Presentation on theme: "Making the Most of Merger Stephanie Biden Partner, Charity & Social Enterprise Department Carolyn Miller Consultant 15 May 2014."— Presentation transcript:
Making the Most of Merger Stephanie Biden Partner, Charity & Social Enterprise Department Carolyn Miller Consultant 15 May 2014
Why Merge? Survival: financial/governance Response to commissioning and contracting or funding bodies Meet beneficiaries’ needs better Greater influence Expand range of services History of collaboration
Other ways to collaborate Spectrum of choices: Collaborative working on issues/projects Sharing knowledge Joint venture contract or new entity Shared services Full merger
Together, we will increase our impact The right move at the right time Expertise + reach
Supporters Head office teams Local teams Those we support
Three Key Stages to Merger 1.Groundwork Compatibility Heads of terms/confidentiality agreement 2.Due Diligence Financial/legal/operational/cultural 3.Completion Merger agreement Practicalities (pre and post)
Basic Merger Structures: Asset Transfer 1 A A B B
Issues with Asset Transfer 1 B assumes liabilities of A Therefore good due diligence vital Simpler/cheaper resulting governance and management structure Feels like a takeover (but it needn’t)
Basic Merger Structures: Asset Transfer 2 A A B B C C
Issues with Asset Transfer 2 Same issues as Asset Transfer 1, except: Feels less like a takeover More expensive
Issues with Groups Tighter than mere contract arrangements Cheaper to establish No transfer of liability More complex governance and management Easier to persuade boards? Useful stepping stone? Reversible Does it solve financial problems?
Due Diligence: key legal issues Constitutional Objects Powers Members Structural Corporate/unincorporated
Due diligence: staff/pensions TUPE New staff structure? The new CEO? Pensions Defined benefit pension schemes Deal breaker?
Due Diligence: Contracts/funding arrangements Contract of funding agreement Consent (funding agreements) Assignment v novation (contracts) Risk – value? Third party suppliers
Due diligence: Land Freehold/leasehold property Restrictions on disposition Charges Condition Permanent endowment Other special trusts
Due diligence: Intellectual property and data Intellectual property (IP) Brands, publications, databases Data protection Personal data Consent
Due diligence: other issues Litigation/disputes Insurance Information technology Trading company Investments Tax/VAT
Due Diligence: Regulators Charity Commission/OSCR Homes and Communities Agency Pensions Regulator Care Quality Commission Other sector specific
Merger Agreement Warranties and indemnities Purpose? To focus the mind? Importance of due diligence process Conditions Regulators – consents/registration Consents from funders/contractors Member approval Pre-assignment/novation/consent TUPE Announcements
Post Merger Notifications Banks Contractors Regulators Register of charity mergers? Final accounts Winding up/striking off (NB Legacies)
Tips for Success Shared vision Strategic and organisational fit Business case Leadership Recognising human factors Good communications Identifying deal breakers Clear plans for merger process and beyond Sensitivity to different organisational cultures See: IVAR – “Thinking about… merger”
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