Uncertainty, opportunity and risk in school mergers and acquisitions

The independent school sector is navigating one of the most challenging periods in recent memory. Rising costs, changing demographics, and political uncertainty are forcing an increasing number of schools to explore strategic options they might not have considered a decade ago. Chief among these is the possibility of a merger or acquisition.

Having advised on a number of these transactions, we see both the opportunities and pitfalls firsthand. Mergers and acquisitions (M&A) are not a silver bullet, but when approached with clarity and strategic intent, they can be a powerful mechanism to help secure long-term sustainability.

A sector defined by uncertainty

Uncertainty is perhaps the defining feature of the current independent school landscape. Declining birth rates, particularly in some urban centres, are beginning to impact enrolment. Economic pressures are narrowing the pool of families able and willing to afford independent school fees, while rising costs across staff, energy, and pensions are squeezing margins.

This is further shaped by a volatile political landscape. With growing pressure on the charitable status of independent schools and the introduction of VAT on school fees, boards are having to prepare for multiple financial scenarios that would have once been unimaginable.

Even schools with strong reputations and excellent academic outcomes, are reassessing their long-term viability as standalone entities.

Where M&A creates opportunity

In this environment, mergers and acquisitions can offer a lifeline — but also a pathway to growth, investment and innovation.

For schools facing financial strain, merging with a like-minded partner or joining a larger group can bring access to capital investment, central services, and stronger recruitment channels. For schools that are in a more financially stable position, acquisition or consolidation can expand provision, enhance curriculum breadth and strengthen competitive positioning.

From a practical standpoint, mergers can unlock efficiencies through shared estate teams, joint procurement, streamlined governance or IT integration. Some groups are also able to offer centralised marketing, admissions and finance functions, which can alleviate pressure on local teams and budgets.
For boards and leadership teams, these moves can also support strategic renewal. Enabling schools to refresh their vision, reinvigorate facilities and engage alumni and philanthropic supporters around a longer-term future.

Understanding the risks

Despite its potential, M&A is not without risk, and schools must approach it with their eyes open.

• The biggest risk is often cultural integration. Schools are complex communities with unique traditions and identities, meaning a merger that makes perfect sense on a spreadsheet can still be unsuccessful if the stakeholders don’t feel heard or respected. Communication, transparency and alignment of values play an important role in a successful merger.
• Another key consideration is reputational risk. Even the rumour of a merger can unsettle parents and staff, making timing, messaging, and transparency an essential part of the process.
• On a technical level, due diligence must be thorough. Hidden liabilities, pension exposures, compliance issues and underfunded capital needs can complicate or derail a deal. Charitable governance and regulatory oversight, such as the Charity Commission, must also be carefully managed.
• Finally, financial projections must be realistic. Overestimating savings or underestimating the complexity of integrating systems and teams can lead to challenges. If the success of a merger relies on record pupil growth, ambitious fee increases or idealised synergy savings prevailing, very careful thought must be given to the likely success of these key economic drivers.

The strategic rationale and long-term economic viability should sit at the forefront of a decision to undertake a merger. A good M&A deal should show tangible benefits within a few years – it is rarely a quick fix.

A strategic tool, not a last resort

M&A can be a powerful tool to support growth, diversification and stability, but it is not necessarily the right solution for every school. However, given the current climate, it should at least form part of the strategic conversation, not as a last resort, but as a proactive option for schools that want to thrive in a changing market.

When executed well, M&A can help secure not only the future of a school but also the continued success of its educational mission. The most important first step is not deciding whether to merge but ensuring you understand your position, you have assessed your strategic goals honestly and explored your options early.

For my information, please contact Matteo Timpani or your usual Crowe contact.