Eastside Primetimers chief executive Richard Litchfield has been quoted in an article by Third Sector magazine about charity sector mergers, ‘The do’s and don’ts of merging’. He is cited alongside Lisa Harker, chief executive of The Art Room, which merged with the larger children’s mental health charity Place2Be earlier in 2018.
Richard Litchfield, chief executive of the consultancy firm and merger specialists Eastside Primetimers, says there are a number of steps that all charities should go through on their way to completing a merger.
First, they should focus on strategy, Litchfield says, adding that although merger or collaboration is not a replacement for a strategy, “it just might help you get there quicker”.
The next step is to clarify the objectives of and motivations for the merger, and then to get the board’s agreement before exploring the idea of a merger more fully, allowing any concerns to be raised before the planning process begins.
After this, Litchfield says, the charity should consider its “red lines” – specifically, what needs to be protected post-merger. He says this might be particular services run by the charity, people in the leadership team or the charity’s brand.
Once these are decided, the search begins for partners that meet the objectives of the merger and which have complementary strengths and weaknesses to the charity in question.
Potential impediments to a merger, such as pension liabilities or legal issues, also need to be examined. If there are no issues, Litchfield says, you can begin conversations with the other party about pursuing a merger.
It is at this point, he adds, that conversations about the structure of the new charity can begin, not earlier in the merger process, as some charities think.
He also warns that charities should bring staff onside early in the process and explain the reasoning behind the merger. He says that although this will inevitably create some uncertainty about job security, being up front about what is happening will make the merger process easier in the long run.
All mergers cost, mainly because of the need for legal advice, additional staff costs, project management and due diligence.
And the costs can be onerous, especially for smaller charities. A report by Social Investment Business and Eastside Primetimers, Match Points, said mergers can cost between £130,000 and £350,000 to implement.
The full interview can be read on their site here. It was published on December 3rd 2018.