School Mergers - Key Drivers and Legal Considerations

The UK’s private school sector has long been recognised for its high academic standards, rich heritage and unique learning environments. However, private schools have increasingly faced economic and operational pressures, exacerbated by the imminent introduction of VAT on school fees from January 2025, prompting a considerable increase in market consolidation as a response.

What are the Key Drivers of Market Consolidation?

• Financial benefits for the school amid rising costs: A merger means shared grounds, fewer teachers, reduced renovation, upkeep and modernisation costs and economies of scale in sharing central and administrative services. Running costs can be particularly high for smaller private schools so a merger can really be attractive for the balance sheet and for providing financial security.
• Pupil benefits: operational efficiencies and working together for mutual benefit of pupils. A school merger can present a wider array of opportunities for pupils (enhanced curriculums, shared expertise and additional facilities such as a swimming pool or all weather pitches) plus enjoying the enhanced reputation such a merger may bring. Increasing the attractiveness of a school is particularly important with a decline in domestic enrolments as pressure on household budgets increase.
• Reducing the regulatory and compliance burden: Smaller schools often have fewer staff and administrative resources and therefore may struggle to meet their regulatory and compliance obligations. Consolidation is an attractive option for such schools who stand to benefit from the support of a more established and administratively capable institution.

• Increasing International Student Enrolment: With the potential decline in domestic student enrolments, attracting and enrolling international students is an important weapon in the financial arsenal of the UK’s private school sector. Mergers can represent a means of strengthening Student Sponsor compliance whilst benefiting from the additional staffing and marketing resources required to sponsor students from overseas, especially in a post Brexit immigration landscape.

What are the Key Legal Considerations on a School Merger?

When two or more private schools consider a merger, there are a host of complex legal considerations to take into account. Such considerations include:

• Corporate Transaction documentation: The consolidation of private schools often involves significant assets and key to any merger or acquisition will be to properly document and structure the transaction, drawing up the necessary contracts and legal agreements
• Regulatory Approvals and Consent – Consolidation and mergers of private schools involve obtaining necessary approvals from the Department for Education as well as informing a school’s educational oversight body such as Ofsted / ISI
• Employment and TUPE Regulations – Private schools may be required to consult with staff if their employer is changing or their terms of employment are impacted
• Data Protection and GDPR Compliance – With the transfer of pupil, parent and staff data between merging institutions, data protection and GDPR compliance is critical
• Immigration and Sponsor Licence Considerations – Where one or both private schools hold a Home Office sponsor licence, it is equally important to factor in Home Office reporting and the transfer of student and staff sponsorship.

For further information on how we advise owners and governors of independent schools on school mergers, please contact a member of our team or submit an enquiry form, below.