School bought by company - repercussions?

[Cynical]

My children's school is one of several bought at the end of 2004 by Cognita, a company headed by Chris Woodhead and funded in turn by a private equity company. Anyone out there in the same boat? I'm worried about a number of issues, not least Woodhead's stated aim of some teaching materials being centrally generated, the profits sought by the backers, etc etc.

Snuffy, any grapevine or official info about when/if your school's backers are planning to cash in ? We heard the investment was medium term; what do you think that means ?

Xenia - thanks for posting; just wanted to point out it's an old thread - one which I resurrected, in the hope of contacting Cynical, to see how her situation developed.

Big improvements in some ways from before, mostly different. Fees increasing according to inflation, I think. Agree about the National Curriculum and wanting to avoid it but I teach a core subject so am directed by GCSE syllabus and I chose to follow the QCA scheme at Key Stage 3 due to the availability of good resources. There is flexibility, though. Kids are from mostly middle class families, not the super rich - often education paid for by grandparents. Is indeed a middle of the road school with no major specialism but it has a fab family atmosphere and is a caring community where kids never 'slip through the net'.

I don't yet get what they're trying to achieve.

To me, a large chunk of what can make a private school better is more resources, but apparently Woodhead wants to deliver "cheap and cheerful".

That works fine in many commercial environments, but when the state provides a free product, why pay a lot for something that isn't much better ?

Thus the business is very vulnerable to improvements in the quality of local state schools.
Some people will of course prefer private schools, because they just feel they are inherently better, but I don't think that's a big %
Apparently they're doing the national curriculum, so they won't teach things that are much different from free state schools.

Can they teach these things better ?
That to me is still an open question, but without spending more on teachers either directly in pay or by having notably smaller classes which cost more per pupil, he has to rely upon "better management". Maybe that's feasible, but he's left most of the management in place, and unless he is some genius in staff selection and leadership, I don't see how.

I odn't know how the maths works out. Most of the better private day schools grew from charities to educate the poor and they have always tried to keep fees low and help fund children who can't afford fees (a few). That's the ethos of most of the better ones in most places from Manchester Grammar, Newcastle grammar, Haberdashers schools etc.
Take say Habs girls Elstree where one of my girls was at that's about £3000 a term now for secondary. I don't know what the Cognita schools charge. Do any of them go up to A level? I assume the aim of the venture capitalist fund or whoever princpially owns it is to sell off when they find a buyer and in fact most of what a school has is land which can be valuable. I doubt they really ever make much profit out of fees once wages are paid so if I had to guess I'd say the principal assets Cognita has is land holdings schools are on but that they might be able to get extra income from provision of services such as offering to run say state schools for fees so that might build up some educational profits as it were.

Is it clear what role CW actually has in all of this? Is he more of a figurehead or does he have real clout?

Xenia's right, the idea will be to sell, but that rather begs to the question of to whom, and what they will be selling.
Land is obvious, but don't forget London is the world centre for financial engineering.
The development of a firm that does outsourcing of state schools would be a decent business, if you guess the political climate will work.
That actually makes CW's schools more attractive in the short to medium term, because they will want to point to good results, and so will try harder, rather than focus on short term profits.

The other track of their plan is almost inevitably to create a predictable stable cash flow.
It's then child's play (OK, PhD Physics play), to convert that into a bond which you can sell secured upon this cash flow and the liquidation value of the assets, if it goes tits up.

A not implausible structure is to refinance the purchase with borrowing fixed at 7-8% over 10-20 years. This gets the owners a positive cash flow early on. They can invest this money in equities, and on average would expect to make rather more than 7%.
At the end, the lenders get their cash back (or liquidate the property owning business), which is a low risk deal for them.

At the end of the bonds' lives they have the property/business portfolio "free".
On average of course, there is risk, but most of that can be hedged.

There's some serious number crunching to be done here, but any decent physicist can do that.

It must be hard. Most of the Cognita schools when I( just had a quick look seemed to be preps and not preps anyone has heard of really, not the best feeders to the best new schools or anything, but I might be wrong and I think 80% of schools' costs each year are teachers' wages which doesn't really leave much margin for profit plus all the other things of any kind which doesn't matter in most schools as they don't make profits. I suppose you could buy those with big houses and land, move and merge the schools into smaller etc sites selling the group's argument that it will be cheap and cheerful and make profit from land sale?

Why not both ?
They may "trim" playing fields, build houses, much cheaper than moving a school.
There's also small bits of money to be made from more aggressive marketing of the facilities during holidays and weekends.

But if I was tasked with running a school for British parents, then I'd look at what they want.
I believe that there is a strong demand for after-school care, and for earlier supervised playgrounds, (say from 7:30). This could be marketed as various after schools clubs and tutoring.
Most schools have a little bit of this, but I'd be tempted to see what falls out if you do it with gusto and money.
Rather than go home to sit in front of video games and DVDs, your kid can learn to cook, build model trains, or do archery.
I suspect that you might hit a virtuous circle where not only was this a profit centre, but your school would quickly gain a reputation for supporting kids interests.

Staff might not be wildly happy about doing this, but it doesn't have to be the academic staff, indeed it might be cheaper to use less qualified folk.

Combine both these ideas, and do your own summer camps as well.

British parents work the longest hours in Europe, I believe that they'd not only pay, but in some cases thank you for the service.

Or not, I'm no expert in schools as a business, but you don't win in a competitive market with a dull low value product.