Legal structures for collaborations and mergers

David SaundersDavid Kelly

NCVS

Association Consortia

Collaboration

MergerAlliance

Why collaborate?

Funders

Less money available

Combat bigger threats

Convenience for commissioners

• Combines the benefits of large and small scale

• Rationalised area-wide structure, dovetailing independent service delivery responsive to local or specific client group needs

How do you do it?

• Look before you leap

• Find potential partners

• Communicate throughout

• Does it fit with trustees/vision/values/priorities?

• Take advice

• Agreement

Models

Separate organisations keep their independence but work jointly on some activities or functions

Organisations with resources/expertise offer assistance to others

New organisation is formed to do joint work on some activities (track record)

Group structure with lead organisation

Merger to form a new organisation, working as one on all activities

Type of activities

• Can be used to carry out charitable activities, service delivery, campaigning or policy work

• Share premises or functions

• Improve strategic efficiency

What is a bidding consortium?

A group of organisations who come together to win contracts

Speculative

Responsive

Longer term collaboration, set up in advance with a wide membership and wide areas of activity

Shorter term collaboration, set up in response to a particular opportunity with only relevant partners

Lead Provider

Subcontractor 1

Subcontractor 2

Subcontractor 3

Delivery of contract and

services

Lead Provider

Prime/ Managing Agent

Subcontractor 1

Subcontractor 2

Subcontractor 3

Delivery of contract and

services

Prime Contractor / Managing Agent

New legal entity

Either delivers contract itself through transferred staff/resources or subcontracts to member organisations

Organisation 1 Organisation 2 Organisation 3

Special Purpose Vehicle

New EntityOperates as hub or long term standing

consortium

member

member member member

member member

Standing Consortium

s.c. s.c.

Merger

Merger is where two or more organisations formally combine to form one organisation.

The term merger has no precise legal definition and is used to cover a number of different processes.

Some mergers may also be referred to as takeovers

External drivers

Pressure from funders to reduce duplication

Government encouragement

Competition with similar organisations

Stakeholder opinion

Public perception of an overcrowded voluntary sector

Internal drivers

Desire to provide more or better services

Need to increase efficiency through better use of resources

Preventing duplication of services

Financial difficulties

Raising public profile or boosting income

Loss of key staff or trustees

‘Survival’ &‘ rescue’

Merger leading to a new organisation

New organisation

Organisation A

Organisation B

Organisation C

Merger using an existing organisation’s structure

Organisation

B

Organisation

A

Organisation

A

Things to consider

• Do the outcomes justify the time and resources invested?

• Loss of autonomy

• Cultural mismatch

• Mission drift

• Damage if unsuccessful, which could be fatal

What if it goes wrong?

Any questions ?