This document discusses considerations for charity mergers. It outlines two main options for a merger - creating a new organization or one existing charity taking on the others. Initial questions for trustees include determining if a merger benefits the charity and assessing compatibility. Practicalities involve checking governing documents for merger powers and obtaining necessary consents. A thorough due diligence process examines each charity's finances, operations, assets and more. Required paperwork typically includes due diligence reports, board minutes, the new governing documents and a merger agreement. The presentation then describes one organization's experience merging two women's aid charities, emphasizing the importance of communication, consultation, pilot programs and realistic timelines.

1. Charity Mergers:
The real issues you need to consider
Martyn Davies
Senior Associate, Geldards LLP

2. Charity Mergers:
• Merger options
• Trustee Considerations
• Practicalities
• Due Diligence
• Documentation to expect

3. What do we mean by “Merger”?
• Two or more separate organisations coming
together to form one legal entity – usually
- A new charity formed to take on the assets and
liabilities of the original charities or
- One of the existing charities takes on the assets
and liabilities of the other charity(ies)

4. Which option to choose?
• Depends on legal structures involved
• Bargaining position of the parties involved
• Any specific issues (legal or otherwise) which
need to be accommodated

5. Which option to choose?
Option 1
• New corporate body established to be recipient
Advantages
• Perception of parties (not a “takeover”)
• Clean start, equality of parties
Disadvantages
• (Possibly) costs of creation of new body
• Consents to transfer assets to new organisation

6. Which option to choose?
Option 2
• Existing organisation acts as recipient
Advantages
• No costs of creation of new body (but may be costs
of amendments to recipient governing document,
name etc)
• Recipient won’t need to transfer its assets
Disadvantages
• Can be perceived to be “takeover”

7. Considerations
Initial Questions for Trustees
• Is a merger in the best interests of the charity
• What are the likely benefits/risks
• Are the charities compatible in terms of
objects, vision, culture and values etc
• What are the views of the key
funders/beneficiaries of the charity – will they
support it

8. Initial Questions for Trustees
• What are the likely costs to achieve the
merger, consider time commitments of
staff/trustees as well as financial (professional
fees/rebranding etc)
• Will any consents be required to allow the
merger to happen, are these likely to be given
Considerations

9. • Establish legal status of each party (company,
trust, unincorporated association);
• Check “objects” of each
• Are “activities” compatible and in furtherance
of objects?
• What will transfer, for example are there any
permanent endowment /special trusts or large
liabilities
Considerations

10. Practicalities
• Check governing documents, is there:
- Power to merge or
- Power to transfer or
- Dissolution clause which can be used to facilitate
the merger?

11. Practicalities
• Is Charity Commission involvement required
- Only if insufficient powers in and no power to
amend governing document or
- Governing document requires consent

12. Practicalities
• Other consents which may be required:
- Members
- Grant funders (esp. if merger would trigger
repayment)
- Landlord(s)
- Customers
- Sector regulator

13. Due Diligence
Overview
• Goes beyond “initial questions”
• Investigations into each charity to achieve
“full knowledge”
• If properly conducted there will be no nasty
surprises!

14. Due Diligence
Scope & Who conducts
•May involve:
- Lawyers
- Accountants
- Other advisors
- In-house
•Timescale:
- Can be lengthy
- Plan in sufficient time so as not to lose momentum
and ensure deadlines met
- Be clear about who is doing what

15. Due Diligence
How & Steps
• Party A (or their advisors) request information
from B for themselves (and also Shadow
Board of newco)
• Party B (or their advisors) request information
from A for themselves (and also Shadow
Board of newco)
• Replies compiled, exchanged and considered

16. Due Diligence
Key to a smooth process
• Ensure both sides appoint a senior individual or
team to manage the process
• Agree timescales for the provision of replies to
enquiries and keep to them
• Have weekly calls to ensure matters are
progressing in line with agreed timetable
• Agree confidentiality terms early and a press
release in case of a leak

17. Due Diligence
Areas covered:
• Corporate structure - subsidiaries
• Accounts and supporting information
• Material changes since last accounts
• Banking and borrowing detail
• Grants and terms

18. Due Diligence (continued)
• Assets
• Valuations if necessary
• Commercial agreements
• Intellectual property rights
• Property (land, buildings, environmental etc)
information

19. Due Diligence (continued)
• Staff terms and conditions / disputes
• Pensions
• Details of any material complaints, disputes,
litigation and claims
• Sector specific regulatory compliance

20. Process
Merger Paperwork – Usual
• Due Diligence Reports
• Board/Trustee minutes and resolutions to
proceed
• Governing documents of newco
• Notice of EGM of members if required
• Merger agreement
• Asset Transfers
• TUPE letters

21. Cardiff Derby Nottingham
Thank You
Any Questions?

22. Contact details
Martyn Davies
DD: 029 2039 1745
E: martyn.davies@geldards.com

23. Our Merger Journey
Sian Mainwaring

24. Aim of this workshop
• To outline the approaches and processes we
took
• Our learning experiences and challenges
• Food for thought.......
• Any questions

25. Who were we?
• Neath and Lliw Valley Women’s Aid
• Together, 60 years experience supporting
women and children experiencing domestic
abuse
• Organisational similarities
• Operating within 1 Local Authority -
Neath Port Talbot

26. Who are we now?
CALAN Domestic Violence Services
• First Women’s Aid groups in Wales to merge
• Company limited by guarantee and registered charity
• Domestic violence services for all individuals and families
• Crisis intervention and preventative services
• Refuge and Community Support Services
• BRAVE team – specialist children and young peoples project
• Lead organisation for NPT DA One Stop Shop
• Campaigning and awareness raising
• Big Lottery EIP project

27. Our merger journey

28. The first step....
• 2010 remodelled children and young people’s
services across NWA/LVWA
• A vision to integrate services, avoid
duplication, reduce central costs, increase and
diversify service provision, develop specialist
skills and reach more children and young
people
• BRAVE – one specialist service from June 2010
• Dipping our toes in “Collaboration”

29. Our BRAVE experience
• Increased referrals to the service
• Increased number of children and young people
accessing 1-2-1 and group support
• Service diversity and development – RESPECT
interpersonal violence programmes, specialist
therapeutic play service and prevention and
education programmes
• Reputation synonymous with excellence
and innovation

30. Why a merger?
• The development, innovation and sustainability of
appropriate services to individuals and families
• Best practice and quality of services
• Efficiency savings and rationalisation of resources
• Capacity to respond to policy and development
opportunities
• To reduce perception of overcrowded voluntary
sector

31. Agreed Principles
• A merger of equals
• Positivity and momentum to be
maintained through the process
• New organisation, new name, new
identity

32. The merger begins.....
• January 2011 – Neath WA and Lliw Valley WA
made a formal commitment to explore a
merger
• Merger Steering Group established and
independent Chair appointed
• Legal consultants, Geldards LLP, appointed
• Business case for merger finalised
• Merger principles and deal breakers
identified

33. Continued…..
• Due diligence exercise – financial and
organisational perspectives
• Decision taken to formally transfer assets with
effect from 1st
July 2012
• Appointment of an independent HR
consultant and drafting HR plan
• Sub Groups to the MSG established for HR,
finance, governance and corporate identity

34. Continued…..
• Schedule of planned consultation events
agreed by MSG
• Development of corporate identity
• Legal documentation completed June 2012 in
preparation for formal transfer 1st
July 2012

35. Our key elements
• Communication, communication,
communication
• Consultation and engagement
• Pilot programmes and interim plans
• Planning and Structure
• Realistic timescales
• Energy and momentum

36. Communication
• Integral and essential
• Open and meaningful
• Communication plan – who, when and how
• Consultation days, e-briefings, letters, team
meetings
• Agreed format, content, timings
• Even if no news – communication

37. Consultation and
engagement
Staff, Service Users and Stakeholders
• SWOT analysis
• Organisational priorities
• RBA Framework
• Corporate identity
• Service development
• Organisational structures

38. Interim arrangements and Pilot
Programmes
• To ensure a smooth transition post 1st
July and
minimum disruption to service provision
• Clear areas of responsibility and lines of
communication
• Interim arrangements for Senior and
Operational Managers
• Re-location of staff teams and managers
• Joint on-call service

39. Our learning
• Organisational identity – name and branding
• External facilitators and experiences
• Integration of staff, services and
organisational cultures
• Momentum and energy
• Governance and Board development
• Resources, capacity and workloads
• Financial considerations post merger

40. Challenges.....
• A new experience for Trustees, Staff and
Service Users
• Balancing merger and day to day
responsibilities
• Not missing opportunities
• Integrating organisational cultures
• Overcoming them and us syndrome

41. ANY QUESTIONS?