Understanding key issues for mergers in further and higher education

The issue 

Continued funding cuts, alongside the new high quality post-16 offer, have put mergers firmly on the agenda. The government, in its review of post-16 education and training institutions (pdf), stated we need “fewer, often larger, more resilient and efficient providers” to enable specialisation and centres of expertise.  

In its simplest form, a merger is where one or more institutions cease to exist as a legal entity when incorporated into a new or existing institution.  There are many examples of merged institutions in the sector including those between further education (FE) colleges, higher education (HE) institutions and also some FE/HE mergers.

What you can do

Make informed decisions

If your institution is considering a merger, making informed decisions is essential. Where voluntary, the decision whether to merge or not will depend on various factors (outlined in our guide to technology implications of mergers and restructures) including the: 

• Reasons, or drivers behind it
• Type of merger envisaged  
• Alternatives available 
• Key issues such as technology and legal implications

A relevant technology implication, for example, will be the provision of, and cost associated with a Janet Network connection.

In 2016, the Association of Colleges published a guide for governors and senior leaders on new structures (pdf), including advice on gathering supporting evidence necessary to inform decision-making, and a relevant merger case study.  

The Higher Education Funding Council for England (HEFCE) have also produced a document describing lessons learned from collaborations, alliances and mergers alongside guidance for higher education institutions.  

Evaluate your strengths and weaknesses

There may also be steps you must take. For example, any college considering significant structural change must undertake a college structure and prospects appraisal (pdf) to evaluate strengths, weaknesses and local circumstances and determine the model that will best allow it to deliver its mission.

Use our business intelligence guide to help you gather, present and use evidence to plan for the future, while our process improvement guide can offer step-by-step guidance to improving your business processes.

Consider the drivers for your merger

Being able to deliver high quality outputs in a cost-effective way is one reason to merge but there may be other drivers in terms of government policy, service delivery, improvement, reputation, competition or indeed survival.

The further education sector is going through a period of immense change as a result of a number of drivers - our embracing sector transformation guide can help support your college on this journey.

As with any major change process, you should ensure a strategic approach to quickly and effective respond to these drivers.

Look at alternatives

Where flexibility, low risk and low costs are imperative, you should consider alternatives to mergers. For example, sharing services can also save costs, increase efficiency and share knowledge, although you should me mindful of the legal issues surrounding sharing IT services. Our shared services including our shared data centre and Microsoft 365 agreement can help you reduce costs and improve flexibility.

Other options include converging services, creating alliances, joining up networks or subcontracting services externally. 

Understand and address key issues

Knowing what the issues are and understanding their implications early is essential. Success is not guaranteed and each merger is unique. However here are our tips to help you move forward: 

• Rigorously analyse your options, benefits and manage risks
• Consider impact and ensure a complementary vision and culture
• Manage change effectively with strong, high quality, people-focused leadership  
• Build an effective team to manage the project 
• Consider technology implications and select the right technologies 
• Satisfy your legal obligations, carry out due diligence and be aware of competition issues
• Update policies and agreements to reflect change  
• Be realistic about outcomes, likely costs and savings, and time needed
• Monitor and evaluate benefits and measures of success

Find out more

Our blog explores learnings from colleges that have gone through mergers and transformation. You can also listen to the accompanying podcast.