Bankert & Schwartze: When Done Right, Mergers Can Improve Student Outcomes and Save Schools Money. Here are 4 Lessons for Ed Leaders

Until a few years ago, the words “merger” and “education nonprofit” rarely appeared in the same sentence. Concepts from the world of business conjure up mental images of heartless corporate takeovers and numbers-driven power brokers, which is why many education leaders are understandably skeptical of embracing private-sector concepts that appear at philosophical odds with equitably serving students.

Recently, however, pressure to prove results has amplified: Schools and education nonprofits compete for scarce resources, including talent. Funders challenge organizations to show quantifiable proof of impact and a path to financial sustainability. And political headwinds, especially around charged issues such as parental choice and school accountability, keep growing.

That’s why nonprofit leaders and their boards are considering mergers — the consolidation of two (or more) organizations through formalized partnerships — as a way to address all these challenges at once. Our experience in the private and nonprofit sectors leads us to believe that well-designed education mergers putting kids at the center of the rationale can dramatically accelerate academic outcomes, the number of students and communities served, and organizational efficiency.

In our work leading strategic planning for dozens of schools and education nonprofits every year, we’ve seen mergers increasingly discussed as viable strategic options. Two small school networks in New Orleans, a highly saturated charter landscape, saw consolidation as a way to improve classroom instruction, upgrade talent and reduce operating costs. With greater scale, they planned to offer students a broader array of programs and courses, as well as more specialized instruction. The outcome, when done right: improvements in student achievement, less dilution of quality resources across schools and economic efficiencies.

“When done right” can sound like a throwaway line, but it’s a significant consideration given the complexities involved in structuring a partnership. For every successful education-sector merger, there are many others that failed or were never completed. In the private sector, mergers often derail without a clear line of sight to cost savings or revenue upside. In education, efforts stall because leaders can’t identify how combining forces will add value for students or the adults who support them — or because they struggle to reconcile organizational values and cultures. “These things tend to collapse for reasons that have less to do with logic and more with who is making decisions, holding the purse strings and defining the brand,” one sector leader told us.

Thankfully, the merger exploration process is predictable even as the facts of each case are unique. Our experience shepherding nearly 10 education organizations through this process over the past 18 to 24 months surfaces four key lessons:

1. Don’t wait to have the conversation. Many education organizations do not consider a merger until forced to do so because of a challenge (such as loss of a major donor or a crucial contract) or because they are approached by a potential partner. Assessing a time-sensitive opportunity can add significant stress to an organization, and stakeholders should know where they stand early on. Surfacing differences in perspective on risk tolerance and on organizational non-negotiables are essential early steps.

2. Evaluate a merger in the context of a range of strategic options. Mergers can be exciting, but they are rarely without risk. Rather than evaluating a potential merger in a vacuum, leaders should weigh the benefits and drawbacks against other likely strategic paths, including staying the course, to get a clearer picture of the most attractive options. How aggressively organizations pursue next steps — and whether they act solo or in partnership — is often a function of positioning in the broader landscape.

3. Proceed in a structured, timely manner. Merger deliberations can sow uneasiness if they drag on: There’s greater risk that word will get out too soon, leaders experience analysis paralysis, or the options on the table become muddled and uninspiring. Leaders should structure a tightly managed process that ensures they get the necessary information to make a good decision, and then communicate thoughtfully to staff and other stakeholders once the decision is made.

4. Seek guidance from people familiar with merger exploration and implementation. The complex process of evaluating a merger happens on top of the day-to-day work of an education organization, and few leaders have the expertise or bandwidth to lead the process. We recommend identifying a third party (for example, a board member with merger expertise) to help assess the options, represent the organization’s interests and dedicate the necessary time to flesh out the plans in sufficient detail.

Once thought to be an option pursued only under the most extraordinary circumstances, a merger may be a valuable strategic path for more schools and education nonprofits. If leaders capitalize — with appropriate caution — on the opportunity, they can accelerate progress for the students and communities that need it most.

Lina Bankert is a partner at Bellwether Education Partners, where she co-leads the Strategic Advising practice and has supported dozens of strategic planning processes for schools and networks, including mergers and acquisitions exploration. Lauren Schwartze is a senior associate partner at Bellwether Education Partners and has deep perspective on strategic planning and talent system evolution. Bellwether was co-founded by Andy Rotherham, who sits on The 74’s board of directors.

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