensuring real value for stakeholders needs to be at the heart of any proposed M&A within the education sector. These transactions require a careful and balanced assessment of strategic fit, cultural compatibility, and integration challenges.

Factors to consider in education M&As

The regulatory landscape varies significantly across different education sectors meaning any proposed deal needs to be able to demonstrate its value and viability to board members but also pass any required regulatory approvals processes.

The Department for Education provides oversight across academy trust mergers requiring Regional Schools Commissioners (RSC) approval, significant change notifications for structural alterations, due diligence requirements including financial sustainability assessment, and condition improvements as prerequisites for approval.

Office for Students governance covers university mergers requiring OfS consent, degree awarding powers transfer arrangements, student protection plans during transition, and quality assurance maintenance throughout the entire merger process.

Professional management of regulatory processes involves early engagement with relevant authorities, comprehensive documentation of strategic rationale and benefits, stakeholder consultation demonstrating support of the proposed merger, and compliance monitoring throughout the transaction. Our experience of advising on mergers within the education sector enables us to navigate the complex approval requirements efficiently while maintaining transaction momentum all the way through to completion.

Alternatives to mergers

For those institutions looking to enhance their offerings and widen their geographical reach without committing to a full merger, entering into a strategic partnership with another institution can be a viable alternative.

This type of partnership can be achieved in a number of ways:

• Federation arrangements – Both institutions maintain their own separate legal entities with shared governance, common leadership, and resource sharing without the need for full integration. This type of arrangement can help preserve institutional independence and allow for gradual integration testing compatibility prior to a full merger.
• Validation partnerships – Entered into between universities and colleges to create or expand degree provision opportunities, provide geographical expansion into new student populations, enable revenue sharing through mutually beneficial arrangements, and facilitate progression pathways to better support student advancement.