web:  www.locality.org.uk   email:  [email_address]   tel:  0845 458 8336
Emerging from a Merger Lessons learned from the merger of  bassac  and DTA Tina Winders Director of Finance and Corporate ...
<ul><li>History of partnership working </li></ul><ul><li>Community Alliance  </li></ul><ul><li>Membership </li></ul><ul><l...
<ul><li>Exit strategy for end of a programme </li></ul><ul><li>Manchester Settlement meeting </li></ul><ul><li>Trustee eng...
<ul><li>Staff relationships  </li></ul><ul><li>Chief Executives </li></ul><ul><li>Finance/operations directors </li></ul><...
<ul><li>Merger v take over </li></ul><ul><li>Sensitivities </li></ul><ul><li>Larger  =  more generous </li></ul><ul><li>Cu...
<ul><li>Lawyers (BWB) </li></ul><ul><li>Independent consultants (IVAR) </li></ul><ul><li>HR – in house/ Croner </li></ul><...
<ul><li>Costs </li></ul><ul><ul><li>Legal fees </li></ul></ul><ul><ul><li>Pension liability  </li></ul></ul><ul><ul><li>Re...
<ul><li>Time – too quick v too slow </li></ul><ul><li>Consultation union/staff forum </li></ul><ul><li>Various types of co...
<ul><li>DTA-bassac/ bassac-DTA </li></ul><ul><li>Suggestions ranged from “bastads” to “community matters”! </li></ul><ul><...
<ul><li>Director of integration </li></ul><ul><li>Lots of form filling and new signatures needed! </li></ul><ul><li>Need t...
locality.org.uk
Part 2 Structures and Legal Considerations Philip Kirkpatrick Co-Head Charities and Social Enterprise Department Bates Wel...
Spectrum of collaborative arrangements <ul><li>Sharing knowledge  </li></ul><ul><li>Collaborative working on issues/projec...
Main Collaborative Structures <ul><li>Un-documented joint working </li></ul><ul><li>Memorandum of understanding </li></ul>...
Collaboration Checklist <ul><li>Compatible objects? </li></ul><ul><li>Objectives of collaboration </li></ul><ul><li>How lo...
Collaboration Checklist <ul><li>Management and governance processes </li></ul><ul><li>Who decides what?  How? </li></ul><u...
Collaboration Checklist <ul><li>Admission of new partners / members </li></ul><ul><li>Profit distribution </li></ul><ul><l...
Collaboration Checklist <ul><li>Conflicts of interest </li></ul><ul><li>Data protection  </li></ul><ul><li>Joint ownership...
Basic Merger Structures:  Asset Transfer 1 A B
Issues on Asset Transfer 1 <ul><li>B assumes liabilities of A </li></ul><ul><li>Therefore good due diligence vital </li></...
Basic Structures:  Asset Transfer 2 A B C
Issues on Asset Transfer 2 <ul><li>As with Asset Transfer 1 except: </li></ul><ul><li>feels less like a takeover </li></ul...
Basic structures: Group 1 B A
Basic Structures:  Group 2 C A B
Issues with Groups <ul><li>Tighter than mere contract arrangements </li></ul><ul><li>Cheaper to establish </li></ul><ul><l...
Basic Structures:  Federation F M M M M M M
Issues with Federations <ul><li>Collaborative rather than merger structure </li></ul><ul><li>No transfer of liability </li...
Legal Due Diligence <ul><li>Objects and powers </li></ul><ul><li>Members </li></ul><ul><li>Structure – corporate / unincor...
Legal Due Diligence <ul><li>Properties </li></ul><ul><ul><li>freeholds / leaseholds </li></ul></ul><ul><ul><li>restriction...
Legal Due Diligence <ul><li>Hire purchase / leased assets </li></ul><ul><li>Intellectual property </li></ul><ul><li>Inform...
Merger Agreement <ul><li>What transferring? </li></ul><ul><li>Warranties and indemnities – where does risk lie? </li></ul>...
Merger Agreement <ul><li>Conditions </li></ul><ul><ul><li>consents from / registration with regulators </li></ul></ul><ul>...
Philip Kirkpatrick Partner Co-Head of Charity and Social Enterprise Bates Wells & Braithwaite London LLP p.kirkpatrick @bw...
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  • 1 a tina and philip

    1. 1. web: www.locality.org.uk email: [email_address] tel: 0845 458 8336
    2. 2. Emerging from a Merger Lessons learned from the merger of bassac and DTA Tina Winders Director of Finance and Corporate Services Locality
    3. 3. <ul><li>History of partnership working </li></ul><ul><li>Community Alliance </li></ul><ul><li>Membership </li></ul><ul><li>Corsham Street - joint staff </li></ul>The case for merger
    4. 4. <ul><li>Exit strategy for end of a programme </li></ul><ul><li>Manchester Settlement meeting </li></ul><ul><li>Trustee engagement </li></ul><ul><li>Financial </li></ul><ul><li>Need - on either side? </li></ul>The catalyst
    5. 5. <ul><li>Staff relationships </li></ul><ul><li>Chief Executives </li></ul><ul><li>Finance/operations directors </li></ul><ul><li>Funders </li></ul><ul><li>Strategic Partners </li></ul>Trust
    6. 6. <ul><li>Merger v take over </li></ul><ul><li>Sensitivities </li></ul><ul><li>Larger = more generous </li></ul><ul><li>Culture – acknowledge differences, what will new organisation be like. </li></ul><ul><li>Perceived differences greater than actual </li></ul>Perceptions
    7. 7. <ul><li>Lawyers (BWB) </li></ul><ul><li>Independent consultants (IVAR) </li></ul><ul><li>HR – in house/ Croner </li></ul><ul><li>PR and branding (Public Life) </li></ul>Professional Help
    8. 8. <ul><li>Costs </li></ul><ul><ul><li>Legal fees </li></ul></ul><ul><ul><li>Pension liability </li></ul></ul><ul><ul><li>Redundancy costs </li></ul></ul><ul><ul><li>Rebranding, launch </li></ul></ul><ul><ul><li>Due diligence accountants fees </li></ul></ul><ul><ul><li>Governance, additional meetings etc </li></ul></ul><ul><ul><li>Cancelling supplier contracts </li></ul></ul><ul><li>Benefits </li></ul><ul><ul><li>Synergy of 2 member networks </li></ul></ul><ul><ul><li>Savings in SMT, support staff </li></ul></ul><ul><ul><li>Reduced costs of audit, insurance, annual member conference, regional networks </li></ul></ul><ul><ul><li>Opportunity to refresh, marketing etc </li></ul></ul><ul><ul><li>Taken more seriously, more able to sit at the “top table” </li></ul></ul>Costs v benefits
    9. 9. <ul><li>Time – too quick v too slow </li></ul><ul><li>Consultation union/staff forum </li></ul><ul><li>Various types of communication </li></ul><ul><li>Joint team days, social events </li></ul><ul><li>Listen </li></ul><ul><li>Be prepared to change plan </li></ul>Process
    10. 10. <ul><li>DTA-bassac/ bassac-DTA </li></ul><ul><li>Suggestions ranged from “bastads” to “community matters”! </li></ul><ul><li>Shortlist of 6 </li></ul><ul><li>(Nearly!) Unanimous support for </li></ul><ul><li>locality </li></ul>What’s in a name?
    11. 11. <ul><li>Director of integration </li></ul><ul><li>Lots of form filling and new signatures needed! </li></ul><ul><li>Need to things get in the right order </li></ul><ul><li>Launch – venue, publicity </li></ul>Next steps
    12. 12. locality.org.uk
    13. 13. Part 2 Structures and Legal Considerations Philip Kirkpatrick Co-Head Charities and Social Enterprise Department Bates Wells & Braithwaite London LLP
    14. 14. Spectrum of collaborative arrangements <ul><li>Sharing knowledge </li></ul><ul><li>Collaborative working on issues/projects </li></ul><ul><li>Joint venture by contract </li></ul><ul><li>Joint venture through new entity </li></ul><ul><li>Shared purchasing </li></ul><ul><li>Shared services </li></ul><ul><li>Merger </li></ul>
    15. 15. Main Collaborative Structures <ul><li>Un-documented joint working </li></ul><ul><li>Memorandum of understanding </li></ul><ul><li>Written contract (JANE) </li></ul><ul><li>Partnership agreement </li></ul><ul><li>Limited liability partnership </li></ul><ul><li>Limited company </li></ul><ul><li>Group structure </li></ul><ul><li>Federation </li></ul>
    16. 16. Collaboration Checklist <ul><li>Compatible objects? </li></ul><ul><li>Objectives of collaboration </li></ul><ul><li>How long will it last? </li></ul><ul><li>Who contributes what? </li></ul><ul><li>When and how? </li></ul><ul><li>Effect on staff? </li></ul><ul><li>Who employs / seconds? </li></ul><ul><li>Who disciplines? </li></ul>
    17. 17. Collaboration Checklist <ul><li>Management and governance processes </li></ul><ul><li>Who decides what? How? </li></ul><ul><li>Steering committee? </li></ul><ul><li>Role of the boards </li></ul><ul><li>Communications – internal and external </li></ul><ul><li>Policies </li></ul><ul><li>Budget and budgetary control </li></ul><ul><li>Accounting arrangements </li></ul>
    18. 18. Collaboration Checklist <ul><li>Admission of new partners / members </li></ul><ul><li>Profit distribution </li></ul><ul><li>Tax and VAT </li></ul><ul><li>IP and data ownership / management </li></ul><ul><li>Liability: </li></ul><ul><ul><li>contract </li></ul></ul><ul><ul><li>tort </li></ul></ul><ul><li>Insurance </li></ul><ul><li>Dispute resolution </li></ul>
    19. 19. Collaboration Checklist <ul><li>Conflicts of interest </li></ul><ul><li>Data protection </li></ul><ul><li>Joint ownership problems: </li></ul><ul><ul><li>land/premises </li></ul></ul><ul><ul><li>intellectual property </li></ul></ul><ul><ul><li>other assets </li></ul></ul><ul><li>Methods/timing of termination </li></ul><ul><li>Consequences of termination </li></ul>
    20. 20. Basic Merger Structures: Asset Transfer 1 A B
    21. 21. Issues on Asset Transfer 1 <ul><li>B assumes liabilities of A </li></ul><ul><li>Therefore good due diligence vital </li></ul><ul><li>Simpler/cheaper resulting governance and management structure </li></ul><ul><li>Feels like a takeover (but it needn’t) </li></ul>
    22. 22. Basic Structures: Asset Transfer 2 A B C
    23. 23. Issues on Asset Transfer 2 <ul><li>As with Asset Transfer 1 except: </li></ul><ul><li>feels less like a takeover </li></ul><ul><ul><li>more expensive </li></ul></ul><ul><li>If you had to pay the costs personally, how would you do it? </li></ul>
    24. 24. Basic structures: Group 1 B A
    25. 25. Basic Structures: Group 2 C A B
    26. 26. Issues with Groups <ul><li>Tighter than mere contract arrangements </li></ul><ul><li>Cheaper to establish </li></ul><ul><li>No transfer of liability </li></ul><ul><li>More complex/expensive governance </li></ul><ul><li>More complex/expensive management </li></ul><ul><li>Easier to persuade boards? </li></ul><ul><li>Useful stepping stone? </li></ul>
    27. 27. Basic Structures: Federation F M M M M M M
    28. 28. Issues with Federations <ul><li>Collaborative rather than merger structure </li></ul><ul><li>No transfer of liability </li></ul><ul><li>Role is to co-ordinate/support independent activity </li></ul><ul><li>One member can damage reputation of all </li></ul><ul><li>Need clear, binding rules of conduct/membership </li></ul><ul><li>Need proper control of IP </li></ul><ul><li>Federation needs to add value </li></ul>
    29. 29. Legal Due Diligence <ul><li>Objects and powers </li></ul><ul><li>Members </li></ul><ul><li>Structure – corporate / unincorporated? </li></ul><ul><li>Regulatory support / approval? </li></ul><ul><li>Contracts / grants </li></ul><ul><li>Debts </li></ul><ul><li>Employees and TUPE </li></ul><ul><li>Pensions </li></ul><ul><li>Litigation / disputes </li></ul>
    30. 30. Legal Due Diligence <ul><li>Properties </li></ul><ul><ul><li>freeholds / leaseholds </li></ul></ul><ul><ul><li>restrictions on disposition (s 36 CA 1993) </li></ul></ul><ul><ul><li>charges </li></ul></ul><ul><ul><li>condition </li></ul></ul><ul><li>Permanent endowment / specie land </li></ul><ul><li>Other special trusts </li></ul>
    31. 31. Legal Due Diligence <ul><li>Hire purchase / leased assets </li></ul><ul><li>Intellectual property </li></ul><ul><li>Information technology </li></ul><ul><li>Investments </li></ul><ul><li>Tax / VAT </li></ul><ul><li>Trading company </li></ul><ul><li>Data protection </li></ul><ul><li>Insurance </li></ul><ul><li>Other sector specific issues </li></ul>
    32. 32. Merger Agreement <ul><li>What transferring? </li></ul><ul><li>Warranties and indemnities – where does risk lie? </li></ul><ul><ul><li>ongoing contractual liabilities </li></ul></ul><ul><ul><li>known creditors </li></ul></ul><ul><ul><li>unknown creditors </li></ul></ul><ul><ul><li>liabilities arising from breach of trust </li></ul></ul><ul><ul><li>liabilities arising from excusable breaches of trust </li></ul></ul><ul><ul><li>run-off insurance? </li></ul></ul>
    33. 33. Merger Agreement <ul><li>Conditions </li></ul><ul><ul><li>consents from / registration with regulators </li></ul></ul><ul><ul><li>consents from funders / contractors </li></ul></ul><ul><ul><li>member approval </li></ul></ul><ul><li>Pre-assignment / novation / consent contract / lease arrangements </li></ul><ul><li>TUPE </li></ul><ul><li>Announcements </li></ul>
    34. 34. Philip Kirkpatrick Partner Co-Head of Charity and Social Enterprise Bates Wells & Braithwaite London LLP p.kirkpatrick @bwbllp.com DD: 020 7551 7835 www.bwbllp.com
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