1 a tina and philip

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we b : www. l o c al i t y . o r g . u k e mai l : i nfo@locali ty. org. uk tel: 0845 458 8336

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Page 1: 1 a tina and philip

we b : www. l o c al i t y. o r g. u k

e mai l : i n f o @l o c al i t y. o r g. u k t e l : 0845

458 8336

Page 2: 1 a tina and philip

Eme r g i n g f r o m a Me r ge rLe s s o n s l e ar n e d f r o m t h e me r ge r o f

b as s ac an d DTA

Tina WindersDirector of Finance and Corporate Services

Lo c al i t y

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• History of partnership working• Community Alliance • Membership• Corsham Street - joint staff

The case for merger

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• Exit strategy for end of a programme• Manchester Settlement meeting• Trustee engagement• Financial• Need - on either side?

The catalyst

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• Staff relationships • Chief Executives• Finance/operations directors• Funders• Strategic Partners

Trust

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• Merger v take over• Sensitivities• Larger = more generous• Culture – acknowledge differences, what will

new organisation be like.• Perceived differences greater than actual

Perceptions

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• Lawyers (BWB)• Independent consultants (IVAR)• HR – in house/ Croner• PR and branding (Public Life)

Professional Help

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• Costs– Legal fees– Pension liability – Redundancy costs– Rebranding, launch– Due diligence accountants

fees– Governance, additional

meetings etc– Cancelling supplier contracts

• Benefits– Synergy of 2 member

networks– Savings in SMT, support staff– Reduced costs of audit,

insurance, annual member conference, regional networks

– Opportunity to refresh, marketing etc

– Taken more seriously, more able to sit at the “top table”

Costs v benefits

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• Time – too quick v too slow• Consultation union/staff forum• Various types of communication• Joint team days, social events• Listen• Be prepared to change plan

Process

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• DTA-bassac/ bassac-DTA• Suggestions ranged from

“bastads” to “community matters”!• Shortlist of 6• (Nearly!) Unanimous support for

l o c al i t y

What’s in a name?

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• Director of integration• Lots of form filling and new signatures needed!• Need to things get in the right order• Launch – venue, publicity

Next steps

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l o c al i t y. o r g. u k

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Part 2

Structures and Legal Considerations

Philip KirkpatrickCo-Head

Charities and Social Enterprise DepartmentBates Wells & Braithwaite London LLP

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Spectrum of collaborative arrangements

Sharing knowledge Collaborative working on issues/projects Joint venture by contract Joint venture through new entity Shared purchasing Shared services Merger

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Main Collaborative Structures

Un-documented joint working Memorandum of understanding Written contract (JANE) Partnership agreement Limited liability partnership Limited company Group structure Federation

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Collaboration Checklist

Compatible objects? Objectives of collaboration How long will it last? Who contributes what? When and how? Effect on staff? Who employs / seconds? Who disciplines?

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Collaboration Checklist

Management and governance processes Who decides what? How? Steering committee? Role of the boards Communications – internal and external Policies Budget and budgetary control Accounting arrangements

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Collaboration Checklist

Admission of new partners / members Profit distribution Tax and VAT IP and data ownership / management Liability:

contract tort

Insurance Dispute resolution

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Collaboration Checklist

Conflicts of interest Data protection Joint ownership problems:

land/premises intellectual property other assets

Methods/timing of termination Consequences of termination

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Basic Merger Structures: Asset Transfer 1

A B

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Issues on Asset Transfer 1

B assumes liabilities of A Therefore good due diligence vital Simpler/cheaper resulting governance and

management structure Feels like a takeover (but it needn’t)

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Basic Structures: Asset Transfer 2

A

B

C

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Issues on Asset Transfer 2

As with Asset Transfer 1 except: feels less like a takeover

more expensive

If you had to pay the costs personally, how would you do it?

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Basic structures: Group 1

B

A

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Basic Structures: Group 2

C

A B

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Issues with Groups

Tighter than mere contract arrangements Cheaper to establish No transfer of liability More complex/expensive governance More complex/expensive management Easier to persuade boards? Useful stepping stone?

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Basic Structures: Federation

F

M

M

M

MM

M

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Issues with Federations

Collaborative rather than merger structure No transfer of liability Role is to co-ordinate/support independent

activity One member can damage reputation of all Need clear, binding rules of

conduct/membership Need proper control of IP Federation needs to add value

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Legal Due Diligence

Objects and powers Members Structure – corporate / unincorporated? Regulatory support / approval? Contracts / grants Debts Employees and TUPE Pensions Litigation / disputes

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Legal Due Diligence

Properties freeholds / leaseholds restrictions on disposition (s 36 CA 1993) charges condition

Permanent endowment / specie land Other special trusts

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Legal Due Diligence

Hire purchase / leased assets Intellectual property Information technology Investments Tax / VAT Trading company Data protection Insurance Other sector specific issues

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Merger Agreement

What transferring? Warranties and indemnities – where does

risk lie? ongoing contractual liabilities known creditors unknown creditors liabilities arising from breach of trust liabilities arising from excusable breaches

of trust run-off insurance?

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Merger Agreement

Conditions consents from / registration with regulators consents from funders / contractors member approval

Pre-assignment / novation / consent contract / lease arrangements

TUPE Announcements

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Philip KirkpatrickPartnerCo-Head of Charity and Social Enterprise

Bates Wells & Braithwaite London LLP

[email protected]

DD: 020 7551 7835www.bwbllp.com