Roundtable Discussion: Strategic restructuring (mergers, joint ventures, consortia)

1. Roundtable Discussion:Strategic restructuring(mergers, joint ventures, consortia)

2. Definition of a Merger • “Merger is where two or more organisations formally combine to form one organisation…” [James Sinclair Taylor, NCVO] • Assets and liabilities of an organisation are merged or acquired by another • Change in governance and legal arrangements • Today, will alternate between “merger” and “restructuring” (broader term)

3. Jack Welch on Mergers “The first pitfall is believing that a merger of equals can actually occur. Despite the noble intentions of those attempting them, the vast majority of MoE self destruct because of their very premise”

4. Background • Inefficiencies, lack of scale, duplication • Mergers/joint-ventures/consortia frequently discussed • But not many happening (eg 9% NCVO statistic) • Economic/funding conditions lend themselves to new, larger, more efficient ways of doing business • It’s about long-term sustainability and impact!

5. Themes • Mergers is type of restructuring – one on a spectrum • Common tool for managers in private sector • SMTs and Boards should frequently consider restructuring options • Are mergers/partnership good? Answer = it depends • Change process – need to take your people and theirs on journey • Trust is key ingredient for success • 1+1 = 14

6. Main drivers for mergers Source: Breakthrough, October 2009

7. Jack Welch on Mergers “Mergers and acquisitions give you a faster way to profitable growth. They quickly add geographical and technological scope, and bring on board new products and customers. Just as important, mergers instantly allow a company to improve its players – suddenly there are twice as many people “trying out” for the team.”

8. Reasons preventing mergers Source: Breakthrough, October 2009

9. Obstacles to Mergers Source: Breakthrough, October 2009

10. 4 Models of Mergers Like-for-like organisations in same sector, merging services. Wells Old Almshouses & Llewellyn, Charles and Harper's Almshouse Trust Like-for-like organisations in different sectors creating new portfolio of services. Crisis & OSW; BHT and Blue Rocket. Larger organisation ‘acquiring’ smaller org, ensuring continuity of service and new investment. The National Childcare Trust & The Baby Café Charitable Trust Two or more organisations co-invest into new company. Third Sector Consortia Management LLP

11. Types of Restructuring

12. Merger process Different Stages Assess Approach FormalDiscussions Finance Negotiate & Complete Implement • Self-analysis • Pros/ cons • Poss partners • Costs • Early consultation? • Seek Board support • Make initial approach • Meet face-to • face • Agree rules for process • Identify deal- breakers • Seek Board approvall • Set up working grp • Set timetable • Begin due diligence • Consult with SMT? • Complete MoU • Inform Board re progress • Assess financing needs • Raise finance if reqd • Seek grants for support • Seek Board approval • Consult • Hire prof support • Complete due diligence • Legals and contracts • Final sign-off • Announce • Plan project • Merge boards • SMT teams • Staff teams • TUPE/ Redundancies • Co-locate • New branding Feasibility study Matching service Project manage merger process Financial advice Support due diligence, givelegal & accountadvice Post merger consultancy, HR, mentor SMT/ boards Support Available

13. Considerations for legal structure Source: Social Finance, October 2009

14. What are success factors? Source: Social Finance, October 2009