Strategic partnerships between independent schools: mergers and collaboration

By merging or collaborating, schools can:

• pool resources or make bulk purchases to receive discounts and achieve economies of scale;
• share administrative functions such as HR, IT and finance, reducing duplication and leading to more efficient use of staff and resources;
• offer a broader curriculum by sharing specialised teachers and facilities, providing students with a richer educational experience without the need for additional investment;
• have better access to funding and grants by being part of a larger merged institution; and
• be more attractive to prospective students and parents, leading to increased enrolment and revenue.

While the potential benefits are significant, these arrangements come with complex legal considerations. Here, we summarise some of the key legal aspects that independent schools should address when considering a merger or collaboration:

1. Due diligence: conducting thorough due diligence is essential. Reviewing the financial health, liabilities, contracts, and compliance status of the potential partner school (as well as its constitution to ensure it has the power to merge or collaborate) is important, as well as assessing the cultural fit between the schools. Legal advisors can help identify any red flags and help to ensure that all aspects are thoroughly vetted.
2. Governance and structure: determining the governance structure of the merged entity or collaboration prior to completing is crucial. This includes deciding on the leadership, board composition, and decision-making processes.
3. Documenting the collaboration or merger: drafting clear and comprehensive contractual agreements is vital. These should outline the terms of the merger or collaboration, including its governance structure, financial arrangements, and the division of responsibilities.
4. Staff: schools must consider the implications of any merger or collaboration for their staff. The effect on employment contracts, staff integration, and whether there will be any redundancies, all need to be considered, and appropriate advice must be taken.
5. Assets: the use or transfer of any real estate as part of the merger or collaboration will need to be considered carefully, and separate due diligence will likely be required. Similarly, the use or transfer of any assets will need to form part of any feasibility study and due diligence exercise. Schools also often have valuable intellectual property, such as trademarks, educational materials, and proprietary technologies. Schools should, therefore, ensure that these are adequately considered and protected before they merge or collaborate.

Of course, there will be other areas to consider, such as developing a strategic plan for what the merger or collaboration is to achieve and how this will benefit both schools, carrying out a full feasibility study to include areas other than legal considerations, and engagement with stakeholders, but involving legal advisors from the outset can help to guide the process and address any potential legal issues proactively.

Conclusion
Merging or collaborating with other independent schools can offer significant financial and educational benefits. However, these arrangements come with complex legal (and other) considerations that must be carefully managed. By instructing legal advisors early, we can help guide the process and ensure the schools achieve a successful partnership.

Contact our Corporate & Commercial team if you would like advice and assistance with considering any merger or collaboration arrangements.