MAT mergers: does 1+1 always = more than 2?

Mergers and acquisitions (M&As) occur frequently in the corporate sector. Turn to the financial pages on just about any day of the week for news of the latest merger or takeover. While some M&As succeed many fail to deliver the value that was anticipated.

In the world of MATs we are very familiar with the acquisition part of the equation. A MAT sponsoring a weak or struggling school is akin to an acquisition – and certainly the way that some MATs grew post 2010 was reminiscent of the rise of a corporate empire. The re-brokering of academies is also increasing (up to 167 in 2016) and this too is feeding the acquisition pipeline.

But mergers too are now very much part of the MAT scene. You only have to look at the minutes of those Headteacher Board meetings that are published to get a sense of the scale of M&A activity among academies and trusts. In some cases this is being driven by groups of schools deciding to convert to academy status together and seeking to join the same MAT. In other instances small trusts have recognised that they are not viable when it comes to running cost-effective business support functions and/or providing school improvement support. They are merging with another trust of the same size or seeking to join a larger MAT.

Given these trends what can we learn from the corporate sector about M&As that might be relevant to MATs? In an article for the MIT Sloan Management Review Hamid Bouchikhi and John Kimberly describe seven lessons that will make it more likely that M&As will result in successful integration. I have taken the essence of these lessons and transposed them into a MAT context. And then added one point of my own!

First, mergers are about much more than economics – i.e. realising economies of scale, merging IT systems, reducing senior management costs or maximising purchasing power.  Rationalising functions and services is, say Bouchikhi and Kimberly, a necessary but not a sufficient condition for a successful merger. Academies and boards also need to address what are described as ‘psychological issues’. They need to forge a new shared identity. This goes way beyond choosing a new name and logo. The parties to a merger have to be able to answer the question ‘Who are we?’ They should be able to describe what makes them distinct, what is it that they want to achieve together and what are their shared values that will underpin how they work together?

Moreover they should be answering those questions in such a way that others – pupils, parents, staff, the local community and other schools – can see what they stand for and are striving to achieve. Vision, values are mission critical to making mergers successful.

Second, those involved in considering a merger should check in advance whether these ‘identity’ related issues are likely to undermine the chances of success. In practical terms this means MAT due diligence should examine more than just data relating to pupil and staff performance, financial sustainability, and projections of pupil numbers and the state of the school estate – important though those things are. It should also embrace understanding the culture of the different schools or MATs coming together and assessing whether they are likely to be compatible. Potential partners should spend time in each other’s schools, and ensure that their respective leaders and board members talk to and get to know each other. They should understand the culture and context within which different MATs are working, learn about each other’s aspirations and find out what it is hoped to achieve from a merger. Are the potential partners ready to let go of their existing identities in order to create a new merged identity?

Third, partners need to be clear about the terms under which the merger is taking place. The authors describe four different types of M&A – and we can see how they apply to MATs:

  • Assimilation, which occurs when the identity of a school acquired by a trust is deliberately dissolved and assimilated into the identity of the new MAT. There is no pretence at equality in the takeover arrangements. The MAT effectively imports its systems, operating practices, brand and management into the school it is taking on. That is effectively what often happens when a MAT acts as a sponsor – particularly if a school is weak or failing at the point of takeover. How well and how long it takes for staff, parents and pupils to accept the situation and feel part of a new enterprise will depend on how attached they were to the old regime, the reputation of the incoming MAT and the communication, people skills and professional competence of the new MAT team. Assimilation can be a very effective strategy when a school is broken.
  • Confederation is the polar opposite of assimilation. Each organisation or school keeps its name, governance, leadership and autonomy. Any central role is more about co-ordination with sharing or integration limited to agreed areas of mutual interest – such as support functions, professional development, recruitment and possibly an element of school improvement support or challenge. Technically this model does not apply to MATs but I have come across a number of MATs that, despite their legal form, effectively operate as confederations with participating academies still cleaving to their old identity. This model may work in the corporate sector but with trusts a confederation approach tends to equate to a weak marriage of convenience. The partners are not ready to form something new and different. It’s a minimalist MAT model: the MAT will always struggle to be more than the sum of its parts. The academies in such arrangements are only likely to get limited value from being part of a larger entity and the organisation itself is vulnerable if one of their members starts to develop problems – they are unlikely to have cultivated the skills, systems and disciplines necessary to intervene and arrest decline.
  • Federation (not to be confused with school federations) differs from confederation in the minds of the authors by virtue of there being a new layer of identity sitting alongside the existing identity. In MAT terms that means you positively foster the uniqueness of individual organisations or schools while having a lstrong overarching layer that co-ordinates and supports their work and holds them to account for their bottom line performance. The formal structure of a MAT may be similar or the same as in the confederation model but the culture underpinning it is very different. In contrast with the confederation approach, accepting different identities is not a legacy issue but a positive asset that benefits the whole organisation and from which all parts of the enterprise can benefit and learn. There are many MATs that would say that this accurately reflects their philosophy – and it is how they would make a pitch to any schools that would want to join their MAT.
  • Metamorphosis describes a process for dissolving or losing existing identities and blending them into a completely new identity. In this scenario the new MAT is different from what its constituent academies or MATs have been before. There are no winners and losers from the merger process: staff and other stakeholders have the opportunity to shape and create the shared identity of the new MAT. This helps to forge ownership of the new MAT’s agenda. Adopting metamorphosis as the approach is also likely to generate the social capital and goodwill that will help to realise the practical benefits of a merger and to tackle the nitty-gritty thorny integration issues. As with the other M&A approaches I could take you to MATs that are pursuing this route.

Fourth, MATs need to be pragmatic; one size does not fit all. So MATs might adopt one approach in one situation (e.g. assimilation when sponsoring a weak school) and another approach in another (e.g metamorphosis if joining with another cluster of schools or federation – as defined above – if an outstanding school joined the group). The important thing is for MATs not to kid themselves or their prospective partners: to be clear and honest about the approach they are adopting.

Fifth, successful mergers must address substantive as well as symbolic issues of identity. Symbolic issues include agreeing a mission statement, adopting a set of values, commissioning a new website, creating a new logo and promoting the new identity to staff, the community and the wider world. These are important but need to be accompanied by tackling issues of substance – such as governance, the role of the board and local governing bodies, budget management, leadership structures, rationalisation of posts or letting people go who do not share the new vision. For MATs substantive matters also include developing a model for collaborating deeply on school improvement. If MATs are to fully realize their potential this has to go beyond sharing data and holding to account and encompass how leaders and staff across the trust are going to build capacity, share expertise and work together to improve outcomes for children and young people. Symbolic initiatives will be exposed if they are not quickly backed up with decisions on substance.

Sixth, forging a new identity is not just the property of those leading the merger process. Bouchikhi and Kimberly say that ‘Identity is shaped, owned and reinforced by the organisation’s key stakeholders. It lies in the eyes of the beholders.’ Leaders that fail to understand this end up operating in a parallel universe running an organisation that does not reflect how the rest of the world sees them. For MATs this means engaging with staff, parents, pupils, the local community and media, the RSC and other local schools.

Seventh (and from my perspective this cannot be said too often) aligning identities is not a one-off task but a process that takes several years. That fits with what we know about other forms of school partnerships: the benefits will come through if collaboration is pursed in a disciplined way but it can time for the full benefit and impact to be achieved. That is a difficult message but necessary in an education world that all too often is looking for instant improvement.

And so to my own observation. Experience from other parts of the public sector, particularly the NHS, shows that while structural upheaval is under way there is a real risk of an core organisation’s core business suffering. Leaders get distracted, managers  absorbed in other tasks and standards start to slip. This points to MATs ensuring that they stay focused on their immediate school improvement priorities during a M&A process. Changes aimed at improving things for future generations of children and young children should not be at the expense of those currently going through the school system.

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