The transfer of ownership of an independent school can be a complex and sometimes troubling enterprise and any seller should plan carefully before making any decisions.

There is advice available and this should be sought before too many people are involved. Confidentiality is often the best course of action needed to avoid unnecessary concern and anxiety within the school community and beyond, at least until the issues surrounding the sale are clarified. Even then, if the decision to sell is made, it is usually wise to keep it confidential until a clear and secure route to completion of the sale is established.

Buying and Selling Schools – Reasons for Sale

In times of recession and economic uncertainty, a small school can feel strong pressures from falling rolls to do something dramatic. This may result in ill-advised decisions that could provide a short-term fix but turn out to create other problems further down the line.

  • If a proprietor is nearing retirement and does not have an exit strategy then he is placing the future of the school in jeopardy. He needs to make plans to ensure the well-being of the staff and pupils. He may have an obvious successor lined up but if this is not the case then he will need to think very carefully about his next course of action and would be advised to seek advice.
  • Certain schools are more vulnerable. For example, small special schools are particularly susceptible to fluctuations in pupil roll, since the loss of one or two pupils, at the fees that they can command, may make the school unviable, thereby endangering the continuity of education of all the pupils and the jobs of all the staff.
  • Sometimes, an honest and humble appraisal of the circumstances may indicate that a school could perform significantly better than it currently is doing, with more dynamic and energetic leadership, and this insight can assist the decision to take the school transfer route.

Buying and Selling Schools – Buyers

Buyers come in many forms:

  • There are individual buyers or couples – people who have had many years in education, who have saved sufficient funds and who are attracted to the prospect of passing on the torch of learning or the gift of education to young minds, i.e. Philanthropically minded people who fancy that lifestyle and who would feel fulfilled in that role.
  • There are also buyers who have gone a stage further and have created small groups of schools and have the backing of private equity to fund their enterprises. These small groups are creating the economies of scale that can permit them to take on an individual school lacking this benefit.
  • There are also the large multi-national groups who are using these same economies of scale to forge global educational interests and who seek a foothold in this country.

Buying and Selling Schools – Charitable Trusts

For many years there has been a ‘cultural’ feeling that charitable trust schools, with governing bodies and boards of trustees, will not be available on the market. The assumption is often made that these schools are all well managed, have no problems, are secure and therefore, it is unlikely that a transfer will be sought. Similar assumptions would also have it that, in any case, they cannot be legally traded as their charitable status would not permit it. This is not the case and there are compelling reasons why it should be understood that it is not the case.

Many – or even most – charitable schools are well managed, but some are not and those that are not, suffer the same problems that non-charitable schools face if they are not well-managed. It’s all down to pupil rolls and, as recent closures of charitable schools have shown, they are not immune to these immutable laws: there is nothing intrinsic about the charitable status that protects such schools from market forces. And although there may be legal obstacles contained within the Memorandum and Articles of Association, these may well be obstacles that can be overcome easily by any good law firm.

Many such transactions have taken place in recent years and the trustees of charitable bodies should be aware of this possible course of action. (Many governors are not aware of the possibility and so it does not occur to them that the transfer route could be a solution to their problem). The reasons for the sale of a charitable school do not differ significantly from those that use other trading methods.

Buying and Selling Schools – Think hard, plan ahead and act decisively

The biggest mistake is to assume, or hope, that ‘all will be ok in the end if we just stick it out for a couple more years’. Be aware that what is a good prospect for a successful transfer now, and for school survival in the future, may not be the case in a couple of years time. So for all schools contemplating closure PLEASE consider the transfer option first – but consider it in time to save the places of the pupils and the jobs of the staff.