A certain amount of controversy was inevitable. After all, the private equity industry attracted plenty of headlines during the credit boom for aggressive takeovers and financial engineering. And leading commercial law schools have, over the last decade, faced mounting criticism for expanding at the expense of students with little prospect of a career in law.

As such, last week's news that the College of Law – the UK's longest-standing and largest legal education provider – had agreed a £200m sale to Montagu Private Equity was always going to alarm those who fear the introduction of commercial players into education.

Within days, the University and College Union had issued a statement urging the Government to legislate in order to protect UK universities and public assets from being acquired by private equity firms. It also swiftly led to speculation that the College could become saddled with debt and would be under to pressure to boost profits via, for example, a sale of its property portfolio.

Nevertheless, the deal was applauded in other circles. Conservative minister for science and universities David Willetts – a vocal champion of private provision in higher education – and Legal Services Board chairman David Edmonds welcomed the sale, with the latter praising the deal for enhancing competition in the UK legal education sector and potentially acting "as a catalyst to promoting further access to the profession".

The sale would appear an early boost for the coalition Government's much-touted plans to attract private investment in education. Private equity houses have already made a series of investments in the sector including the acquisition last year of Greenwich School of Management by Sovereign Capital. Montagu secured the College of Law sale against interest from buyout rivals Providence Private Equity and Palamon Capital Partners and FTSE 100 education and publishing group Pearson. And, of course, US financier Carlyle Group backed the 2009 acquisition of the College's arch-rival BPP.

Much will be riding on the success of the deal at fulfilling the College's plans to capitalise on its commanding position in high-end legal education. And despite the griping that the College often attracts for its commercial approach – a stance which critics claim conflicts with its charitable status –  the deal appears to crown a highly successful reinvention of the law school after a low point in the 1990s.

Having been criticised by major City law firms for complacency, the College was publicly snubbed in the creation of the original City consortium in 1999, which saw three law schools create a specialised legal practice course (LPC) for eight City firms.

nigel-savageThe College responded with a period of investment and a sustained effort to rebuild its links with leading law firms, resulting in a series of deals to provide bespoke training to many of the City's leading firms. Much of the credit for this turnaround goes to Nigel Savage (pictured), the College's restless and entrepreneurially minded chief executive, who pushed for a more proactive management style at the institution.

The deal sees Montagu gain a trophy asset with a commanding position in the UK's vocational legal education market, not to mention the benefits of the College's prized degree-awarding powers. The College, meanwhile, is freed from the cultural "shackles of charitable status", as one staffer puts it, and gains potential sources of investment to back strategic expansion.

There will be no shortage of such plans. The managers driving the College have for years wanted to expand beyond the body's core UK legal education market. As part of its recently concluded strategic review, the College has laid out ambitious plans for growth after the sale completes.

Such plans were picked up by the media earlier this year, with Legal Week reporting the College's intention to set up a Singapore campus, a venture that will see the school attempt to capitalise on a large base of prospective law students in Singapore and the surrounding Asia region.

The College also plans to attract prospective students by expanding its 'best friends' relationships with Beijing's Renmin University of China Law School, Northwestern University Law School in Chicago and IE Law School in Madrid.

The opportunity for the College is to establish itself as a globally recognised legal education provider and potentially compete with elite law schools connected to the world's premier universities.

One graduate recruitment manager at a top 20 UK firm comments: "From a client's perspective, the sale can only be viewed as beneficial. This is the only way that the College will be able to respond quickly enough to client demand – both in terms of expansion into Europe and Asia and in the variety of its offering."

The College also plans to expand beyond its remit of offering legal education and training, with sources stating that its intention is to offer business degrees and training to prospective students. In order to do so, the College intends to expand its existing relationship with the Open University (OU) (the College currently provides the OU's law degree and LPC).

While the opportunities of the sale are obvious, the move comes with risk. There will be much focus on the College's treatment of students and a well-developed online student community including sites like RollonFriday will be quick to pounce on any evidence of profiteering or crass cost-cutting by the new owners.

There will also be much focus on how successful the newly created Legal Education Foundation, which will receive the £200m proceeds from the sale and which will act as the College's separate charitable arm, and a new multimillion-pound scholarship fund will be at upholding educational standards and widening access to the profession.

As a well-regarded upper mid-market player with a record for conservative value-based investing, rather than aggressive, debt-laden deals, Montagu appears to be a good match for the College. Relatively high levels of equity in recent buyout deals – often as much as half the sale value – will also reduce the risk of the College being saddled with excessive debt.

Having raised a €2.5bn fund last year, Montagu also has significant funds to back the deal, but private equity buyers have been caught out for overly optimistic projections on a number of acquisitions since the banking crisis ended their access to cheap debt.

The College will also have to navigate a period of several years under which its core solicitor and Bar training market is expected to continue contracting – a trend which could put strain on an institution carrying significant debt.

There is also the potential that the sweeping current review of the framework for legal education could result in reforms that disrupt the College's market dominance, though that seems an outside risk.

David Yates, chairman of the College's board of governors and warden of Robinson College, Cambridge comments: "We cannot ignore the fact that the market for fully qualified lawyers is contracting in the UK, and the only way of meeting this challenge is to become more agile in a business sense."

He adds: "The issue is not who owns the education provider, but whether there is the relevant machinery in place to maintain its academic quality. We have made sure that this will continue to be in place for the future."

Montagu is ultimately expected to look for a sale after five to seven years. Advisers on the deal have indicated that the options under consideration include a sale to another private equity house as well as an initial public offering on the London Stock Exchange, which could mean that the College converts to university status.

Yet – risks aside – the deal remains a landmark and one that is potentially transformational for the legal and educational sectors. As Savage concludes: "We're keeping all options under consideration, but it will remain our top priority to safeguard academic excellence. The legal landscape is changing irreversibly and we need to be changing with it."

———————————————————————————————————————————————–

Fact file – The College of Law

Founded: 1962
Turnover: £75m
Staff: 700
Students: 8,000
Sites: London, Birmingham, Bristol, Chester, Guildford, Manchester and York