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Academies and trusts: Think before you merge

09 February 2018

The difficulties of a small academy can be solved by merging with another trust. Howard Dellar looks at what this involves


MORE Church of England academies and multi-academy trusts (MATs) are likely to consider merging in 2018, especially where it makes geographical sense, as the squeeze on budgets become tighter. Not all these mergers will be between church MATs. So what issues do they face?

As in most mergers, a key issue will be one of the cultures of the merging organisations — for example, an MAT with top-down governance and another that gives academies more autonomy. The aim is for the parties to find enough in common to see that a merger would make a positive difference for the pupils and the finances of the new organisation.

The benefits of a merger need to be explained clearly to the pupils, staff, community, and diocese. If academies are located close to one another, it will be easier to share staff across sites, such as an executive head, a PE teacher, or a music teacher.

If there are academies in more than one diocese in the proposed new MAT, it will be necessary to protect the respective diocesan interests from the start. Another crucial issue is how much autonomy each MAT board of directors delegates to its academies. This needs to be properly recorded in a “scheme of delegation”, and discussed and agreed early on in any merger process.

The various stakeholders will bring different concerns to the table, and it is best to anticipate these before they arise. The Diocesan Board of Education and church trustees will be con­cerned that their influence over the academies will not be diminished in any merger. This might require legal protection at company and local governing-body level.

The Department for Education (DfE) will expect MATs to carry out a rigorous consulta­tion process — not a box-ticking exercise, but one that truly engages. MATs must show that they have sought the views of all stakeholders in a “fair and open” process.

The local authorities involved will want to seek reassurance that any merger will not disrupt local pupil-place plans, and that educational standards at schools or colleges near by will not suffer.

During the process, the academies involved may uncover unexpected educational under­achievement, especially where good or out­standing academies have not been inspected by Ofsted for some time. Similarly, a financial investigation may reveal significant budget deficits, solvency issues, unworkable govern­ance arrangements, and costly employment issues. Any of these could stop a merger in its tracks.

In the case of a merger of two MATs, legal advisers will not normally recommend establishing a new company, as using one of the existing companies can save time and costs.

But any merger will inevitably involve a transfer of at least one of the existing MATs assets and undertakings and liabilities. This is likely to feel as if the academy conversion process is happening all over again. Where there is a change of employer, a Transfer of Undertakings (Protection of Employment) (TUPE) consultation has to take place; and where the company changes, there will need to be a transfer of the land documentation to the new company and approvals from the church land trustees.

A transfer of commercial contracts and Master and Supplemental Funding Agreements will need to be put in place. New schemes of delegation will also need to be negotiated and school policies drafted. There will be no DfE grant to pay for the costs of the merger; so the directors and governors will want to know who is to pay and how the costs are to be split be­­tween the parties.

There are added legal complications if a Private Finance Initiative (PFI) contract is being transferred, or there are different types of community and church academies in the new MAT.

The key to the process is making sure that the Diocesan Director of Education, Regional Schools Commissioner (RSC), and Education Funding Agency (EFA) are fully informed and are onside, so that any difficulties, especially financial ones, can be quickly identified.

The process can be daunting, but careful planning helps to identify whether a merger is really the right way to safeguard the viability and educational outcomes of church academies into the future.


Howard Dellar is head of the Education, Ecclesiastical and Charities Department at Lee Bolton Monier-Williams. He writes in a personal capacity.

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