Planning for the future: Why mergers are on the rise in the independent school sector

Independent schools mergers: planning for the future.

Schools have had their fair share of challenges over the past few years, with the pandemic, high inflation, and an escalating cost of living putting additional pressure on school budgets and the families of students and staff.  

Budgets have been squeezed with the introduction of VAT on private school fees, and business rates charitable relief has been removed from private schools. National insurance contributions for employers are also increasing, with the small comfort that the employment allowance is increasing, too.

Why are schools exploring mergers?

Against this backdrop, it is no surprise that there has been a noticeable rise in merger activity within the independent school sector. Schools are increasingly entering into partnerships and merger discussions as a reaction to financial pressure, as a strategic decision to futureproof their operations, and to improve their long-term sustainability.

Importantly, mergers can also assist schools in retaining and attracting talent, investing in development projects, and offering broader curriculum options—all vital for remaining competitive in a changing educational landscape.

These conversations must be approached from a broad perspective. Beyond immediate financial concerns, governing bodies must consider what is truly in the best interests of the school, its pupils, and its wider community. Regulatory considerations also come into play where an independent school is a charity.

More than just crisis management

But it is important to recognise that this is not purely about crisis management. Many independent schools are pursuing mergers from a position of strength, using these arrangements to plan for leadership succession, expand their geographic reach, or invest in new specialisms.

Futureproofing is at the heart of these moves. For instance, schools with strong reputations but ageing infrastructure may seek partnerships to finance necessary upgrades. Others may look to expand their brand through enhancing their national or even international profile.

Prioritising due diligence

A successful merger hinges on finding a suitable merger partner, and thorough preparation and due diligence. The process typically begins with a period of strategic evaluation, during which each party not only carefully assess the compatibility of their objectives, but the merger's cultural fit and strategic value. This stage should not be rushed.

From a legal perspective, due diligence should encompass a thorough review of all aspects of the school's operations — financial, employment, property, legal compliance, regulation, and governance.  Schools must closely examine contracts and documents, such as employment contracts, supplier agreements, and any third-party service agreements, to ensure that everything they want to transfer can transfer, without issue. Consultation with stakeholders may be necessary.

Confidentiality is key at the early stages of merger discussions, and legal advice may be needed on how to protect confidential information in the initial stages.

Key challenges and considerations

Certain contracts and obligations, such as long-term maintenance contracts, outstanding loans, and pension obligations, can all complicate a merger. Employment issues, including potential TUPE (Transfer of Undertakings) implications, must be identified and managed.

Property issues can be particularly knotty, as many independent schools occupy historic estates involving complex ownership structures. Title investigations, planning permissions, restrictive covenants, and listed building consents may all come into play.

Where a school is a charity, ultimate responsibility for a merger lies with the Governors (as charity trustees) and they must ensure that the merger is in the best interests of the school and in furtherance of the school’s purposes.  They must have an appropriate power to merge, and their objectives must be compatible with those of their merger partner; expert charity law advice may be needed where the objectives of one merger partner are narrower or wider than the other, as assets may need to transfer on a restricted basis.

For charitable independent schools, any decisions must be thorough, well-documented, and aligned with the charity’s governing document and applicable charity law. Governors must be be able to demonstrate that they have considered all reasonable options, risks, and potential conflicts of interest.  Stakeholder consultation may be necessary, and Charity Commission consent could be required in certain circumstances.

A strategic step forward

For many independent schools, mergers may offer the potential to protect and enhance the educational provision for future generations of students. However, they must be approached with thorough due diligence, robust governance, and specialist legal advice to navigate the many challenges.

This article first appeared in the Independent Schools Magazine April 2025.

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The information in this article is necessarily of a general nature. The law stated is correct at the date (stated above) this article was first posted to our website.

Specific advice should be sought for specific situations. If you have any queries or need any legal advice please feel free to contact Wrigleys Solicitors.