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The Skylark Merger Framework
A four stage approach to mergers within the charity sector
Introduction
A clear and agreed process, with outcomes and decision points defined at the end of each stage, provides an invaluable “route
map” to help Boards of Trustees, Chairs, CEOs and senior staff navigate their way through a merger effectively and efficiently.
The four main phases of The Skylark Merger Framework provide the key generic steps which can then be tailored to the
specific circumstances of your merger.
I
Stage
II
Merger Strategy
Guided by the Business
Strategy determine a
short-list of target
merger candidates.
END OF
STAGE
MILESTONES
III
Integration
Planning
Feasibility
Exploring the potential
benefits and risks of
merging. What
opportunity would the
merger deliver both
parties? Are the charities’
cultures compatible?
Joint
agreement
to pursue
IV
Detailed Integration
planning: How will the
charities come together?
How will the transition be
handled? Formal due
diligence.
Agreement in
principle of
‘Can’ they will
come together
The Skylark Merger Framework
Integration/
Execution
Implement the agreed
plan, review and measure
associated short and long
term benefits. Transition
NewCharity to be fully up
and running as ‘businessas-usual’.
GO/ NO-GO
joint
decision
NewCharity
fully up and
running
1
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The Skylark Merger Framework
Stage III: Integration Planning
I
Stage
II
Merger Strategy
III
Feasibility
IV
Integration
Planning
Integration/
Execution
Detailed Integration planning:
How will the charities come together?
How will the transition be handled?
This stages undertakes legal and financial due diligence, confirms interim
leadership positions and governance, builds a NewCharity business plan and develops a
detailed implementation plan with costs and resources
Integration Workstreams
Outputs
Leadership, Governance, Organisation, People & Culture
Service & Beneficiaries
 Detailed project plan and status
updates
 Completed MOU
Financial
 Financial and legal Due
Diligence reports
Legal
Communications & Branding
 Business Plan covering all
organisational/operational
areas with financial implications
Facilities, IT & Systems
Project management & Service Continuity
 Agreed Legal Model and steps
to achieve
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Stage
The Skylark Merger Framework
Stage III: Integration Planning
I
II
Project Management & Service Continuity
Integration Workstreams
Merger Strategy
III
Feasibility
Integration
Planning
IV
Integration/
Execution
Leadership, Governance, Organisation, People & Culture
Senior leadership, governance, CEO Appointment, HR issues, structure, people & change management
Services & Beneficiaries
Identifies any changes to the services or beneficiaries - what services, to whom and where
Financial
Historical and projected financials including funding impact, NewCharity Business Plan & risks
Legal
Legal structure, constitutional and compliance processes such as Commercial contracts e.g. leases, funding
Communications & Branding
Develops NewCharity name, branding strategy and communications plan to stakeholders
3
Facilities, IT & Systems
Covers changes or improvements to properties and other assets Defines new ways of working and processes
and how IT systems will support them
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The Skylark Merger Framework
Stage III: Integration Planning – Leadership, Organisation, People & Culture workstream
Stage
I
II
Merger Strategy
Integration workstream:
III
Feasibility
IV
Integration/
Execution
Integration Planning
Leadership, Governance, Organisation, People & Culture
Topics to Consider
Outputs
1. Agree leadership and governance principles of
NewCharity including the organisation structure by
assessing alternative options
2. Assess culture of both organisations and synergies
3. Decide process for appointing CEO and appoint interim
CEO
4. Assess HR Terms and conditions, HR policies &
procedures, employee handbook, operating procedures
5. Assess contracted staff and volunteers, decide staffing
and costs of proposed organisation including costs of
any staff displacement
6. Assess if TUPE is applicable; if required, develop TUPE
plan and costs
7. Make recommendations on HR including;
• Staffing & retention procedures
• common reward/pay strategy
• common HR policies & procedures, T&C
alignment, employee handbook and operating
procedures,
1.
2.
3.
4.
5.
Agreed CEO appointment process and Interim CEO
Governance and Organisation structure, staffing and costs
HR Transition plan (including TUPE)
Proposed culture change programme
NewCharity HR policies & procedures, employee handbook
and operating procedures
Tips – including supporting tools

Culture Assessment tool



Take specific TUPE advice
Invest in a new culture
Leadership is central to organisational and cultural
integration
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The Skylark Merger Framework
Stage III: Integration Planning – Services & Beneficiaries workstream
Stage
I
II
Merger Strategy
Integration workstream:
III
Feasibility
IV
Integration/
Execution
Integration Planning
Services & Beneficiaries
Topics to Consider
Outputs
1. Review existing services for both parties
2. Agree joint services portfolio - where you are able to
merge, replace or grow the services through combining
charities. What services, to whom, where?
3. Align services to facilities, people and organisation
• Carry out a skills to services gap analysis
• Plan any necessary re-alignment to joint
offering
• Plan transition for any discontinued/re-aligned
services
4. Review existing beneficiaries for both parties
5. Agree joint beneficiaries
6. Communicate with beneficiaries throughout transition important to keep the beneficiaries involved throughout
the process to reduce fear of change.
1.
2.
3.
4.
5.
Inventory of all services & beneficiaries
Planned joint service portfolio & beneficiaries
Skills to Services Gap analysis, action plan & costs
Services Transition action plan
Communication action plan
Tips – including supporting tools
 Communicate with beneficiaries throughout transition Important to keep the beneficiaries involved throughout
the process to reduce fear of change.
 Look for synergy – one service being enhanced by
another
 Focus on defined beneficiaries and services not “all
things to all men”
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The Skylark Merger Framework
Stage III: Integration Planning – Financial workstream
Stage
I
II
Merger Strategy
III
Feasibility
Integration workstream:
IV
Integration/
Execution
Integration Planning
Financial
Outputs
Topics to Consider
1. Appoint External Financial advisor
2. Conduct financial due diligence including review of
long term, ongoing contracts eg. property, software
licences & service contracts, tax (VAT/PAYE/CT)
• Review historic financials (income/ costs/
balance sheet)
• Review accuracy of prior year forecasts
• Review financial projections
• Confirm consistency of accounting policies
• Review financial controls and processes
• Determine any future financial commitments
3. Identify costs of merger and sources of funding
4. Agree method to share costs between organisations
5. Develop draft future business plan & financial
projections for merged entity
1.
2.
3.
4.
5.
6.
7.
Audited accounts
Management accounts
Auditor management letters
Budgets – past, present & future
Financial procedures manual
Budget for merger and sharing costs approach
Business plan and financial projections of merged organisation
Tips – including supporting tools
 Charity Commission due diligence checklist
 Financial due diligence template
 The more detailed the business plan the greater
understanding of the future and the issues that might arise
 Finance team needs to be connected to all other workstreams
to assess and calculate assets, costs and income
 Assess risk of changes in income (eg from grants/contracts to
commercial/other sources)
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The Skylark Merger Framework
Stage III: Integration Planning – Legal workstream
Stage
I
II
Merger Strategy
III
Feasibility
Integration workstream:
IV
Integration/
Execution
Integration Planning
Legal
Topics to Consider
Outputs
1. Appoint External Legal advisor
2. Agree method to share costs between organisations
3. Assess, explore and evaluate Legal structural options (A
into B, A+ B =C etc)
4. Recommend composition of NewCharity Board including
sub committees and any interim board structure
5. Determine process for appointment of Chair and other
roles within NewCharity board
6. Develop new governance documents (memorandum &
articles)
7. Consider legal implications of;
• HR/people (TUPE) implications
• Property ownership & leases
• Other leases (eg IT)
• Commercial contracts
• Funding/income grants and contracts
8. Check current Charitable objects and proposed changes
9. Determine Process and timetable for closures, transfer
of duties and responsibilities and sign-offs
1.
2.
3.
4.
5.
Proposed legal structure and rationale
Proposed composition of Board and Chair appointment process
Confirmation of NewCharity Charitable objects and any changes
New governing documents
Process & timetable for closures, transfer and sign-off
Tips – including supporting tools
 Consider single source of legal advice but each Board
take independent advice if necessary
 Confirm scope of ‘Non Disclosure Agreement’ up to
Go/No-Go
 Check time required for legal changes do not impact on
critical path
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The Skylark Merger Framework
Stage III: Integration Planning – Communications & Branding workstream
Stage
I
II
Merger Strategy
Integration workstream:
III
Feasibility
2.
3.
4.
5.
6.
7.
8.
Integration/
Execution
Integration Planning
Communications & Branding
Topics to Consider
1.
IV
Outputs
Stakeholder management and involvement
•
External; beneficiaries, funders, influencers,
government
•
Internal; management, staff, trustees,
volunteers
Key messages relating to merger – rationale, vision
of future and benefits
Communication media – how to get messages to
stakeholders; face to face, email, web, external PR?
Timing of initial and sustained messages
Costs and responsibilities
Launch event(s) eg conference and detailed plan and
costs
Develop and agree NewCharity name development
and sign-off process
Research and test “Brand Value” of old names
versus values of NewCharity
1.
2.
3.
Detailed Communications Plan
NewCharity name and rationale
NewCharity name launch and plan
Tips – including supporting tools



If you don’t communicate – others will do it for you!
Professional and sustained communication will add
value – inconsistent, fragmented communication will
erode value
Communication Plan outline
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The Skylark Merger Framework
Stage III: Integration Planning – Facilities, IT & Systems workstream
Stage
I
II
Merger Strategy
Integration workstream:
III
Feasibility
IV
Integration/
Execution
Integration Planning
Facilities, IT & Systems
Topics to Consider
Outputs
1. Review of current facilities v. needs of new
organisation
2. Define accommodation strategy for combined
organisation – short and medium term
• Develop cost estimates including refit and cost
of transition/relocation – lease terminations etc
• Develop transition plan
3. Ways of working and business processes to be
assessed and compared
4. Proposed new processes (best of/adoption/new)
5. Assess systems and their effectiveness in supporting
processes
6. Assess IT landscape – hardware and software
7. Develop options for IT integration – costs/technical
8. Assess external support / outsourcing
1. Assessment of current facilities v. needs of new organisation
2. Accommodation strategy for combined organisation including a
list of potential suitable accommodation and costs of refit and
relocations
3. Transition plan including integration of business processes
4. IT Strategy and plan
Tips – including supporting tools
 Assess medium term property strategy not just short
term
 Ensure property strategy supports overall strategy
 Consider the future strategy of NewCharity and changes
in business processes /ways of working before
confirming IT strategy and plan
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The Skylark Merger Framework
Stage III: Integration Planning – Project Management & Service Continuity workstream
Stage
I
II
Merger Strategy
Integration workstream:
III
Feasibility
3.
4.
5.
6.
Integration/
Execution
Integration Planning
Project Management & Service Continuity
Topics to Consider
1.
2.
IV
Outputs
Map services, responsibilities and continuity risks
Develop a detailed Service Continuity plan; how and
when will services from both organisations be
maintained until NewCharity is fully operational?
Appoint Merger Project Manager
Develop detailed project plan, including links
between each of the workstreams
Agree and execute Project management process (eg
conference calls/meeting schedules/ meeting notes
etc)
Develop risk register to ensure all parties are aware
and actively manage risks
1.
2.
3.
4.
Service continuity plan
Detailed Project plan
Project Management process
Risk register
Tips – including supporting tools


Service continuity is the foundation of a successful
integration
Effective project management requires investment in
a good project manager, sufficient resources and
management time
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