Merger process

Planning the process with stakeholders and making sure you are clear about the role of your organisation’s regulator is key.

Mergers work best when the process is led by good communicators and change managers. Those who can create a vision for the merged organisation and carry people along with them in achieving it.

Mergers pass through stages. Planning ahead and setting a timetable is important to make sure the process goes smoothly.

You will need professional legal advice and can find more information on this on our legal advice and assistance page. You may also find a neutral facilitator helpful during discussions.

Once you have decided to merge, it is useful to create a small merger working group with the chairs, some of the trustees and senior management from each organisation with relevant skills. Alongside this, any advisers or consultants. In large organisations, other senior staff may be included.

An implementation group of staff can act on decisions taken by the steering group and will get future colleagues starting to work together.

Encouraging staff to start working together while still in separate organisations can help integration after merger. Trustees and staff should work together to develop a single vision, mission and strategic aims.

Looking at these areas together helps produce a sense of shared ownership in the future of the new organisation.

Set a target date for merging, then start working to make it happen. Delays may make the merger process harder. The process is time consuming. Time costs money and if staff are working on merger, they are not working on their ongoing tasks.

Consider the following.

• How much time will be required from different staff?
• Could you employ temporary staff to back fill on ongoing work?
• How much consultancy help do you need?
• At what stages will you need to call on professional input? 
• What legal steps are involved? A useful summary of these can be found in page nine of IVAR’s ‘Thinking about… Merger during Covid-19’

Once decisions on these and other key issues have been made, it is helpful to set these out in a heads of terms document. An example of heads of terms can be found on page seven of IVAR’s ‘Thinking about… Merger, during Covid-19’.

As well as this, to agree an action plan setting out all steps, timescales and how responsibilities are shared.

Set a budget for the merger which includes costs such as:

• staff time
• legal and professional fees
• relocation costs
• redundancy payments.

It is also important to consider:

• how will these costs be shared between the merging organisations?
• can you get funding to support the merger process? 

While some funders may be keen to see mergers, other stakeholders may have conflicting interests. These should be addressed early on.

For example, if important operational buildings are held on advantageous leases which can only be assigned with the landlord's consent, not getting this consent could seriously obstruct a merger. 

You should think about:

• What effect will merger have on the interests of different stakeholders? Consider:
  • beneficiaries or service users
  • volunteers
  • donors and funders
  • staff and members of the organisation.
• Which stakeholders need to be consulted before and after the decision to merge is made. For example, agencies you are contracted with will need to be told of changes such as your new registered charity or limited company numbers before merger takes place. 

Regulatory approvals may be required from the Charity Commission in England and Wales. For charities registered in Scotland, this will be the Office of the Scottish Charity Regulator (OSCR). This would also be the case when merging with a Scottish charity.