Mergers are on the up, but do they improve college performance?

Mergers are on the up, but do they improve college performance?

Merger activity has been a pervasive feature of the further education (FE) market for many years. In the last 25 years there were 171 college mergers, averaging roughly six per year.

Merger activity has increased considerably in recent years (more than 50 since 2015) following the Area Review process. Given the increased college merger activity in recent years, it is important to understand whether or not these have proved to be a successful route to improving college performance. The question is relevant to informing future government policy as to whether, and in which circumstances, mergers are an effective tool for driving improvements in the sector.

Frontier was commissioned by DfE to look at the impact of mergers on college performance focusing on financial outcomes. We used data covering the decade immediately preceding the Area Reviews and developed econometric models to examine the effect of merging on a range of outcomes including profitability, operating costs and student success rates.

Our main finding is that there is no strong statistical evidence of college mergers leading to an improvement or deterioration of college performance on average. Within that, however, there is considerable variation in performance – for some colleges merging is associated with significant improvements in performance while for others that has not been the case. More detail is available in the full report available here.

Further work to uncover the factors that make mergers successful or unsuccessful would build on our research and provide valuable evidence to inform future government policy as to how and when mergers work well to improve performance and the circumstances when this is not the case.  

Frontier regularly works with public and private sector clients on issues related to education, skills and labour markets. For more information, please contact [email protected] or call +44 (0) 20 7031 7000.