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The realities of merger: an academy CEO’s perspective

The realities of merger: an academy CEO’s perspective

As numerous academy trusts begin to consider the option of merger, not least following the announcement of the Trust Capacity Fund in July, Phil Crompton (Forum Strategy Associate and former CEO of Trent Academies Group) shares his experiences and some of the leadership lessons he took away from the process. 

The Trent Academies Group (TAG) existed from 2014 until 2018. I was the founding CEO. It’s now ceased to be. In January 2018 I announced my intention to retire in September of that year and, as no one in the trust was inclined to take the reins, the Board decided that it made sense to join forces with another multi- academy trust.

We had developed a lot of excellent shared values, practice and events. The trust was moving along nicely and the three academies were showing many signs of improvement. But our risk register identified my retirement as a problem and a succession plan was needed. No one had emerged, so when I announced my retirement the Board had to consider Plan B. They/we decided merger with a like-minded trust was the preferred option. Thus began the process of seeking the right candidate.

Quite sensibly, given their oversight of the system, the Chair decided the first port of call should be the RSC – who suggested five trusts that might be a good match. Trustees met representatives of each and, as well as seeking sufficient synergy in vision and values, had three particular questions in mind:

  • Did key personnel in the trust have experience of raising achievement in challenging areas?
  • Did academy governing bodies have at least some influence?
  • Would the trust be able to provide appropriate challenge for an already outstanding academy?

Their conversations were shared with the rest of the Board and with the three Headteachers. They soon narrowed it down to three possible partners and arranged for the Headteachers to meet the respective CEOs.

You may notice that my part in this process was limited. I had taken the view that I would not have to work with these people and my views were not highly significant. I contributed at Board meetings and, I think, influenced thinking to some degree. However, the CEO needs to be a key player in any merger as the one person who has the detailed overview of life in each academy as well as being the one who fully understands the risks faced by the potential partner. And it’s much easier to take advantage of a leaderless organisation – it all seems so obvious now.

By March 2018 it had been decided that the preferred partner was the Spencer Academies Trust (SAT). Each of the three trusts interviewed had made it clear that they would not accommodate a new name – we knew the Trent Academies Group name would no longer exist. Work was underway to ensure that any merger would include the presence of TAG trustees on the new Board, to guarantee that the three academies would continue to operate under the “Everyone will be given the chance to shine brightly” strapline, and that members of our senior teams would play a major role in whole trust work. However, the clock was now ticking and the Board was keen to get an agreement in place for the new academic year. This probably gave the slightly larger partner the upper hand and questions, understandably, were asked as to whether it really would be a merger and not a takeover.

Due diligence began. The TAG Board took the view that the RSC’s office had recommended trusts that were well run and well governed (they were) and due diligence did not need to be very rigorous. SAT themselves took a different view, turned over many stones and highlighted some concerns. Serious doubts at this stage would have left little wriggle room and, if SAT had backed out, we would have moved into a new year without a CEO – a big risk. Happily, they didn’t, but they could have done.  If, for our part, the Trent Academies Group had decided that SAT was not a good partner so late in the day, the RSC could have instructed SAT or another trust to take over anyway. Fortunately, the board was content that SAT was for us; and SAT felt the same way!

However, my own power was ebbing away – the danger of announcing retirement. I still had a central team to manage but my role really involved planning the future. And there wasn’t one for TAG as an independent trust. I left with each of the three academies posting its best ever GCSE results. They were all moving in the right direction. Whilst I was slightly uneasy about some aspects of the merger I was consoled by the fact that the extra capacity SAT could offer would help my colleagues to accelerate progress. The deal didn’t quite get over the line in the summer but it was agreed that it could be delayed until October.

I observe from a distance of course but it seems that each of the three academies have benefited. They are probably now in a stronger financial position given they no longer have to pay for my services or the team that I led over the first year (who either departed into retirement or on to new jobs). It is my personal view that there are too many CEOs, Finance Directors and HR Directors in the system. The merger made sense when it was first suggested, and it makes sense now, but it would be naïve to ignore the fact that in many ways it looked like a takeover. If I were to relive the experience, I would stay in post for 3 months longer to ensure what was agreed actually happened. Most of it did, but the transition might have been a bit smoother.

It does seem that the free for all which was started in 2010 is slowly having order imposed upon it. Small MATS appear to be unsustainable in the long term and rationalisation is required. More mergers will happen. I am sad that the trust into which I put so much of myself has now gone, but egos need to be parked. The resources available need to be used to maximum effect and having hundreds of small trusts operating across the system is not helpful. They either need to grow to scale quickly or merge together in my view.

I offer some advice to those who see merger as a way forward, or, indeed, as a necessity:

  1. By all means ask the RSC office for advice but don’t adhere to it too rigidly (if you don’t have to!). They will want mergers to happen, may direct Boards to their preferred trusts, and they may not necessarily be the best fit for you. You might want to explore existing contacts before informing the RSC office. Someone you already know and respect could well be the best partner. If that is the case, explore it and then be transparent about it with the RSC if it looks like it could become a reality.
  2. Only embark on the more detailed parts of the process after securing a written agreement about what bits of ‘the DNA’ of the two trusts will exist in the new entity, what the leadership and governance arrangements will (generally) be, what the scheme of delegation will look like, and, of course, – with as much clarity as is possible at this stage – what the financial commitments of schools will be.
  3. Do not go into merger talks without a functioning CEO, if you can help it. To announce a retirement and then open discussions immediately put us on the back foot. It is far better to suggest that you are keen to find a partner trust with a view to a medium-term merger. Relying upon capable and enthusiastic trustees to manage the move adds an extra risk. They can walk away and they might ignore some of the details because they grow weary.  It’s human nature. The Board needs to make the big decisions, but the CEO and the Executive team need to be active drivers and managers of the process to ensure the best outcome for the existing trust and its schools.
  4. Carry out careful and thorough due diligence. Expose weaknesses and strengths on both sides. Don’t let one appear to be closer to perfect than the other. There are flaws right across the system and that‘s hardly surprising given how young it is. Don’t be too modest about what you have achieved. The stronger your hand, the better the outcome you can secure for your schools and staff.
  5. Work in partnership for at least a term, and perhaps a year, before committing to formal merger and don’t be afraid to pull out if it isn’t working. Use this time to engage in discussion with your communities about the arrangement.
  6. Communicate and consult. Make sure that your staff feel part of the process and are as informed as possible. In situations such as these, uncertainty is unavoidable and good people often head for the exit. That’s the biggest risk for pupils, so must be managed. The more transparent you can be and the more you can seek the views and input of staff, the more ownership they will feel and the more likely they are to stick around.

The Trent Academies Group has disappeared from sight. It saddens me a bit, of course it does, but the three academies continue to thrive as part of the bigger entity. The pupils, the parents and most of the staff are apparently barely aware of the change and that has to be a compliment to those who organised the new arrangement.

 

Phil Crompton is an Associate of Forum Strategy, former founding CEO of Trent Academies Group, and an executive coach on the Being The CEO programme.