Are college mergers the answer?
28th October 2019
by Hilary Clifford
In the last three years there have been 64 college mergers.
Mergers continue to be promoted by many within the FE sector as the preferred solution for colleges, whether this is because of size, location, financial resilience or quality of provision. There are currently 248 colleges in England and for the foreseeable future mergers continue to be a key feature of the post 16 landscape. However, to date there has been little assessment of the success and impact of college mergers. Currently two colleges are demerging and of the 40 colleges judged to be financially inadequate in 2017/2018, some were recently merged organisations.
Undertaking a merger is a huge process and several colleges are onto their second, third and fourth merger exercise. The motivation for merger is various and the benefits must be significant when there is no funding support to underwrite the costs or mitigate the risks.
Within the corporate world, there is a significant body of evidence to show that only 50% of mergers achieve their initial aims and objectives. All too often, the potential synergies are enthusiastically overestimated. Of course, mergers are undertaken for a variety of reasons, but synergies are typically expected to be realised from:
- Economy of scale or scope
- Shared best practice
- Shared and improved capabilities and opportunities
As many in the sector will know, achieving a successful merger is hard and getting to merger date and officially becoming one organisation is the end of one long process of due diligence and planning. It’s also the beginning of a whole new scheme of work which can take several years to embed and fully achieve. Developing a plan and a process for measuring post-merger integration is critical as well as maintaining motivation and energy to see it through.
Once the merger is complete and the dust has settled, it is time to consider the value created with the synergy gained. We recommend that college leaders consider this review a few months post-merger. Sensible questions to consider are:
- Have the cost savings been delivered or are they on target to do within the estimated time frame?
- Are the initial assessments realistic or do they need revising?
- Is projected business growth proving to be realistic?
- Do we have benchmarks in place to sanity check the merger plan?
- Are timescales realistic?
To help with this review and to ensure the operating model is in place we have developed a post-merger assessment service to work with you to answer some of these questions. We focus on progress against objectives for the vision and culture, the learner experience, curriculum development, governance, leadership and management and other areas critical to the successful development of the new college organisation. Our aim is to work with you to define progress against the planned synergy benefits and to use this process to build the capacity and capability in house to ensure this is achieved.