Posted on: August 11th 2021 · read

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Education Secretary Gavin Williamson announced in March 2021 that the Government wants to see far more schools in multi-academy trusts by 2025 and are actively looking at ways to make it happen.

Stating that schools ‘benefit from being in a strong family’ he said ‘Multi-academy trusts are powerful vehicles for improving schools by sharing expertise, working collaboratively and driving improvements. It is living proof of the old adage, a problem shared is a problem halved. This is something we want to see more of, because it shows time and again how the multi-academy trust model consistently improves outcomes for pupils.’

There is a suggestion that the single academy trust model is under threat, so what are the benefits of joining, or establishing a MAT?

  • Resources can be pooled together to support all schools within the MAT
  • Experienced Trustees and school leaders can support the professional development of others within the MAT
  • Vision, ideas and collaboration between schools can improve outcomes for pupils and opportunities for staff
  • Economies of scale often result in all schools receiving better value for external services
  • Professional fees for audit services are proportionally lower than for a SAT.

Schools looking to work with an established MAT, and likewise, MATs considering taking on new schools will now have the option to ‘try before you buy’. Joining a MAT can often appear to school leaders as handing over autonomy but deciding if a particular MAT would be the best fit for your trust could be determined during an evaluation period where the impact can be monitored and evaluated in a transparent and open way beforehand.

There are downsides to this approach, such as the amount of time and resources that would need to be invested in the process which may not achieve the desired outcome and this option may not be possible for some schools if they are currently in special measures, as the DfE are likely to want a quicker, long-term solution.

Working with an established MAT

When seeking a MAT that appears to be a good fit for your trust, there are a number of points to consider before embarking on a formal process, such as how quickly the MAT has expanded in the past, if any schools have left the MAT and what Ofsted ratings each of the schools have received. There is also a lot of useful information in the MATs financial statements published on their website, including the Trustees Report and Governance Statement which can help you to make a well-informed decision.

Setting up your own MAT

SATs may prefer to set up their own MAT with at least one other school and with permission from the Secretary of State. Trusts would need to put forward a business case and plan which outlines full details of the proposed change, risks, assets, liabilities and any other relevant information. Alternatively, a SAT could apply to be a formal sponsor of another academy, such as one with poor performance, which wouldn’t require a separate application for permission to become a MAT

The Financial Due Diligence process

A comprehensive Financial Due-Diligence (FDD) undertaking will provide the information required to enable all parties to make an informed judgement as to the balance of risks and opportunities and the terms on which to proceed. In any FDD undertaking, it is important to cover all material issues, looking beyond the obvious and investing the time to investigate properly in order to avoid unexpected issues later on.

What should be investigated?

  • Funding, income and expenditure profile over the past 3 years, including cash flow
  • Budget position for the past 3 years and any future changes that are known
  • Forecasts of predicted pupil numbers on roll; considering wider issues such as local housing developments
  • Scrutiny of all board meeting minutes from the past 3 years
  • Review of all legal contracts
  • Analysis on all HR contracts including any existing TUPE requirements and special conditions
  • Inspection of the physical assets of the Academy, such as the condition of buildings and facilities
  • Scrutiny of all legal documents, insurances, health & safety audits, audit outcomes, ‘near miss’ reports and potential liability claims
  • Review of internal processes and controls (does practice reflect policies)?
  • Liabilities and any restrictions
  • Skills profile of current staff and Trustees

Who should undertake due diligence?

Many larger trusts will have some of the skills and expertise required to carry out certain aspects of the due diligence process ‘in-house’, but specialists including audit and accounting advisors, legal professionals, building surveyors and HR advisors are all likely to be required.

For schools that work closely with others around them, and those undertaking a ‘try before you buy’ approach, there may be a temptation to conduct a simple ‘desktop’ review, not least because of the costs involved. However, this approach can lead to many pitfalls and is easy to get wrong. All Trustees will need to be fully aware of all relevant information before any decisions are taken, with findings discussed and clearly documented in the minutes. The better the FDD process, the more successful any potential merger will be.

Get in Touch

We are highly experienced in the education sector, having undertaken considerable due diligence work of this nature over the past 10 years; initially in the realms of higher education establishments and subsequently with academies looking to merge into a new or larger MAT.

Please get in touch with your regular adviser or local office if you would like an informal discussion to look at the options available.

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