1 a tina and philip
TRANSCRIPT
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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
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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
DD: 020 7551 7835www.bwbllp.com