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 Larger organisation ‘acquiring’ smaller org, ensuring continuity of service and new investment. The National Childcare Trust & The Baby Café Charitable Trust Like-for-like organisations in different sectors creating new portfolio of services. Crisis & OSW; BHT and Blue Rocket. Two or more organisations co-invest into new company. Third Sector Consortia Management LLP

11. Types of Restructuring TypeFeatures/ descriptionDrivers or Benefits Full merger/ acquisition Combine assets & liabilities into existing or new entity, new legal & governance arrangements needed most potential impact High transaction costs Joint venturePool functions (back-office) or co- invest into new venture, new legal & governance likely Less investment than full merger ConsortiumSPV for delivery of services, bound by contractual arrangements Utilises strengths of partners Retain independence PartnershipBusiness partnership of some variety, no legal changes Loose alliance Lower costs First step to merger

12. Merger process AssessApproach Formal Discussions 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, give legal & account advice Post merger consultancy, HR, mentor SMT/ boards Support Available Different Stages

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

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