Navigating School Mergers: What Every Independent School Leader Should Know
In an era of shifting demographics, rising costs, and growing competition, many independent schools are exploring partnerships and mergers as a strategic path forward. While a merger may offer economies of scale, expanded programming, and financial sustainability, it also carries significant complexity and risk.
Whether you’re a Head of School, Board Chair, or Business Officer, the decision to pursue a merger demands a rigorous due diligence process.
Why Mergers Are on the Rise
Enrollment pressures, especially in small and single-sex institutions, are driving schools to consider partnerships that would have seemed unlikely a decade ago. For some, it’s about survival. For others, it’s about thriving - expanding curricular offerings, sharing facilities, or positioning the school more competitively in the local market.
But good intentions are not enough. The merger of two nonprofits, each with its own legacy, culture, and stakeholders, is inherently complex. Mergers can fail - not because the financials didn’t align, but because the governance, community, or mission didn’t.
A Roadmap for Schools Considering a Merger
A good “Due Diligence Checklist” can help you consider critical areas before committing to a merger or acquisition. It should include items in categories such as:
Governance and Legal Structures: From bylaws to board minutes, understanding how each school is structured and has been governed is essential.
Financial Health: Audited financials, endowment restrictions, tuition trends, and liabilities should be reviewed carefully.
Enrollment and Market Positioning: Are both schools competing for the same students or do different marketing messages need to be reconciled? Will the combined school be able to improve the combined market share once merged?
Faculty and HR Issues: Merging salary bands, benefit plans, and union status can be complex, merging faculty culture can be even more challenging.
Campus and Facilities: Will both campuses remain open? Are there costly deferred maintenance issues? If one campus will be sold, are their buyers, and is the use restricted in a manner that limits marketability?
And, Culture and Community Fit: Perhaps the most difficult to quantify, yet the most important to get right.
Along these lines, we’ve prepared a checklist available for download at the link below. However, it is important to stress that no two situations are alike, and a checklist such as this is a very early starting point, and no substitute for advice from an attorney, tailored to your school and its strategic needs and options.
Final Thoughts
Mergers are not just about cutting costs. They’re about building something stronger together - a school that is more resilient, more innovative, and more responsive to the changing needs of families and communities.
The due diligence process is your opportunity to ask tough questions, identify risks, and uncover the synergies that might not be obvious at first glance. With the right tools and a clear-eyed process, your school can make a merger decision rooted in mission, strategy, and long-term sustainability.
If you need help conducting or interpreting due diligence for your school’s potential merger, we can help. Contact us to learn more.
Co-authored by Pete Commons and Greg Smith
