MAT mergers: five top tips for trusts

The DfE's latest guidance identifies economies of scale, stronger school-to-school support and strategic considerations among the reasons for academies moving between trusts. Its current transfer process also expressly accommodates MATs merging or consolidating, i.e. where all academies from one trust transfer into another.

For those considering a merger, this is not simply a strategic decision to combine two organisations along with the steps needed to bring both trusts together at a practical and cultural level. It is a substantial legal, regulatory and operational exercise, with multiple workstreams needing to come together at the same time.

Having advised on a number of MAT mergers, here are five practical points we think should be on the agenda from the outset.

1. Better, not just bigger

A merger should have a clear strategic rationale. “Bigger” is not, by itself, a compelling reason.

The key question is: what will the combined trust be able to do better than the two trusts could do separately?

A compelling rationale will usually go beyond economies of scale. It might be about combining school-improvement expertise, strengthening financial resilience, creating greater leadership capacity, reducing duplication in central services or building a stronger regional or specialist offer.

That rationale matters legally as well as strategically. Those making the decision need to demonstrate that they have properly considered the transaction and its implications, and that it is consistent with the trust’s charitable purposes and governance obligations.

It also provides the foundation for communicating the merger to staff, parents and other stakeholders and securing their support for your vision.

2. Get the legal structure right at the outset

A MAT merger is not a conventional corporate transaction where the parties can simply agree a completion date and work towards it. The DfE approval process is central to the timetable, and the legal work needs to be planned around it.

Once the proposed transfer has been approved in principle, the DfE works with the trusts and their advisers through an agreed process towards the transfer date. There are prescribed stages and deadlines for key elements, including the transfer arrangements, funding agreements, land and employment matters. The DfE will need to be satisfied that the necessary arrangements are in place before the transfer can proceed.

That makes the early structuring work particularly important. The parties need to understand which trust will continue, how the academies and assets will move, what happens to existing funding and contractual arrangements, and which consents or third-party approvals are required. Often, the choice of which trust will continue will come down to which trust would require more consents/approvals to transfer its schools.

The practical lesson is to establish the critical path at the outset, working backwards from the proposed transfer date and incorporating the DfE's requirements and deadlines. Issues such as land, funding agreements, contracts and TUPE should not be treated as separate workstreams that can simply be picked up later: a delay in one can hold up the whole transaction.

That is often where experienced legal teams add real value - anticipating issues and coordinating the DfE process and the two trusts so that the transaction is ready to complete when approval is given.

3. Do proper due diligence - and look beyond the balance sheet

Due diligence should cover finance, property, employment, pensions, contracts, litigation, safeguarding, data protection and regulatory compliance.

The objective is to identify liabilities and obligations that may not be apparent from the accounts: estates issues, historic employment matters, contingent liabilities, restrictive contractual arrangements and commitments under construction or other long-term contracts.

For live capital projects, for example, the review should capture building contracts, consultant appointments, warranties, bonds, guarantees and funding arrangements, so that the necessary novations and consents are built into the transaction.

Good due diligence is not about producing a lengthy report. It is about identifying what needs to be resolved/ mitigated, documented or reflected in the transaction before completion. It means both trusts go into the merger in full knowledge of all the implications.

4. Treat people and governance as core workstreams

TUPE, consultation, pensions, employee liabilities, changes to roles and potential redundancies can all arise from a merger. Establishing early which employees will transfer and what the future staffing structure looks like will help avoid problems later in the process.

Governance also needs to be designed rather than assumed. The new trust will need an agreed structure for members, trustees, committees, local governance and delegated authority. Existing schemes of delegation may need to be redesigned to reflect the combined organisation.

Conflicts of interest should be identified where individuals have roles or interests in both trusts, with appropriate processes and board records in place to manage such conflicts.

5. Plan integration before you get to completion

The legal completion date should mark the point at which the new arrangements can operate effectively - not the point at which integration planning starts.

The practical work needs to be mapped well in advance. Payroll arrangements need to be tested so that salaries, pensions and statutory reporting continue without interruption. Finance teams need to agree how opening balances will be reconciled, bank mandates and payment controls established, accounting systems aligned and budgets and management information produced from day one.

The same applies across IT, procurement and HR. Systems and user accounts may need to be migrated, supplier arrangements novated or replaced, policies aligned and responsibilities for functions such as estates, procurement and safeguarding agreed.

This should form part of a detailed integration plan running alongside the legal transaction, with clear ownership, dependencies and deadlines. The aim is to ensure that, when the legal transfer takes place, the new trust is ready to operate, rather than embarking on a programme of integration from scratch.

Getting the merger right

A successful MAT merger is about more than getting the legal transfer over the line. The real test is whether the combined trust is stronger, more resilient and better equipped to support its schools than the two organisations were separately.

That means bringing the strategic, legal and operational workstreams together from the outset. The rationale for the merger should inform the transaction structure; the DfE timetable should shape the legal process; and integration planning should be sufficiently advanced that the new trust is ready to operate from day one.

For VWV, this is where experience of MAT mergers matters. Understanding how the DfE processes, transaction documents, property, employment, finance, governance and operational arrangements fit together can help identify dependencies early and keep a complex transaction on track.