The number of prep school closures doubled in 2025. The number of mergers was up 25%.
Pressures on independent schools are well documented. Rising operating costs, changes in business rate relief, staff pension contributions, unfavourable demographic changes, and, of course, the imposition of VAT on fees from Jan 1 2025.
Schools have responded in two ways; increasing fees and reducing costs. But fees have become unaffordable to a significant number of families, thereby reducing enrolments and pupil retention. The pressure on schools to seek operating efficiencies and financial stability underpins merger activity.
Schools that have been more likely to close or merge have tended to be;
- outside London and the Home Counties. Or more specifically, schools whose parents are less likely to be ex-pats or employed by London’s financial services ecosystem,
- small schools,
- prep schools, as opposed to senior (11-18) schools,
- undifferentiated schools in competitive areas,
- schools with a small number of boarders,
- standalone schools, not part of a group.
The rest of this article expands on why 2026 closure and merger activity is likely to be at similar levels to 2025.
Throughout this article, unless specified, ‘prep’ refers to all independent primary schools, be they called ‘prep’ or ‘junior’ schools.
How many prep schools have closed?
As a measure of the pre-VAT status quo, an average of 19 prep schools closed every year from 2014 to 2023. Year to year variation was relatively constant, at four or five from the mean. The numbers exclude non-mainstream prep schools, fundamentalist faith schools and technical reclassifications.
All changed in 2025. 45 prep schools closed, over double the historic average.
Many of those schools that closed attributed their demise to these pressures, especially VAT. For some, that was fair. But there were also weak schools in that number, susceptible to shocks, and schools whose prospects had been fading for some years.
So was 2025 a culling of the weakest, the low hanging fruit? Early indications suggest not. At the time of writing, mid-way through January 2026, five more independent schools have already announced their closure at the end of the academic year. And if that rate continues, 2026’s closures will be similar to 2025.
Furthermore, following on from the Independent School Council’s summer 2025 estimate of 11,000-13,000 pupils leaving independent education since the turn of the year, numbers that I’m privy to suggest a median decline of 10-15% in headcount to 2026. Which equates to 50,000 pupils at least.
In 2025 many schools serving less affluent clientele, shared the impact of VAT by absorbing some of the 20% increase. In 2026 this discount will unwind, so that parents will pay the full VAT surcharge, as well as any inflation+ annual increase in fees. These schools, more likely to be the engines of social mobility, serving the ‘sacrificers and strivers’ will be vulnerable to lower enrolments and departures.
Prep school merger trends
Between 2014 and 2025, 157 prep schools have merged with senior schools or for-profit groups of schools. In other words, an average of 13 merging preps per year is the norm. I have excluded the buying and selling of previously merged schools between groups, such as the Inspired Education’s acquisition of the Alpha Plus portfolio in 2023 and the portfolio swaps of 2025 involving Outcomes First, Cognita and Chatsworth.
Interesting to note that in the last 12 years 64% more prep schools have closed than have merged.
The merge trend, though, is different to the closure trend. The number of mergers increased from an average of six per year at the beginning of the period to 16 or 17 per year in the later years. The peak was 23 prep schools in 2021, due in part to the Covid lockdowns. The 20 in 2025 matched the 20 in 2019.
There is another pattern. Whereas private groups dominated merger activity over the first half of the period, latterly their involvement has plateaued or even tapered. The cost of raising and servicing debt capital could be a contributing factor. It may also be that the more lucrative schools have been bought, and the focus for these school groups has shifted to Special Schools or building an overseas network. Over the last five years, senior schools have accounted for the majority of prep mergers, and they are usually mergers of charitable foundations. Their rationale is to secure the primary to secondary pipeline of pupils. And this trend is unlikely to abate in the short term.
What is the current prep school ownership landscape?
Surprisingly, only 29% of mainstream prep schools are truly ‘standalone’ or independent of a senior school or school group. This is down from 33% in 2023. These are the 300 or so that are potential candidates for a merger. And from a parental perspective, these are the ones whose character may change over the short to medium term if they do.
Outside this group are the 52% of prep schools are junior departments or part of the same ’family’ as a senior school. 31% of all preps are part of a larger group, charitable or for-profit. 19% of preps are members of larger school groups, and 12% are junior divisions of all-through schools that are themselves part of a larger group. If financial stability is high on your wish list for a prep school, then these 71% have done all they can as preps.