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How to carry out a successful merger

Over the last four years NCVO has merged or taken over services run by five other charities. Many of these charities had been Government’s Strategic Partners and, when funding was stopped, struggled to earn enough income to be sustainable. Sarah Welsh, NCVO's director of planning and resources, has either led or supported each of these mergers and here shares her insights from these experiences.

1

Make sure that the mergee charity really wants to merge with you

One of the charities we merged with put out an invitation to a number of parties to bid to merge with them and then carried out a selection process. Once we had been selected, we knew that they really wanted to merge with us. Not every situation will be as clear cut so it's important to have a clear intent from the outset.

2

Don’t go public until both parties have decided that they want to go ahead and have agreed heads of term

It's essential to keep negotiations under wraps until all parties are in agreement. We have been impressed by NCVO staff and mergee staff’s ability to keep everything secret, enabling us to manage the communications properly.

3

Carry out really robust due diligence

By 'robust' we mean not just considering legal, financial and HR, but also developing a really good understanding of the mergee business model and the way they operate. This will save time later by avoiding misunderstandings as to how processes happen.

4

Don’t scrimp on legal advice

Get your lawyers involved early on in the process and before you have started negotiations. Again, this will save money in the long term as they will be able to give good and considered advice.

5

Set up a sub group of both boards to explore the details of the merger

Formally delegate them responsibility to take decisions on the boards’ behalf. This is the only way to keep the time involved manageable.

6

Don’t think that one person can carry out all the merger tasks

No matter how small the merger seems, one person can easily get snowed under. Set up a project group of staff with relevant responsibilities and share the load. 

7

Keep the operational project group going after the merger has actually happened

The real work starts after the merger as you merge systems and cultures. Speaking of which…

8

The cultural aspects of the merger are the hardest to crack

Invest in robust inductions and ensure time is given at the most senior levels to create the new strategic picture.

9

Produce a business process map

Again, this really helps avoid misunderstandings later. A business process map will show how processes are currently carried out and how they will be done post-merger. 

10

Don’t forget to celebrate once the merger has happened…

…and take time to say thank you to all involved.

Further information

Find out more about the different types of mergers and how to manage them in the collaborative working section. NCVO members can also download our free guide The Truth About Mergers, a detailed real-life exploration of the process based on the merger of the Princess Royal Trust for Carers and Crossroads Care.

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Page last edited Apr 07, 2017 History

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