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Charity mergers
Nine tips to make charity mergers a success
GROWTH, REGENERATION & DEVELOPMENT
Dan Currie
Associate Consultant, Campbell Tickell
Dan Currie
Associate Consultant, Campbell Tickell
Issue 78 | June 2025
In difficult times charity trustees often consider merging their way out of trouble. Over the past 17 years I have helped almost 30 smaller charities to find a larger one to merge into. These are my nine rules for success:
01
Set clear goals and red lines
Trustees must agree at the outset what they want to achieve and the ‘red lines’ around changes they will never agree to. If you set tough conditions at the start, a potential partner may well agree to them. If you reveal them at the eleventh hour, the same partner may walk away.
02
Go to market
Unless there really is only one logical partner, the charity that wants to be taken over should offer itself to the market. This is a closed process of identifying possible partners and approaching them in confidence. Unless you talk to a reasonable number of potential partners (eight is reasonable) you are unlikely to find the charity that can make you the offer you need.
03
Seek cultural alignment
You have to be able to work with these people. If you are nimble and they are bureaucratic that will be a problem. It helps if you like them. Your historic arch-rivals won’t make good partners, however rich they are.
“Trustees must agree at the outset the ‘red lines’ around changes they will never agree to.”
04
Be diligent about due diligence
Each partner, or their advisors, must properly investigate the other’s finances. Due diligence boils down to a single net asset number: the value of remaining assets if the charity was liquidated today, crystallising all liabilities. Responsible trustees will require that number to be positive on both sides.
05
Negotiate terms flexibly
Some business negotiations are conducted with the sole aim of maximising your advantage. You don’t care if the terms you obtain are damaging to the other side. In a merger you are negotiating with a partner whose interests are about to become identical to your own. Both sides have to be willing to compromise. Except on those red lines you set at the start.
“Each partner, or their advisors, must properly investigate the other’s finances.”
06
Take the advice you need
You will probably need to obtain technical advice from a range of specialists. These could be lawyers, accountants, TUPE specialists, tax advisors, property consultants, or insolvency practitioners. Listen to their advice and make your own decisions. Your advisors are there to identify and quantify risk, not dictate your risk appetite.
07
Work to complete in three to six months
It’s hard to properly negotiate terms or to carry out due diligence in less than three months. But merger processes which run beyond three months can lose momentum and fizzle out. Long processes also mean prolonged uncertainty for trustees and staff, which adds unnecessary stress.
08
Devote resources to integration
Every merger or takeover creates a new organisation. Staff teams, cultures, programmes and assets have to be integrated. The more thought both sets of trustees give to this process in advance, the more likely it is to go smoothly. If the merger involves a large staff group, it is sensible to second a manager or appoint an interim to run the process for a limited period.
09
Use a specialist facilitator
I would say this, wouldn’t I? But most boards do in fact need external support to merge. The full process, which starts with deciding whether to pursue a merger and ends with successful integration, is complex. Most trustees will only work on a few mergers in their lifetime. An experienced consultant will coordinate the various activities, guide you around pitfalls, act as an honest broker in tricky negotiations, and drive the merger forward to a successful conclusion.
“Every merger or takeover creates a new organisation. Staff teams, cultures, programmes and assets have to be integrated.”
01
Set clear goals and red lines
Trustees must agree at the outset what they want to achieve and the ‘red lines’ around changes they will never agree to. If you set tough conditions at the start, a potential partner may well agree to them. If you reveal them at the eleventh hour, the same partner may walk away.
02
Go to market
Unless there really is only one logical partner, the charity that wants to be taken over should offer itself to the market. This is a closed process of identifying possible partners and approaching them in confidence. Unless you talk to a reasonable number of potential partners (eight is reasonable) you are unlikely to find the charity that can make you the offer you need.
“Trustees must agree at the outset the ‘red lines’ around changes they will never agree to.”
03
Seek cultural alignment
You have to be able to work with these people. If you are nimble and they are bureaucratic that will be a problem. It helps if you like them. Your historic arch-rivals won’t make good partners, however rich they are.
04
Be diligent about due diligence
Each partner, or their advisors, must properly investigate the other’s finances. Due diligence boils down to a single net asset number: the value of remaining assets if the charity was liquidated today, crystallising all liabilities. Responsible trustees will require that number to be positive on both sides.
05
Negotiate terms flexibly
Some business negotiations are conducted with the sole aim of maximising your advantage. You don’t care if the terms you obtain are damaging to the other side. In a merger you are negotiating with a partner whose interests are about to become identical to your own. Both sides have to be willing to compromise. Except on those red lines you set at the start.
06
Take the advice you need
You will probably need to obtain technical advice from a range of specialists. These could be lawyers, accountants, TUPE specialists, tax advisors, property consultants, or insolvency practitioners. Listen to their advice and make your own decisions. Your advisors are there to identify and quantify risk, not dictate your risk appetite.
“Each partner, or their advisors, must properly investigate the other’s finances.”
07
Work to complete in three to six months
It’s hard to properly negotiate terms or to carry out due diligence in less than three months. But merger processes which run beyond three months can lose momentum and fizzle out. Long processes also mean prolonged uncertainty for trustees and staff, which adds unnecessary stress.
08
Devote resources to integration
Every merger or takeover creates a new organisation. Staff teams, cultures, programmes and assets have to be integrated. The more thought both sets of trustees give to this process in advance, the more likely it is to go smoothly. If the merger involves a large staff group, it is sensible to second a manager or appoint an interim to run the process for a limited period.
“Every merger or takeover creates a new organisation. Staff teams, cultures, programmes and assets have to be integrated.”
09
Use a specialist facilitator
I would say this, wouldn’t I? But most boards do in fact need external support to merge. The full process, which starts with deciding whether to pursue a merger and ends with successful integration, is complex. Most trustees will only work on a few mergers in their lifetime. An experienced consultant will coordinate the various activities, guide you around pitfalls, act as an honest broker in tricky negotiations, and drive the merger forward to a successful conclusion.
