Charities involved in mergers transferred over £225m to form new organisations last year. Together, the 189 organisations undertaking mergers turned over almost £1bn, or some 2.4% of total voluntary sector income; according to The Good Merger Index, the first overview of charity sector mergers, produced by Eastside Primetimers.
There was significant activity amongst Health and Social Care organisations, which accounted for more than 50% of mergers, with a disproportionate bias towards mental health and disability charities, reflecting commissioners’ preoccupation with lower costs and pan-disability provision.
Richard Litchfield, CEO of Eastside Primetimers, said: “This study shows that mergers come in all shapes and sizes, and reach into almost every part of the charity sector. The emerging picture is one of a small number of large transformative mergers, and a comparatively long-tail of local small mergers. The largest 10 deals represented 85% of the income changing hands through merger.”
The Good Merger Index also revealed comparatively high levels of merger activity in supported housing, community development, minorities, intermediary and religious charities.
The study revealed a wide variety in the methods used for structuring mergers, the management of branding and the new governance arrangements that were adopted.
Although there have been many interesting cases of merger in 2013, the overall number of charities undertaking a merger indicate that charity consolidation is at a fairly early stage.
Richard Litchfield added: “The data for 2013/4 shows that many negative perceptions of merger are misplaced. In 75% of deals, the acquired organisations were able to retain some form of identity, management control and Board representation. There were many examples where organisations, even if they were small or in distress, were able to negotiate favourable terms and so created a much more sustainable environment for staff and service users.”