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This page explains the types of charity mergers and the different reasons for merging.
Once you have understood this, you can explore:
The Institute for Voluntary Action Research (IVAR) provides:
Merger is where two or more organisations formally come together. Most commonly by one transferring its property to the other and then ceasing to exist.
Merger is usually referred to as a ‘takeover’ in the commercial world. The term merger has no precise legal definition and is used to cover a range of scenarios.
When deciding to merge your main consideration should be whether merging will improve outcomes for beneficiaries by helping an organisation better achieve its aims.
There has been a growing interest in merger among voluntary and community organisations. This is in response to a combination of internal and external factors along with the impact of the pandemic. As the 2020 IVAR Report states:
‘For organisations with their backs against the wall, the merger proposition now may be: the preservation of something versus the potential disappearance of everything.’
The greatest disappointments with mergers happen when both organisations believe they will be able to continue exactly as before. The most successful mergers are those where the parties recognise there is a strategic and organisational fit: each has something to gain from the other.
Internal drivers include:
External drivers include:
Mergers can take many forms. The most common types are:
This is a form where one organisation takes control of the other. This happens by them becoming the sole member or trustee of the other, but without any transfer of assets and liabilities.
It is often a quicker process than a full merger and can be used as a short-term step. This gives the parent organisation the chance to find out more about the subsidiary organisation before moving to an asset transfer.
There may be reasons why it is preferred to keep the subsidiary organisation as separate on a longer-term basis. For example, ring-fencing certain assets or avoiding triggering certain liabilities.
The relationship may continue or may be a stage before the full merger. However it is not desirable to maintain two distinct legal structures each with their own separate boards, finances and employees.
It is possible for there to be more than two parties involved in a merger and the three options above can be adapted .
Last reviewed: 01 September 2021Help us improve this content
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