Due Diligence

Due diligence is the gathering of information on your partner and the review of that information with a view to ascertaining the level of risk of entering into a collaboration with that partner. In the context of international partnerships you will need to investigate not only the regulatory and statutory environment of the country/countries in which the partnership will operate but also the legal, financial and academic circumstances of foreign partners.

Due diligence should aim to carry out as complete a review of the potential partner as possible, though the scope and scale of the due diligence exercise will vary depending on the type of collaboration you plan on engaging in and also the status and location of the institution concerned.

Knowing Your Partner

The internationalisation of HE has resulted in an ever expanding number of partnership opportunities. However, greater opportunities mean greater risks. It is essential that staff carry out due diligence of partners in order to maximise the educational and business benefits of international collaboration and also to avoid the common pitfalls associated with such activities.

Why Carry Out Due Diligence?

From a legal point of view, the purposes of due-diligence are two-fold;

  • Getting to know your partner; and

  • providing contractual remedies if the partnership is unsuccessful.

In addition, Swansea University is subject to the quality controls and evaluations of the UK Quality Assurance Agency for Higher Education (QAA) whose job it is to uphold quality and standards in UK universities and colleges. The QAA guides and checks the quality of teaching, learning and assessment in UK higher education, and protects the public interest by conducting reviews of how institutions maintain their academic standards and quality and publishes reports detailing their findings.

Due diligence is a requirement of the QAA and enables partners to fully understand one another, avoid misunderstanding and manage their collaboration in the best possible way.

The Quality Code goes on to explain that the due diligence enquiries that are carried out will vary depending on the type of collaboration envisaged but that they need to be proportionate to the complexity and volume of the provision involved and the risks which it might present. An assessment needs to be made of the conditions which are necessary to enable the proposed arrangement to succeed, and the extent of the due diligence enquiries need to be tailored to and proportionate to these. In particular, Swansea University needs to satisfy itself that ‘they have adequately assessed the financial, legal, academic and reputational risks and demonstrate that they have determined the appropriate due diligence procedures to provide the necessary information.’

Colleges are responsible for carrying out academic due diligence, but the legal and financial due diligence will be carried out centrally.

When carrying out due diligence look at Chapter B10 of the UK Quality Code for Higher Education and check to see that you address all issues highlighted in the indicators provided.

When to Carry Out Due Diligence

The earlier, the better, as the results of the due diligence will shape the collaboration and allow the parties to understand the risks involved.

However, it is important to remember that due diligence is an ongoing exercise throughout the duration of the collaboration. You need to make sure that those key areas of due diligence which are subject to change over time remain under periodic review.

Getting Started - Things to Consider

  1. Think about why you would like to collaborate.  The proposed partnership will need to be consistent with the College and University’s strategies for internationalisation. You also need to be satisfied that a joint venture rather than a solo project is appropriate for delivering the planned operations.

  2. Ensure you have the right person or team in place to plan the collaboration. Do not be afraid to collaborate but do not underestimate the amount of time, commitment and costs needed to make a collaboration successful. Develop a plan of the steps to be taken and identify the timescales, responsibilities and resource implications involved.

  3. Check with Academic Quality Services (AQS) that there are no legal or regulatory bars to collaboration. Carry out a risk assessment to check that there are no aspects of delivery by the proposed partners which would either be wholly impracticable or manageable only at disproportionate expense.

  4. Remember that due diligence will need to be carried out on academic, administrative, legal financial and tax issues.  Contact AQS for support with legal, administrative and financial due diligence.

Academic Due Diligence

You should look at the academic quality and reputation of the proposed partner and determine whether they have the necessary degree awarding powers, teaching and research resources and or capacity of Department/post holder concerned to be involved in the collaboration. The needs of the academic due diligence should of course be tailored to the nature of the proposed collaboration. However, issues identified in International Partnerships: A Legal Guide for UK Universities (published by the UK Higher Education International Unit in association with Eversheds LLP March 2013) are as follows:

  • Accreditation requirements in the territory relevant to the potential partnership;
  • Number, qualifications, expertise and capacity of key academic, administrative and support staff for operating the partnership and arrangements for recruiting additional staff where required;
  • Number, qualifications, expertise and capacity of academic staff for carrying out marketing/ student recruitment/teaching/research according to the envisaged partnership arrangements;
  • Availability and quality of facilities and materials (research, laboratories, teaching venues, library access, accommodation, IT facilities for students and employees, student welfare);
  • Recruitment process and selection criteria of participating students (if any);
  • Academic standards and assessment and examination criteria and procedures;
  • Language qualifications of key members of faculty, employees and students;
  • Quality assurance arrangements;
  • Previous experience of the proposed partner of partnerships with other UK universities and availability of independent academic references. 

The academic due diligence process should ideally be a mixture of a paper-based review exercise and site visits, plus endorsement by the appropriate University Board/Committee.

Financial Due Diligence

Some form of financial due diligence is always necessary. However, what is needed depends on the arrangement itself.  Contact Academic Quality Services for advice on this.  The purpose of financial due diligence is to check on the financial strength of an organisation.  At the limited end it could be a check of publicly available financial information.  At the extensive end it should involve the financial and tax history of your partner, and the organisational, management and statutory position. The time and costs of undertaking this will therefore need to be factored into the College’s business plan for the collaboration.

The purpose of the financial due diligence is to decide –

  • Is there anything that should stop Swansea University entering into this arrangement?Are there issues that Swansea
  • University needs to protect itself against in the contract?

In addition to carrying out due diligence before setting up or entering into a partnership with another institution/organisation, it is also important to carry out due diligence reviews periodically to ensure that nothing crucial has changed and that you wish to continue to engage in the partnership.

Due Diligence and Assessing Risk

The nature of the proposed arrangement and its potential risks determines what type of due diligence enquiries may be necessary.  For instance, has an assessment been made of the conditions that are required to enable the collaboration to succeed? The due diligence enquiries are tailored to these and are proportionate to the complexity and volume of the provision involved and the risks it may present.

Therefore, the extent and intensity of these enquiries varies depending on factors such as: whether an entire programme is being delivered by an organisation other than the degree-awarding body; whether the degree-awarding body is delivering the programme but some or most of the learning is taking place off-site (for example in the workplace); whether an individual student placement is required; or whether placements for a cohort of students are required.

Due diligence procedures which are appropriate and proportionate to the arrangement envisaged are determined and implemented.  For example, checks on the legal status of a UK business potentially providing an individual placement or work-based learning opportunity might simply involve checking information at Companies House.  Checks on the financial stability of the organisation are unlikely to be necessary for local authority funded schools or social services providing placements.  These enquiries provide information that enables the academic, financial, legal and reputational risks identified to be addressed.