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New research1 from specialist education insurer Ecclesiastical has revealed the independent school sector is under increasing financial pressure as two-thirds (64%) of independent school leaders say their school would be open to considering a merger or acquisition in the future.
Independent schools are facing increasing financial pressures and school closures
Amidst financial pressures and economic uncertainty, the survey of 250 UK independent school leaders discovered that three in five independent schools are more concerned about their finances than ever before (61%) and believe there will be an increase in independent school closures over the next year (58%).
Amidst political and economic uncertainty, school fees are a serious concern for independent schools. The research found that three in five (57%) independent schools are more concerned about parents being unable to keep up with paying school fees than ever before.
Majority of independent schools are experiencing mergers and acquisitions
The research found that one in five (20%) independent schools are currently going through a merger or acquisition, and two in five (38%) have done so during the past 12 months. One in ten (11%) of those surveyed went through a merger or acquisition more than 12 months ago.
Improved financial stability (44%), improved facilities (40%), and cost and resource efficiency leading to improved margins (38%) were cited as the top benefits of mergers and acquisitions for their schools. Closely followed by access to funding (35%) and access to more educational resources (33%).
Mergers and acquisitions fears
Dilution of the school brand and loss of school identity (42%) and loss of students from parents removing their children from the school (41%) were seen as the biggest risks of mergers and acquisitions. Resistance from staff, parents, and students (38%), cultural clashes between schools (38%), and mismanagement of financial integration (35%) were also cited as key risks for independent schools.
“As one of the leading insurers of independent schools in the UK, Ecclesiastical is passionate about supporting the independent education sector. Our research has found that the majority of independent schools are open to future mergers and acquisitions. Mergers and acquisitions can present opportunities and challenges for the independent education sector. It is important that schools considering future mergers and acquisitions review their liabilities and check that they have the correct cover and risk mitigation in place. We encourage independent schools to think about the risks they may face and how best to protect their organisations for the future.”
Ecclesiastical Insurance’s Independent Schools Risk Barometer 2024 explores the top risks within the education sector and focuses on key areas of concern, including mergers and acquisitions, mental health, and safeguarding. It is the latest in a series of sector insights from Ecclesiastical Insurance, combining independent research with specialist knowledge from the insurer.
Ecclesiastical Insurance offers a range of risk management support and guidance to help independent schools manage the risks they face.
1 The survey was commissioned by Ecclesiastical Insurance and conducted by OnePoll with 250 UK independent school leaders (including bursars, head teachers, deputy head teachers, heads of departments) 8 – 14 February 2024