Welcome to the academy trust merger era

One hundred academy trusts have disappeared over the past year amid growing numbers of mergers and takeovers.

Sector leaders highlight the benefits of scale, limited other ways to grow as academisation has slowed and chief executive retirements that make tie-ups easier.

But merging trusts also face hostility to takeovers, logistical headaches and limited guidance and funding, threatening to undermine the recent white paper’s consolidation drive.

Schools Week investigates…

MAT merger numbers

Trust numbers have soared over the past decade, but more recently begun tailing off. The decline comes in spite of government’s academisation push.

New analysis of government figures shows 2,460 trusts were running schools in October, down by 100 or 3.9 per cent year on year. There were 23 fewer multi-academy trusts (MATs) and 77 fewer standalone academies.

The pace of trusts disappearing has also increased slightly, from 8.1 a month between June 2019 and October 2021 to 8.3 a month since.

The real figure for closing-down trusts could be even higher if they were offset by new trusts – though it could also be inflated, as some disappearing trusts will have rebranded rather than closed.

Andrea Squires, education partner at Winckworth Sherwood, said the law firm had been busier with mergers than conversions for three years.

Jeff Marshall, an academy consultant, reports a “steady increase” since 2020.

Schools Week analysis also shows more trusts seeking government sign-off for mergers this year.

The Department for Education’s regional directors weighed up 12 such proposals at their most recent advisory board meetings this term, versus eight proposals a year earlier.

Meeting minutes from July show a similar trend, up from nine last year to 13 this year.

‘Taking the best of both trusts’

Marshall said he saw interest spike after ministers revived their all-MAT vision last year, and again with March’s white paper. It set a 2030 all-MAT target, with most trusts expected to be “on a trajectory” to have at least 10 schools or 7,500 pupils.

But experts and leaders interviewed by Schools Week said many trusts were warming to tie-ups independently of ministers’ wishes.

Most proposed mergers scrutinised by government this term were voluntary, and highlighted educational and financial benefits.

“As MATs grow they see the sense in working together more,” said Squires.

Garry Ratcliffe, CEO of The Galaxy Trust, said launching joint peer support groups for both inclusion and business staff with The Pathway Academy Trust had already proved “really useful” ahead of a formal merger in January.

“We’re taking the best bits of both trusts. Staff also looked at what worked best from each of our finance, personnel and safeguarding systems.”

Andrea Arlidge, CEO of Futura Learning Partnership, said its ongoing merger would enable “investing where we couldn’t before, like automating processes and hiring for data and insight posts.”

Covid exposed ‘limited resilience’ of standalone trusts

For some trusts, tie-ups are responses to challenges.

A spokesperson for Rawlins Academy said it did not feel “pushed” to join the eight-school Embrace MAT, but it had been “continually reinventing the wheel” as a standalone trust (SAT).

He said Covid highlighted SATs’ limited resilience. “If one person wasn’t in, that was in some cases a whole function out of action.”

Advisory board minutes highlight its 19th century buildings too. The spokesperson said the move will “strengthen” its access to capital funding and expertise to manage it.

Ian Anderson, education director at the Skinners Company, said merging its five sponsored SATs was mainly to share “expertise, experience and economies of scale” in a “tight” budget climate.

But it is also to avoid losing almost £1 million in guaranteed annual building funding, with government reportedly tightening eligibility for grants.

Larger trusts and some other groups receive such cash automatically, whereas trusts with under five schools or 3,000 pupils must bid for it.

‘Lacklustre’ academisation drives up rate

Meanwhile, recent “lacklustre” academisation rates have encouraged MATs keen to grow to consider mergers instead, according to Squires.

She claimed regional directors have been “targeting SATs and smaller MATs” too, while school resource management advisers’ visits have “tended to drive trusts towards merger” to strengthen central teams.

One regional director recently agreed a SAT-MAT tie-up followed intervention over £1.5 million in overclaimed maintenance funding at Queen Elizabeth Grammar School.

Last week Lord Knight, chair of the E-ACT trust, also predicted trusts rescuing “unviable” peers amid financial pressures will become increasingly common.

Emma Knights, CEO of the National Governance Association, which co-released merger guidance this year, expects numbers to keep rising – but noted they still remain relatively uncommon.

Most mergers see one trust’s schools legally transfer to another’s, so mergers could be expected to partially show up in academy transfer data. But only 1.8 per cent of academies moved trusts in 2021-22.

Calls for merger guidance and cash

Leaders highlight logistical challenges. Ratcliffe said it felt like “the stress of a house buyer pulling out nine times”.

“Putting the business case together’s a hassle, convincing everyone’s a hassle, but it’s your job to sell the dream.” He noted many small trusts lack capacity.

Rob Pavey, head of Cheney School, part of a three-school trust that joined the now 28-school River Learning Trust in February, was one of several leaders who want more government merger guidance and examples.

He said their merger had been “overwhelmingly positive”, but initially finding the “right fit” trust had not been easy, and it had “taken work to harmonise finance and HR systems”.

Learning Partners is also still combining compliance, assessment and management information systems, 14 months post-merger.

CEO Jack Mayhew noted it had had to align different top-slices and do some limited “open, but not forced, rationalisation” of roles.

Arlidge said merging had been “really exciting” but “hard work”, and the lack of dedicated merger funding – unlike conversions – “could mean some don’t happen”.

Is it a merger, or takeover?

For Ratcliffe, the biggest challenge is “perception”, however. “When’s a merger a merger, or a takeover?”

Polling by Arbor found most trusts keen on mergers are seeking similar-sized or smaller trusts, not larger ones. Most signed off recently are either similar-sized trust mergers, or SATs joining MATs.

“The words never used are ‘take over’ as this tends to trigger sensitivities,” said Squires.

Q&A documents for Learning Partners’ merger last year illustrate common fears, with questions like “will the new trust take money?” and whether “savings mean redundancies”.

Similar-sized trusts often stress plans are “mergers of equals”, sometimes underlined by new names – such as Learning Partners, which united a five-school and seven-school trust.

The largest such merger signed off recently is 14-school Futura Learning Partnership’s tie-up with 13-school Cleveland Learning Trust, though Arlidge said it was not unusually large.

Leaders say extensive consultation can settle nerves and secure buy-in, however.

Some trusts launch joint shadow boards and staff working groups pre-merger to build relationships and help design the joint trust, as well as parent forums and staff drop-in sessions.

‘Easier with shared values’

Merging is “much more likely to be successful” when trusts share values and do thorough due diligence, Squires said.

For Nick Osborne, CEO of the Maritime Academy Trust, which merged in 2020 with Barnsole Primary Trust, “the biggest challenge is aligning culture”

Even similar values may be defined differently, and “expectations have to be reset through clear, frequent communication”.

Trusts need “brutally honest” conversations pre-merger about their rituals, expectations and less tangible things “not normally on a tick list”.

It also often takes significant change to make mergers conceivable. Arlidge said she was unaware of any mergers that hadn’t been partly triggered by one CEO’s departure.

These can prompt serious reflection on trusts’ futures, and make choosing the post-merger CEO easier.

Mayhew noted many founding CEOs were likely to retire over the next decade. “Does that provide an opportunity to consolidate MATs?”

But Marshall said many strong, smaller trusts were happy with the status quo. The white paper contained few levers to force growth.

One leader said recent political upheaval was beginning to “take the pressure off”, with fewer people “jumping around to join a MAT”.