What is the process for merging?

The merger process can usually be broken down into five steps:

1. Feasibility study; undertaken to establish whether the merger is likely to work and deliver real benefits and to identify the major risks and potential problems. Issues usually dealt with in the feasibility study include cultural fit, legal difficulties, the legal form that the merged entity will take, and an analysis of the costs, benefits and risks of merger

2. Memorandum of understanding; likely to include the objective of the merger, the outline merger plan and timetable, what each party will do and how the merger costs will be shared, a communications strategy, a confidentiality agreement and establishing a merger committee to oversee the process

3. Due diligence; each board of trustees must gain assurance that the merger really is in the best interests of their charity and that any risks have been properly identified and addressed.

4. Proceeding to merger; on completion of due diligence and assuming the due diligence does not throw up any insurmountable problems, the trustees of the merging parties will be in a position to settle the final merger terms and proceed with the merger

5. Post-merger; once the merger has happened in legal terms, this is not the end. Full implementation can take many years, especially if complex service reorganisation is involved

Want to discuss further?

Jonathan Orchard


Ross Palmer

Senior Tax Manager

Related resources