In 1993 all institutions designated by the government as ‘further education providers’ were removed from local authority control (under the provisions of The Further and Higher Education Act 1992). All such colleges are now responsible for institutional self‐management, a task which, in the context of the current post‐16 education environment, presents a number of challenges. Allied to a range of government generated targets, further education (FE) institutions find themselves subject to increasingly intense competition from their perceived local rivals. This is significant because a substantial proportion of college funding is based upon student recruitment (as well as the retention upon and the completion of programmes by students). Thus, there is an inevitable emphasis placed upon competing for the available student cohort. At the same time the FE sector is also subject to wider government measures, including the ongoing capital expenditure cuts for the sector introduced in the 1995 Budget. In the context of considerable external influence and growing competition, many FE colleges are consequently exploring alternative strategies for coping with a complex and uncertain environment. In particular, a growing number of institutions have examined a merger strategy as a response to the pressures within the sector. By 1998, it has been suggested that 100 FE colleges will disappear due to college mergers. It would therefore appear that integration between institutions is at least being explored by a number of colleges, whilst it has been undertaken by a small number of other providers of FE. The main focus of this article is to examine the motives of colleges seeking to merge with another FE institution, to identify the advantages and disadvantages associated with such a strategy and to explore the important issues for institutions involved in the merger process. The article is a preliminary study of college mergers within FE and will initially note that the FE market is fundamentally different to an unrestricted, free market. In the context of government regulation it will be asserted, using a resource‐dependence model, that colleges are locked into a financial dependence upon the government. In turn, the government is then able to demand that specific criteria are pursued across the FE sector. On this basis, it will be noted that the merger is an increasingly prominent strategic option for those institutions responding to this financial dependence. Given the nature of the FE market, the established resource dependence and the characteristics of FE colleges, the article will subsequently examine the perceived advantages and disadvantages derived by institutions pursuing a merger strategy. This will then be extended to embrace an examination of the key management issues that colleges will encounter when considering integration. The article will therefore be of interest to academics and practitioners focusing on the nature of the external environment and markets in the public sector, the response of FE colleges to markets, competition and the government, and those examining mergers as a strategic option.