To merge or not to merge; just ask yourself the right questions first

Forum Strategy has supported trusts in choosing merger partners; and it’s no simple or easy business. Mergers sap senior leaders’ time, they can take longer than a standard organisational restructure, can lead to greater drops in staff morale, and can often lead to a short- to medium-term decline in organisation performance.  So, what should those trusts considering merger consider if they are to make it a success and avoid some of the major pitfalls?

The first question to ask is this: Is it a merger or a takeover? Takeover is a term people can be desperate to avoid but must be upfront about. Your staff and stakeholders will see through any attempt to dress a takeover up as a merger, which can undermine the whole process and present a major risk to your organisation as staff feel misled, disempowered and decide to leave.

A ‘takeover’ may sound tricky, but a merger – in our experience – is even trickier!

A ‘takeover’ may sound tricky, but a merger – in our experience – is even trickier! How come? Because during a merger it is hard to generate any certainty for quite some time. Literally everything must be negotiated!  When you are subject to a takeover and you are in the position of choosing the organisation that will take you on, you know exactly what you are getting into. The terms and conditions are pretty much laid before you and the vision and values of the organisation taking you on is what it is. You have a small amount of ownership in making the choice. With a takeover, you are entering with your eyes wide open, and the operational details of staffing and financial arrangements are negotiated within that framework.

With mergers, by not being clear enough about ‘red line’ or ‘non-negotiables’ up front, you are setting yourself up to fail. So much money can be wasted because the most important questions and decisions were not resolved early on and the process comes crashing down. Both parties need strong advocates and they need to commit to transparency and openness.

So, what tips would we share with trusts looking to merge:

–          Have a frank conversation as a board (and if possible, consult with senior staff) about what the ‘ideal’ merger partner would look like. What would their vision and values, and the characteristics of their organisation, look like? What would they hold dear? Try not to be too vague in these discussions, but don’t be overly specific and rigid either!

–          Take as much time as you can in looking for ‘the right’ partner; scan the landscape and talk to people. Yes, you can ask the RSC for suggestions, but also consider who you enjoy collaborating with already and undertake desk research on those organisations and other potential partners. Review other trusts’ vision and values as the starting point, as well as key documents such as schemes of delegations, curriculum documents, board papers, and annual accounts. Also, try to generate soft intelligence by discretely talking to headteachers, senior leaders, and staff and parents within other trusts. Beware approaching another trust with the proposition of merger too quickly. Before doing so, as a board, be sure that the organisations you plan to approach are a ‘good fit’ and will treat the conversation with the necessary sensitivity and confidentiality.

–          Consider, with your board, the key questions you would ask of the potential merger partner. What are your ‘non-negotiables’? Then, look their CEO and board members in the eye, and ask the key questions. Listen to them and their views carefully too, taking the opportunity to identify both commonalities and sticking points.

–          If the partner feels right, and they want to pursue merger too, try to undertake a facilitated session identifying the vision and values for the new organisation, as well as high-level strategic principles for achieving these. Out of this session, produce a written agreement of intention, highlighting the shared vision, values and key principles upon which the merger process will commence. The boards should also, at this point, carefully consider and agree the proposed name of the new organisation, the governance and leadership structure (and the process for recruiting to these roles), the scheme of delegation, and the financial contribution of schools; as these will all be key cornerstones of the merger process that if not in place could see the process collapsing later on.

–          Communicate with (and consult) staff as far as possible. Ensure that communication is regular, that it is ‘two way’, and that staff are able to raise concerns. Involve staff where possible by asking what they value, what their concerns are, and, indeed, what their hopes and aspirations are for the merger. Draw on their knowledge and understanding of the organisation. The biggest risk to children and young people is losing great staff who feel uncertain and/or disempowered by the process.

–          Ensure that dedicated project management is in place to make sure due-diligence is conducted to plan and on time; and that policies, systems and processes are carefully homogenised ahead of the merger date. You may wish to engage external project management support, not least if the merger involves a fundamental restructure of the senior leadership team. According to Harvard Business Review, “nearly one-third of mergers do not have a plan for organizational implementation at all” and this is a major oversight.

–          Begin thorough due-diligence, headed up by the executive team and with clear scrutiny and oversight by the board. You may also wish to commission outside experts for some aspects of this in order to provide the board with a separate, professional opinion or advice. Independent HR advice and support may be ‘a must’ if due diligence will inform the new leadership team and staffing structure. Due diligence should certainly be about financial commitments and operational risks, but it should dive into every facet of the organisation – including staffing capacity and terms and conditions, sites and buildings, and school improvement demands etc.

–          Ensure a clear external communications plan, ensuring that parents and the community are informed of the changes as soon as possible, including the motives behind it, the benefits of the merger to children and young people, key milestones, how any disruption will be minimised, and opportunities for stakeholder views to be heard.

–          Make sure the legal boxes are ticked. A dedicated legal adviser is a must, with issues certain to arise around name and constitutional changes, TUPE, bank accounts, contractual obligations and much more.

–          Mark the new merger as you would the founding of a new organisation. Recognise the legacy of both organisations and what they bring to the table. Then focus on the new vision and the opportunities that merger brings to shape something new, exciting and that everyone involve has a role in shaping. Generate a sense of ownership and aspiration for what is to come.

A merger is not a linear process, and there will undoubtedly be stumbling blocks and bumps in the road. However, if the principles outlined above are all in place, the chances of a smooth and successful merger will be greatly increased.

Throughout it all, it is important that boards and executives relate their discussions and decision to three guiding principles:

–          Is it legal?

–          Is it going to ensure the sustainability and financial viability of the organisation for the long-term?

–          Is it going to further our efforts to ensure the highest standards of educational provision for all pupils?

Forum Strategy runs the National #TrustLeaders CEO network, a National COO network, & the #BeingTheCEO programme. We provide training and strategic level consultancy to boards and executives. More information:


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