Depending on how you look at it, mergers are either very common or very unusual in UK higher education.
Dig deep enough into the annals of any institutional history and you will most likely find at some point that the institution as we know it today emerged from the combination or absorption of various nineteenth or twentieth-century mechanics institutes, colleges of teaching or technical colleges.
But recent history of the sector has seen only a handful of mergers, most notably the merger of what was then Victoria University of Manchester and the University of Manchester Institute of Science and Technology (UMIST) in 2004, and the merger of the University of Glamorgan and University of Wales, Newport, to become the University of South Wales in 2013. More recently we’ve seen the merger of the Institute of Education into University College London, the merger of Writtle College with Anglia Ruskin University, recounted in detail on Wonkhe here, and the merger in 2024 of City, University of London and the medical school St George’s, University of London to create City St George’s, University of London.
The mergers paradox
Seen from the birds-eye view of Whitehall the relative recent paucity of higher education mergers can be puzzling to some. In the private sector mergers and acquisitions are a well-trodden path to gaining market share, reducing overheads, and generally creating the kind of organisational powerhouse before which others cower and cringe. Arguably, larger institutions can support a wider breadth of education and research activity, can have a greater impact on their external landscape, and are more protected from external change and financial twists of fortune.
But for higher education institutions there is much more to take into consideration than the goal of organisational heft and security – there is a public service mission, and the institution’s values and culture, which may be best served by remaining the same size or pursuing only modest growth. And there is the administrative complexity and effort of undertaking major organisational change, when in some cases, institutional leaders argue, the benefits of scale can be realised through strategic collaboration rather than full merger.
While it may look from the outside like the UK has a puzzlingly large number of universities and other providers of HE compared to our geographical footprint and population, we’re not a global outlier in that regard. Prospective students enjoy a broad choice of large multi-faculty institutions with a wide range of extra-curricular services and opportunities, and smaller, cosier, and more specialist offerings – indeed, higher education policy in recent decades has trended towards increasing the numbers of higher education providers.
Yet at times of financial challenge, such as those the sector is currently experiencing, talk inevitably turns to mergers and whether the sector as a whole would be more resilient if merger or acquisition was a more readily available tool in the financial sustainability arsenal. And here lies what might be termed the merger paradox – financially healthy institutions tend not to see a need for mergers or be motivated to pursue one even where a strategic business case might be made; whereas financially distressed ones are less likely to be an appealing prospect for a merger partner.
In the case of both Writtle and St George’s, their governing bodies were astute enough to realise that their institutions would not thrive in the long term, and to start considering merger well before reaching a point of crisis.
Being financially challenged is not the primary driver to merge with another institution,” says Richard Mills, Director, Head of Finance Consulting and lead for public sector M&A for KPMG in the UK. “Returns on investment take a long time to realise, and sometimes things get worse before they get better. The driver has to be strategic fit – for higher education a merger needs to be about strengthening the academic portfolio, and you need to be really clear on the vision and strategy for the merged organisation.”
Having the strategy in place, and a plan for the legal and financial aspects of managing a merger is only the beginning. “You need to consider the implications of integrating systems, processes, and culture,” says Margaret Daher, Director and major higher education change specialist at KPMG. “The worst case scenario is a Frankenstein model of bolt-ons rather than one organisation emerging. The work of a merger is much greater than the initial negotiations and the creation of a new legal entity – but that initial work can be so consuming that you end up risking letting the dual running of two distinct entities under one institution become an unintentional status quo.”
City St George’s story
Elisabeth Hill, Deputy President and Provost at City St George’s, joined what was then City, University of London in September 2022, and was given responsibility for delivery – and realising benefits from – the planned merger with St George’s, University of London which was under discussion at that point.
The merger was very much about strategy, not finances,” says Elisabeth. “City has always been a University focused on business and professional practice. When Anthony [Finkelstein] took up his post as President he saw the potential to expand the range of professions that we serve to include broader aspects of health as well as medicine. Being a larger institution gives us greater capacity, greater resilience, and a greater opportunity across a breadth of disciplines to leverage interdisciplinary and multidisciplinary work internally and have a greater impact externally. All six of our academic schools already had some kind of interesting relationship with health and medicine so you could see how strengthening the breadth of health and medicine could align with City.”
At the very early stages of discussion, the governing bodies of both institutions had agreed some “red lines” – primarily to give security to the Council of St George’s that the institution’s long history would not simply be assimilated into City and disappear. The incorporation of St George’s into the new institution’s name was seen as essential, as was the idea that the merger was a combination of two universities rather than the incorporation of one by another, although it was agreed that in practice City’s structure and policies would become the reference point for subsequent work to establish the new institution.
Once it was clear that there was a strategic rationale and appetite to pursue merger for both Councils, a lot of “due diligence” work was required to make sure that the new institution would have the finances, and the expertise, to function and would be compliant in legal and regulatory terms. While neither institution felt itself to be in immediate financial peril, neither had the luxury of a financial cushion to support major investment, and it had to be clear that the combined finances of the two institutions would be sufficient both to fund the merger itself and to realise its planned benefits. Taking on space in the midst of a hospital site meant that City’s Council and executive team had to do a lot of work to establish risks and compliance expectations around estates maintenance and health and safety to ensure that they would not be putting City at risk as a result of the envisaged merger.
At this stage both institutions had to carefully manage their very distinctive relationship, i.e. having agreed to merge in principle, but not yet having merged. A tightly negotiated “transfer agreement” set out the conditions under which the merger would operate including the conditions whereby either party could legitimately back out and what information each was obliged to share, in some cases with reference to competition law. Also at this stage, work began with the Department for Education, Office for Students, Privy Council, and General Medical Council among others to work through the academic and legal governance issues of transferring powers and duties from one higher education institution to another. Further work was undertaken to understand the implications for students and prospective students and their likely response to the merger and any related impact.
A key thing was that there was little in terms of pre-defined process for dealing with a university merger of this type,” reflects Elisabeth. “At times it felt like we were making it up – albeit in a very thoughtful and evidence-informed way – as we went along. It was especially helpful to have people with insights from other sectors on our Council that we could draw on where useful or relevant in our sector and context. External bodies were very supportive, and we drew on significant external support, which is an absolute necessity in this kind of work. I don’t know how you could effect something like this without broader insight, guidance and expertise.”
Integration – two becoming one
The new City St George’s, University of London formally came into being on 1 August 2024, but the work of integration is ongoing. “We decided to leave most of the integration work until after the formal point of merger,” says Elisabeth. “By that time, we had been talking about merging for two years and there was a sense that some people were tired of the discussion and needed to see that it was really happening. And on a pragmatic level it is much easier to work through the integration challenges when everyone is under one metaphorical roof, there’s one vice chancellor, one senior team – so we judged that this approach would provide certainty and signal an ability to move forward, replacing uncertainty with certainty. Once we had access to all the detail of the information about St George’s programmes it also became clear that we weren’t going to have to deal with a lot of overlap, which was helpful because it meant we could deliver on a cultural expectation that we would respect the St George’s heritage, which by implication is fundamentally about the academic programmes and research.”
Key priorities for integration were about bringing together St George’s and City’s School of Health & Psychological Sciences into one academic unit, whose executive dean was appointed through an external recruitment process. There was also a mapping process to establish the university professional functions and roles, and assign some functions to the new school, and some to the university. An early priority was confirming directors of professional services for the merged institution, who were then tasked with managing the integration of their teams. This work is now underway.
While that integration work continues, Elisabeth points out that City St George’s like most universities, has a whole range of other strategic change agendas on the go, including portfolio review, curriculum management, creation of a student services hub, and replacement of some university professional services systems. There is also a root and branch review of professional services under way, looking at the location and effectiveness of roles and functions. That means it’s harder to attribute impact specifically to the merger process, but it’s also harder for people to blame the merger as the sole cause of unpalatable disruption.
There is active discussion at City St George’s Council about what above-baseline success measures for the merger should be. Some members of St George’s Council have joined an enlarged City St George’s Council and work is underway to establish the culture of the new institution and supporting processes, and the information needed by Council members to ensure their understanding of the combined institution and support informed decision making around strategic developments and operational priorities.
Institutionally, leadership continues to think on a day-to-day basis about the kind of integrated community it wants to have at the level of both school and university and what sorts of interventions will help people forge that community. Leaders are taking care to have visibility across all university campuses, putting effort into building relationships, undertaking more formal “road shows” to share strategy, hosting talks, and holding informal sessions with different staff groups. The two students’ unions have also merged – a separate merger in its own right – and continue to maintain an active presence on both sites, strengthening student representation and opportunities from the outset.
So what would Elisabeth say to another senior leader preparing for a merger? “It’s extremely intense, and for most people it starts outside your normal realm of expertise. You have to be prepared to run business as usual alongside all the additional work on merging, and you have to support staff and students to stay focused on the things they should be focusing on and not getting distracted either by opportunities for future alignment or deferring things to post-merger.”
Perhaps the most important lesson for any leader considering merger is having to be prepared to navigate the challenge of sticking to institutional and professional values while actually achieving what can be an intensely challenging process on a human level:
We always wanted to be respectful of context and history, to collaborate, be true to our values, and true to the commitments we made and the ethos of how the merger would be discussed and planned,” says Elisabeth. “But you can’t always be as collaborative as you might want to be – otherwise the risk is you fail to get to the point of merger agreement. At least one of the parties has to be pushing for progress and ensuring that decisions are made at any one time.”
Seven merger fundamentals
Having worked on the City St George’s merger, Margaret Daher and Richard Mills would strongly advise boards and executive teams to recognise that a merger is a serious strategic endeavour – it needs to be owned and delivered by resolute staff and managers. Their experience and studies of successful mergers highlights seven fundamentals which need to be got right, although they add that often these are still ignored.
- Create and communicate a strong, clear vision. From the start, all staff should be informed of the compelling strategic rationale behind the merger, the transition process and the expected changes, and encouraged to engage in two-way feedback to increase the sense of involvement.
- Select new leaders early and let them lead. By identifying and publicising the new leadership team, the merged entity can effectively cut links with past loyalties, provide clarity on leadership and lines of reporting, building cultural alignment and engagement.
- Place an emphasis on integration planning. Having a robust and long-term post-merger integration plan is essential to overcoming fragmented ways of working, legacy structures and cultural issues, thereby reducing the risk of indefinitely dual running.
- Do the due diligence. Giving proper consideration to short- versus long-term benefits, and carrying out robust due diligence to understand risks fully and test the plans will help the organisations set their sights on opportunities at an early stage, and incorporate anticipated issues into post-merger integration plans so they are monitored and addressed.
- Win over stakeholders and develop cultural alignment. Staff are the people that make services happen, so it is vital to overcome any resistance to change. A comprehensive change management approach needs to be adopted, “change champions” should be chosen at an early stage, and given the responsibility and authority to influence and motivate their colleagues. Understanding cultural differences and how to achieve alignment is critical.
- Develop both the structure and people. Make sure that the new merged organisation has the resources and the skills to manage the transition process by investing in suitable capability, as well as instituting structural and procedural changes such as mixed work schedules and cross-site working that can encourage collaboration and generate a new culture.
- Have patience to achieve long term objectives. Mergers are highly challenging and integration is unlikely to happen quickly. To succeed every level of the organisation requires dedicated resources, experienced people, and strong pre- and post-merger planning, all of which take time to develop and deploy.
While there are obvious practical and cultural hurdles to overcome, what recent examples demonstrate is that with the right vision, case for change and supporting business rationale, a merger can be the strategic solution for long term sustainability.
This article is published in association with KPMG as part of our Radical Efficiency series. You can view other articles in the series here.
