Emerging from a MergerLessons learned from the merger of
bassac and DTA
Tina WindersDirector of Finance and Corporate Services
Locality
• History of partnership working• Community Alliance • Membership• Corsham Street - joint staff
The case for merger
• Exit strategy for end of a programme• Manchester Settlement meeting• Trustee engagement• Financial• Need - on either side?
The catalyst
• Staff relationships • Chief Executives• Finance/operations directors• Funders• Strategic Partners
Trust
• Merger v take over• Sensitivities• Larger = more generous• Culture – acknowledge differences, what will
new organisation be like.• Perceived differences greater than actual
Perceptions
• Lawyers (BWB)• Independent consultants (IVAR)• HR – in house/ Croner• PR and branding (Public Life)
Professional Help
• 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
• 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
• DTA-bassac/ bassac-DTA• Suggestions ranged from
“bastads” to “community matters”!• Shortlist of 6• (Nearly!) Unanimous support for
locality
What’s in a name?
• Director of integration• Lots of form filling and new signatures needed!• Need to things get in the right order• Launch – venue, publicity
Next steps
locality.org.uk
Part 2
Structures and Legal Considerations
Philip KirkpatrickCo-Head
Charities and Social Enterprise DepartmentBates Wells & Braithwaite London LLP
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
Main Collaborative Structures
Un-documented joint working Memorandum of understanding Written contract (JANE) Partnership agreement Limited liability partnership Limited company Group structure Federation
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?
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
Collaboration Checklist
Admission of new partners / members Profit distribution Tax and VAT IP and data ownership / management Liability:
contract tort
Insurance Dispute resolution
Collaboration Checklist
Conflicts of interest Data protection Joint ownership problems:
land/premises intellectual property other assets
Methods/timing of termination Consequences of termination
Basic Merger Structures: Asset Transfer 1
A B
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)
Basic Structures: Asset Transfer 2
A
B
C
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?
Basic structures: Group 1
B
A
Basic Structures: Group 2
C
A B
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?
Basic Structures: Federation
F
M
M
M
MM
M
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
Legal Due Diligence
Objects and powers Members Structure – corporate / unincorporated? Regulatory support / approval? Contracts / grants Debts Employees and TUPE Pensions Litigation / disputes
Legal Due Diligence
Properties freeholds / leaseholds restrictions on disposition (s 36 CA 1993) charges condition
Permanent endowment / specie land Other special trusts
Legal Due Diligence
Hire purchase / leased assets Intellectual property Information technology Investments Tax / VAT Trading company Data protection Insurance Other sector specific issues
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?
Merger Agreement
Conditions consents from / registration with regulators consents from funders / contractors member approval
Pre-assignment / novation / consent contract / lease arrangements
TUPE Announcements
Philip KirkpatrickPartnerCo-Head of Charity and Social Enterprise
Bates Wells & Braithwaite London LLP
DD: 020 7551 7835www.bwbllp.com
