Help with mergers

With funding being squeezed, charities are actively investigating ways to combine forces and merger is an option to be carefully considered. Strategically, a merger may work if:

More benefits or services can be provided to beneficiaries
Savings can be made on overheads and support services – this may be most likely if one charity takes over another and absorbs the additional support work into existing functions
Savings may also be made if two organisations become one and so only have one chief executive and cut down on other senior manager posts
Charities undertaking similar services or offering their services to the same client group may consider merger to achieve greater influence with funders and give them opportunities to bid for larger contract
Charities may look to diversify their income or their service offering through a merger

At Sayer Vincent, we have developed charity-specific merger processes that will help each charity to understand the key issues. This recognises that charities are not commercial organisations and that one is not buying the other - it is more often a mutual process where information needs to be exchanged efficiently so that the new organisation can move forward rapidly with the real work of achieving the strategic objectives.
In any merger, there are many possible obstacles to overcome and experience has shown that the most important aspect to test out thoroughly at an early stage is cultural fit.

Feasibility appraisal
An early exercise to test out “fit” in all ways is important – both for the outcomes it achieves and the process itself. Trustees and senior managers will need to meet and exchange information during a feasibility exercise – this is an opportunity to test the viability of relationships. The report will show where there are synergies and where there are differences, potential problems to overcome and risks to a successful merger.
If all sides agree to proceed then it is likely that a memorandum of understanding will be drawn up and confidentiality agreements exchanged.

Due diligence
This allows all parties to proceed with the next stage – investigating financial, legal, employment and related issues in greater depth. It is worth exchanging as much information as possible at this stage as this will be a building block for sharing support services once the merger goes ahead. You will probably need some specialist legal advice as well as help to investigate the financial position. Your own teams may well be able to undertake a significant amount of the information gathering themselves, but we can help guide and support them.

Post-merger
There will still be work to do, particularly to merge support services. We can help you to review the support functions needed for the new organisation and the people needed to run those services.

At every stage, Sayer Vincent can offer experienced advice and support to ensure that your charity merger is a success.