School Gate blog: six clues your private school may be about to close

Smaller private schools are facing a spate of takeovers as pupil numbers decline in the economic downturn, but the children and their parents are likely to be the last to know about it.

At least 25 independent schools are discreetly seeking buyers, ranging from a £3.25 million primary school in the South of England, in a period mansion with a modern sports hall and IT suite, to a £1.35 million prep school offered as a “quick sale”.

Brokers acting as intermediaries for such sales say that they expect more schools to come on to the market over the next term, as parents decide that they can no longer afford to pay fees. They are advising schools against making their financial difficulties public for fear of a a mass desertion by parents. One school in the Midlands had to close within six months of the news of its possible sale leaking out.

Sue Fieldman, regional editor of the Good Schools Guide, said that although the right investor might find “ripe pickings” in the economic downturn, parents and pupils were likely to be the last to know about it.

“Parents can end up feeling very aggrieved because they thought they were signing up to a particular school regime and they end up with another one,” she said. “That's why if parents get wind of a sale or any financial difficulties at the school, many would be out of the door like a shot.”

The small, family-owned schools were likely to be most vulnerable, she said. “The smaller prep schools are very vulnerable indeed. This is a shame because they are often very traditional schools that parents are very fond of. We always advise parents to find out who owns the school.”

Most sales of small independent schools are handled by two brokers, the School Transfer Company and National School Transfer. Patrick Carter, of National School Transfer, said that he was expecting to see more privately owned schools coming on to the market as pupil numbers declined.

“I'm certain it's going to happen one way or another,” he said. “Some parents are not going to be able to pay their fees. Now is the time, at the beginning of term with new fees to be paid, when it will become apparent what problems schools will be facing. The most vulnerable schools will be smaller and single-sex ones.”

Peers Carter, of the School Transfer Company, said that he did not expect a glut of smaller schools to come on to the market. “Schools are a brilliant proposition. There's nothing safer to invest in,” he said.

He added that buyers - which could include private individuals looking to invest a legacy as well as chains of schools backed by venture capital - could expect a return on investment of between 10 and 15 per cent.

Such optimism may be misplaced. After the last recession in Britain in 1991, independent schools experienced a steep dive in pupil numbers, losing 11,500 pupils in the following five years.

At least two prep schools, Bramcote Lorne in Retford, Nottinghamshire, and Brigg School in Hull, have closed recently after pupil numbers declined. Both schools are part of the United Church Schools Trust and will now merge with other schools in the group.

David Hanson, the chief executive of the Independent Association of Prep Schools, has said that more schools would follow suit as the effects of the recession began to be felt. Two of the leading international chains, Cognita and Gems, say that they are in the market for acquiring new schools. Cognita, whose chairman is Chris Woodhead, the former Chief Inspector of Schools, says that it is in negotiations to buy up to 15 schools to add to the 46 that it already operates in Britain.

Offers invited

Southern England
Excellent long-established primary school in period mansion set in large grounds
£3.25m+

Southern England
School for infants to secondary ages achieving excellent results. Elegant Victorian house in inspirational setting
£2.75m+

South of England
Attractive nursery and prep school in a beautiful listed building with extensive grounds in idyllic market town
£2.8m+

Southern England
Modern and charming school with excellent facilities
£1.4m+

South East
Attractive and well-equipped primary/ prep school in woodlands. Good links to motorways
£1.35m+

South Midlands
Highly desirable nursery and primary school with approx 260 children
£4.5m+

East Anglia
Long-established prep school in detached period property. Approx 100 pupils
£675,000+

Mid England
Well-established school with period and modern properties. Inspirational sports facilities
£1.3m+

North of England
Well-established school where pupils achieve well above national average standards
£450,000+

East Anglia
Well-established boarding and day school. 165 pupils aged between 4 and 16
£1.9m

Southern England
Long-established school in very large grounds catering for pupils from infant to senior level with boarding available
£750,000+

Southern England
A profitable nursery and primary school with strong community links
£1.5m+

Greater London
Long-established prep school occupying grand premises in respectable part of commuter belt inside the M25
£2.25m+

Sussex
Large detached house with facilities for a small nursery school plus luxurious living accommodation on outskirts of historic town
£835,000+

Provinces
Large international sixth-form college
£8.25m+

North Midlands
Long-established prep school
£1.45m+

Essex
Successful group of nurseries in good catchment areas within a 15-mile radius. Total registration 120+
£585,000

East Anglia
Nursery, pre-prep and prep school on the edge of a thriving and expanding town. Approx 160 pupils
£2.2m

North of England
Nursery, pre-prep and prep school in small village on edge of a major town. 70 pupils
£295,000

South West
Long.established pre-prep and prep school with over 130 pupils.
£900,000

South Midlands
Prep school in a thriving residential area occupying a large purpose-built building on a good size plot. 70+ pupils.
£850,000

East Midlands
Nursery, pre-prep and prep school with 20 pupils. Turnover is £40,000 with operating profit in excess of £12,000.
£445,000

South Midlands
Nursery and pre-prep with approximately 60 pupils. Turnover £260,000, operating profit close to £95,000.
£895,000

Midlands
Pre-prep and preparatory school with approximately 90 pupils aged between 2 and 11. Turnover £450,000.
£350,000

South East England
Pre-prep and preparatory school with over 50 pupils aged between 4 and 11.
£620,000

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