Since the original publication of our 2019/20 Good Merger Index, we have amended it to reflect the inclusion of a very significant deal and charity merger case study we have since become aware of. In April 2020, £10m learning disability organisation Yarrow merged into the larger learning disabilities, autism and mental health support provider Certitude (turnover £36.4m), becoming a subsidiary. The primary purpose of the merger was to further the creation of a quality-driven, specialist social care provider group, offering a range of expertise and services to people with learning disabilities, autistic spectrum conditions and mental health needs living in London. It would also secure the Certitude group as the largest not-for-profit provider of support for people with learning disabilities, autism and mental health needs in London.
For a valuable charity merger case study, we spoke to Aisling Duffy, chief executive of the Certitude group, and to Jeremy Gray – former chair of Yarrow and current chief executive of a separate housing charity, Evolve – about the process and outcomes of this merger.
Certitude came into being in 2010 from a merger of Southside Partnership and Support for Living, which came together as a group structure where Certitude became the new parent entity. At the time, the combined organisation had a turnover of approximately £25m. By 2019, the organisation had grown in the social care sector and had 1,100 staff. Yarrow’s founders, meanwhile, created the organisation in 1988 in Hammersmith and Fulham. This was in response to a lack of services to prevent people with learning disabilities becoming excluded from society. Since then, the charity had grown from just one member of staff to employing 308.
When Jeremy Gray became chair of Yarrow in September 2018, discussions were already underway within Yarrow about merger and the board were strongly supportive of the proposal to seek a suitable merger partner. Yarrow had a good reputation, solid Care Quality Commission (CQC) ratings and strong local authority relationships. However, it was also smaller and – like many organisations involved in care – faced rising costs.
Finding the right partner
Yarrow contracted a consultant to define their merger case and identify a longlist, which they narrowed to a shortlist of four organisations. However, they were wary of the position the organisation would have within a larger partner. For this reason, Certitude’s existing group structure made them an attractive option, alongside a good value fit – Gray emphasises that the organisations had strongly “comparable philosophies” about how best to support people. Meanwhile, Certitude had also considered potential expansion through merger in light of the situation in the health and social care commissioning markets and had identified Yarrow as a compelling option.
The two organisations agreed in principle to a merger in early 2019, drafting a formal paper and setting up a working group of six that was co-chaired by Gray and the chair of Certitude, Eleri Ebenezer. The working group also featured both chief executives and another trustee from each side. The organisations were in agreement from early on that Yarrow would be becoming a subsidiary of Certitude. This ensured that expectations were clear from the outset and helped secure buy-in. The process was initially referred to internally as “Project Vision” by the senior and governance teams, to ensure the merger could be communicated to staff in a well-planned manner.
In December 2019, the organisations announced in the charity sector press that “a final decision would to be taken” on a proposal to merge on April 1st 2020 (many mergers are finalised to coincide with the new financial year).
How did COVID affect the merger?
Duffy observed that while ideally “no one would choose to do a merger at the very point of a pandemic”, due to the legal aspects of the deal already being in their late stages in March 2020, the onset of COVID-19 did not substantially disrupt this aspect of the process. Both sides shared that the merger did help Yarrow to weather the pandemic, however, allowing the new subsidiary to call upon Certitude’s resources and business continuity procedures.
Duffy reported that the crisis did speed up some aspects of operational integration. Initial plans called for the integration of central and backroom functions first, for example, but the pandemic instead led to closer working and rapid changes on the frontlines. The new team also found workarounds to speed up digital integration, to ensure Yarrow staff could access Certitude’s ‘COVID hub’ of key documents when the IT systems were not yet fully aligned.
Yarrow has retained its name and a clear focus on quality and the people it supports. John Crawford, the former chief executive of Yarrow, became interim Director of Integration for 6 months post-merger in Certitude’s senior team, and four Yarrow board members joined the Certitude parent board. Bringing Yarrow into the central team of the group involved some senior staff changes, but below this level, they have largely maintained continuity in Yarrow’s staff. Yarrow was also able to make savings on external consultancy, drawing instead on the internal resource of Certitude’s larger central team.
The organisations cited other benefits, including combined sustainability; the opportunity to build on geographic crossover; and a greater collective presence when engaging commissioners and communities; and increased bargaining power with insurers and businesses. The merger will enable Yarrow clients to access Certitude programmes, including Family Support and Intensive Support, while also widening Yarrow’s reach. Combined, the two organisations support 1,600 people. Certitude also set and exceeded an efficiency target in the merger, and is beginning to explore rolling out improved terms for more Yarrow staff.
Duffy observed to us that while “too often organisations don’t see the writing on the wall” and COVID-19 may be prompting more organisations to consider merger as an emergency measure, the proactive approach of Yarrow’s leadership and board meant the combined organisation was in a strong position to face the pandemic when the moment came.
If you would like to contribute a charity merger case study, discuss how mergers and partnerships might affect your organisation, or have any queries about our Good Merger Index research, contact Eastside Primetimers at firstname.lastname@example.org and we will be happy to take forward a conversation.