Eastside Primetimers have published the latest edition of our annual report on not-for-profit sector mergers, the Good Merger Index.

Our report features data on charity and social enterprise mergers in the year of 2019/20, but also provides a look at the first six months of the 2020/21 year to gauge the impact of the COVID-19 pandemic. Producing this report continues to give us an excellent understanding of merger activity in the sector, including both constraints on consolidation and examples of change.

The research suggests that despite the turmoil many charities faced in the early months of the pandemic, they have not been put off pursuing necessary mergers. 31 mergers took place (46% of the amount seen in the 12 months to 2019/20, when 67 deals were concluded). However, this is in line with  past trends and accounts for less than 0.1% of the 170,000 registered charities in the UK, bucking speculation that the pandemic might force an increase in the previously small numbers of charities merging.

The research also looks at news items and explanations about organisations merging after the onset of the pandemic – in six cases, publicity around the mergers directly referenced COVID-19 as a factor in the final decision to merge, even if planning for the merger began earlier.

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KEY STATS

  • 67 mergers occurred between May 2019 and April 2020, involving 136 organisations – this amount of merger activity for a 12-month period was within the normal trend we’ve seen in past editions of the Index
  • 31 more occurred between May 2020 and October 2020, involving 65 organisations
  • The combined income of 2019/20 merging charities was £536,932,401; this figure was £300,872,555 for the additional 65 charities merging during May-October 2020
  • Across the combined 18 months (98 mergers):
  • 62% of mergers were ‘takeovers’, 32% were ‘mergers of equals’, 5% were subsidiary deals & 1% were asset/service transfers
  • 54% of merging charities were in health and social care charities, 9% were community organisations, 8% international, 7% in education and 5% justice & rights organisations
  • A majority of charities merging had incomes below £1m (63%). 24% were between £1m-5m, 6% £5m-10m and 7% above £10m
  • 11% of mergers involved local organisations belonging to federated national charities, including Mencap, Age UK, Mind and the YMCA
  • Five organisations carried out more than one merger in the period: Kidney Research UK, METRO Charity, Wembley Educational Charitable Trust, Age UK West Sussex (now Age UK West Sussex, Brighton & Hove) and Street Child

If you would like to discuss how mergers and partnerships might affect your organisation, or any queries about the Good Merger Index research itself, contact us at dawn@ep-uk.org and we will be happy to take forward a conversation.

Eastside Primetimers

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