The hazardous journey to secure funding for mergers

3rd November 2017 at 00:00
As more colleges undergo restructuring, we will start to get a clearer idea of how the Transaction Unit maps itself to the sector, says Stuart Rimmer

“Men wanted for hazardous journey. Small wages. Bitter cold. Long months of complete darkness. Constant danger. Safe return doubtful.”

The recruitment notice for Ernest Shackleton’s 1914 Antarctic expedition puts me in mind of my experiences over the last 18 months, working with the Transaction Unit (TU) at the Education and Skills Funding Agency. The unit plays a vital role, assessing college restructuring plans and making decisions on financial support for mergers and other structural changes.

It has helped us bring to life East Coast College, formed from the merger of Great Yarmouth and Lowestoft colleges. This difficult birth was preceded by a long pregnancy. The result is beautiful and makes me proud, but the scars might stay for life. It is worth reflecting what we have learned on this “hazardous journey”.

There is, sadly, a disconnect between the agents of government. We all share virtuous intentions of creating good, stable colleges but the methodologies, approaches and interpretations vary significantly.

The unit has often been accused of being shrouded in secrecy. From my perspective, it is ably led by director Matt Atkinson and his team who were supportive throughout, but under-resourced. The secrecy is not malicious, it’s because when the TU was thrown together the practice couldn’t keep pace with the policy. For the first few colleges in the queue, an already complex process was made even more difficult.

Processes and expectations

There is much learning to be done from both sides. For colleges, it is learning about insolvency practice and turnaround specialisms with high-quality project management. For the TU, it is understanding that education is not a commodity. We both must take a step towards one another.

It was difficult to understand the processes and the expectations. We experienced “Goldilocks” throughout: responses were usually too hot or too cold – and all too rarely just right.

My own view is that the Department for Education needs to unshackle the TU from the constraints of business due diligence models and let it take quick, high-level and sensible decisions about colleges. Time spent with “external advisory panels” is unnecessary.

Another key lesson: beware the consultant. Third-party reviews are expected and arguably essential. But consultants and professional firms must be rubbing their hands together with glee. Some of the firms are even claiming “success” with working with the TU when in practice they have led to projects overrunning in time and cost.

I have been disappointed that few consultants we have encountered have any meaningful education expertise. It is easy to be locked into a Sisyphusian task of constant business plan writing and due diligence, as the world around you changes faster than you can redraft. Where you can do it yourself, work quickly, haggle firmly and be prepared to write some huge cheques, keeping the long-term big picture in mind.

Think carefully around how much capacity you have at senior level, particularly around commercial thinking and financial modelling. This is difficult in a small college. The senior team took a battering over months of high pressure unseen by frontline staff. The best question was asked by a governor: “With all this TU and merger work, what are you not doing in your normal job?”

You may be some time

Turnaround and insolvency is a profession with a different language, culture and business model. At times, it was like trying to exchange US dollars at a bureau de change in North Korea through a cashier who only spoke a local dialect. Finding synergies between these practitioners and colleges will take time.

Overall, it’s fair to say that the TU are learning on the job. They are masters of banking and turnaround but mere apprentices in FE. For us, it’s the other way around. They are great people with positive intentions but the process is too opaque and far too long and expensive. This will get better and clearer.

As a sector, we need to embrace the TU much earlier in our strategic thinking. This is the only game in town. Banks are supportive but not looking to extend loans, there’s an insolvency regime around the corner and government funding is not getting any better. The unit has cash and is willing to get it out of the door to help colleges. Merger and restructuring is a hard and difficult journey, and having the TU walking alongside us might just help colleges get where they want to.

Having completed our journey with the assistance of the TU, our focus at East Coast College is now on cultural change, bringing systems together, building teams and creating hope and trust. The only place to return is Shackleton’s family motto, Fortitudine Vincimus – “By endurance we conquer”. Good luck travellers!

Stuart Rimmer is principal of East Coast College. He tweets @coachinception

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