Case studies - merger

• City of Wells Almshouses
• CLIC Sargent
• The Odyssey Trust
• Volunteering England - three into one
• An abandoned merger
• Family Welfare Association absorbs National Newpin

 

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City of Wells Almshouses

Wells Old Almshouses (WOA) and Llewellyn, Charles and Harper's Almshouse Trust (LCH) merged in 2004 to become City of Wells Almshouses. One of the drivers was the difficulty that the trusts faced in finding suitable new trustees. Moreover, some trustees served on the boards of both. In 2003, the decision by the paid Administrator of LCH to retire prompted its trustees to revisit the idea of a merger which had been discussed by the two trusts for several years. 

 

Merger working party

 

A merger working party was set up in recognition of the substantial commitment required by the merger process and to provide a mechanism for making recommendations for action to the trustees of both trusts. The working party comprised the Chair and another experienced trustee from each organisation, with the Secretary of WOA undertaking day to day work on the merger. This composition was agreed by the other trustees who stood ready to give advice on their particular areas of expertise.

 

Agreeing how to progress

 

To avoid the risk of later misunderstandings, at the outset the working party prepared a Memorandum of Understanding which was agreed by both sets of trustees. It outlined:

 

• the expected advantages of the merger
• how the residents would be consulted to reduce uncertainty
• how the key stakeholders would be involved - the Charity Commission & Housing Corporation in particular
• the role of the Working Party
• the part to be played by all trustees until the merger took effect
• that professional costs would be shared equally between the two trusts

More information

Charity Commission guidance on mergers of almshouse charities

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CLIC Sargent

CLIC (Cancer Leukaemia in Childhood) and Sargent Cancer Care for Children merged to become CLIC Sargent in January 2005. The two charities provided complementary services, were a similar size and had collaborated in the past.

In 2002, CLIC commissioned research on the needs of children and young people with cancer and their families. One of the emerging requests from families was for a more co-ordinated approach, a 'one stop shop' providing a familiar face to turn to throughout their experience. This message gave CLIC and Sargent Cancer Care for Children a strong mandate to merge.

Timescale

"What you decide to do before the day you merge and what you decide to do later influences the pace of your merger process."
Myles Bremner, Director of Planning & Performance Management, CLIC Sargent

It was decided to go through the merger process as swiftly as possible to reduce uncertainty for staff and stakeholders and to stabilise the new organisation quickly. A merger project group, which included trustees and the CEOs from both charities, together with an external consultant, helped the charities devise a timetable for consultation and implementation.

 

Timeline

Date	Action
July 2004	merger first mooted at informal meeting of the two Chairs
Late July 2004	both trustee boards and CEOs discuss the idea
August 2004	directors and selected managers brought into discussion
August 2004	due diligence process begins
October 2004	decision made to merge
November 2004	CEO recruited
November 2004	merger announced to staff
January 2005	merger takes place
April 2005	CLIC Sargent publically launched

 

Some key lessons

• People, not process, made the merger successful - give thought to how you engage with all stakeholders, both internal and external
• Communication is essential - keep talking even when there is no news
• Don't underestimate the time merger takes
• Stick to a single vision - never forget you are merging to benefit your users
• Get the right support - an independent facilitator and a staff member to co-ordinate the merger

More information

CLIC Sargent.

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The Odyssey Trust

Milton House and City Roads were two medium sized London organisations working with drug users. They merged to form the Odyssey Trust in 2002. 

N.B Since our case study was written the Odyssey Trust has merged with Cranstoun Drug Services.

The decision was influenced by developments in the external environment including:

• Government commitment to seeing more drug users in treatment meant more money available for services and more opportunities for growth.
• Increasing focus on inspection and regulation and changes to commissioning meant the climate seemed to be moving in favour of the few large established agencies in the field.

Sounding out commissioners

Both organisations had supportive relationships with the agencies that commissioned their services so in 2001 they asked key commissioners their views on a possible merger. The commissioners were behind the idea and saw the advantages of creating an organisation with a broader range of activities.

It was important to commissioners that the new organisation would preserve the independence of City Roads' 24-hour direct access service. They would not have been happy for City Roads to merge with a large service provider since they felt that this would have made the direct access service a front door to one organisation's services, rather than a resource for the whole sector.

For Milton House, commissioners were concerned that its developing community services would keep their local focus and not be subsumed into a pan-London agenda.

Working style

The two sets of staff had different working patterns and communication processes prior to merger which meant that staff consultation and cross-organisational communication leading up to merger had to be carefully handled. Milton House staff worked an extended 9-5 pattern with regular staff meetings and much use of email. City Roads staff provided a service 24/7 so all-staff meetings were rare. Instead, important, time sensitive messages were relayed by post to the homes of City Roads staff. There were similar differences in the culture of the two boards: City Roads trustees met during the working day; Milton House in the evening.

More information

Edited from an extensive case study in ACEVO's  Managing mergers:  a practical guide based on case studies of CEOs who have led their organisations through the process. The guide can be bought online or by calling 0845 345 8481.

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Volunteering England - three into one

Volunteering England was created in 2004 through the merger of the Consortium on Opportunities for Volunteering, the National Centre for Volunteering and Volunteer Development England.

Who took the merger forward?

A steering group included the chair and one trustee of each organisation with the CEOs in attendance. They agreed how to go about the merger process and decided on strategic and operational issues. Each organisation referred decisions back to the individual boards and consulted staff through meetings and cross organisational consultation. Wide circulation of all papers and minutes kept them informed.

The three CEOs led on managing the merger process and shaping the new organisation. The CEOS consulted their staff, members and trustees. Specialist charity solicitors with experience of mergers were used, but no external consultants.

Cross organisational working groups were established in HR, IT, membership, governance, branding and finance and played a key role in the change management process.

A new brand

Those steering the merger were committed to equal status for all three organisations so the merger created a new organisation rather than two of the three organisations merging into the third. They created a new national brand for Volunteering England as well as a local brand which its member volunteer development agencies could choose to adopt. The process of building this identity helped make the new organisation feel real to its stakeholders and it demonstrated to them that the merged body would be more than the sum of its parts.

New Chief Executive

Volunteering England's Chief Executive was appointed after an internal selection process. Appointing an internal candidate provided consistency for stakeholders as he brought to the new organisation his knowledge of decisions made during the merger process. Once appointed, the new Chief Executive formed a focal point for leadership and management decisions.

More information

About Volunteering England

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Abandoned merger

As two small charities with similar aims and objectives, Group A approached Group B to set up discussions on a possible merger to strengthen their core activities and develop new projects. Group A had an income of around £30,000 a year and Group B's income was around £75,000.

Both organisations agreed to have meetings for one year to explore various key issues such as structure, finance, staffing, membership, vision and objectives/principles. All these key issues were resolved reasonably well despite slight disagreement over certain policies.

Before the final meeting of the year, Group B asked Group A to propose which of their trustees, staff and volunteers would be part of the new merged organisation. Group A responded that almost all their trustees wanted to step down for a variety of reasons.

Group B were surprised to hear this and suggested that they should 'take over' Group A rather than 'merge' with them. They used the term 'takeover' as the merged organisation would have no trustees from Group A. However, this change in the language used altered how Group A viewed the proposal, although the actual plan for the merger had not changed. Group A therefore refused the proposed 'takeover' and decided to continue their activities as a separate organisation.

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Family Welfare Association absorbs National Newpin projects

Why & how did merger happen?

National Newpin was a small charity providing services to parents and children through projects across the UK. When it faced financial difficulties, some of its funders were prepared to help Newpin's services continue so, after discussion, Family Welfare Association (FWA), a large national charity, agreed that it would take over the operation of most of Newpin's services. The majority of Newpin's projects and the associated staff were transferred to FWA in 2004 and Newpin was then liquidated.

Investing time

To protect Newpin's innovative projects, FWA accepted and managed the risks involved in this merger. Doing so took a significant investment of staff, trustee and professional time and this investment continues post-merger. Newpin and FWA were different sizes with different internal procedures. FWA now realises that more time should have been spent on inducting Newpin staff into FWA's internal systems as soon as merger took place.

Premises

Newpin's projects used several premises, mostly rented to them by local authorities. Because the local authorities were also commissioning Newpin's services, these tenancy arrangements were often informal and not well-documented. As a result, the transfer of arrangements to FWA was time-consuming for both FWA and their solicitors.

Liquidation of National Newpin

The charities initially planned to use a process known as a Creditor's Vountary Arrangement. By this, their major creditors, who were largely funders, agreed that the transfer of funders' money from Newpin to FWA would not harm FWA's position. Due to Newpin's specific circumstances, the liquidator later decided to go for a full winding-up. The costs of this meant that a lot of money was absorbed by the liquidation process.

Funders

Newpin's funders were kept informed about the merger so were notified to transfer Newpin's payments to FWA. However, some funding was still paid to Newpin once they had ceased to operate and after FWA had taken on their services. The liquidators took persuading to pass these funds back to FWA. Such risks meant that FWA's trustees had to be kept fully informed.

April 2006

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