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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
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The Skylark Merger Framework
Stage II: Feasibility
I
Stage
Merger Strategy
II
III
Feasibility
IV
Integration
Planning
Integration/
Execution
Exploring the potential benefits and
risks of merging. Testing for major issues,
such as: Are the charities’ cultures compatible?
What opportunity would the merger deliver both
parties? Is the proposed merger feasible?
This stage aims to assess the advantages and feasibility of the merger providing the
CEOs and Boards of Trustees enough detail to secure to a “decision in principle” to merge. The
opportunity and any major issues are determined by answering questions within five topic areas.
Topic areas
Possible Outcomes
Vision & Benefits
Leadership, Governance and working arrangements
Agreement on a draft Memorandum of
Understanding (MOU) and a decision in
principle to pursue a merger; move to
Stage III: Integration Planning
Operations
OR
Legal & Financial Due-diligence, Options and Risks
Some form of collaboration
Service Continuity
OR
End of discussions
The Skylark Merger Framework
2
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Stage
The Skylark Merger Framework
Stage II: Feasibility- Vision & Benefits
I
Merger Strategy
Topic area:
II
III
Integration
Planning
Feasibility
6.
7.
8.
9.
Integration/
Execution
Vision & Benefits
Questions to Consider
1.
2.
3.
4.
5.
IV
Is there agreement about vision, values and aims for the merged organisation?
What potential benefits does it offer to the charities’ beneficiaries?
What are the major risks to both organisations of achieving a successful merger?
Is there a good “cultural fit” between the two charities?
Are Trustees really up for it, given the work commitment and possibly no future
role for them personally?
How is the issue of two Chairs and CEOs going to be resolved?
What form of merger is likely to be appropriate?
• Are identities going to be merged or protected?
• Possible consortia model
What is the likely timeline bearing in mind constitutional constraints?
Do both boards have the will and stamina to see it through?
The Skylark Merger Framework
Outputs
1. Joint Trustees’ meeting
2. Outline vision statement for
merged charities
3. Develop outline timetable &
milestones
Tips – including supporting tools
 Mutual sense of a “good cultural
fit” is critical at the outset
 Having a clear benefits statement
helps maintain focus
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Stage
The Skylark Merger Framework
Stage II: Feasibility – Service Continuity
I
Merger Strategy
Topic area:
II
III
Integration
Planning
Feasibility
IV
Integration/
Execution
Service Continuity
Questions to Consider
1. Is there enough capacity to provide service continuity during the merger?
2. How will the existing services of both organisations continue to be delivered to
their beneficiaries during the merger process?
3. Do both charities have sufficient staff resources to both deliver services and
investigate the merger opportunity?
4. Will the merger alter funding arrangements for existing services in any way?
5. What corporate communication will both charities put out to their stakeholders
during the feasibility stage?
6. How will you refer to the proposed merger in any funding bids that are submitted
during the feasibility stage?
The Skylark Merger Framework
Outputs
1. Agreement on any joint and
separate working during merger
process, inc. funding bids
2. External and internal
communication of progress of
merger
Tips – including supporting tools
 Do not under-estimate the
amount of Trustee, management
& staff time involved in merger
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Stage
The Skylark Merger Framework
Stage II: Feasibility – Leadership, Governance and working arrangements
I
Merger Strategy
Topic area:
II
III
Feasibility
IV
Integration
Planning
Integration/
Execution
Leadership, Governance and interim working arrangements
Questions to Consider
1. How can the spirit of collaboration best be reflected in the working arrangements
for exploring merger:
• Joint steering committee of Trustees?
• Joint management group or project board of CEOs, senior leaders?
2. Who will lead the merger process?
3. What should the governance arrangements be during and after the merger?
4. What are the interim funding arrangements?
5. What should the decision making process be? Boards, members…
6. How will the CEO be appointed?
7. At what point should internal and external communications begin?
8. What membership arrangements (if any) would there be?
9. How and when will staff, funders and other stakeholders be informed and
consulted?
10. Will charitable objects of either or both organisation need to change?
The Skylark Merger Framework
Outputs
1. Exchange summary Information
Sheets
2. Signed Confidentiality Agreement
3. Draft Memorandum of
Understanding (MoU)
Tips – including supporting tools
 Address leadership questions
early
 Clearly defined governance
through interim period is critical
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Stage
The Skylark Merger Framework
Stage II: Feasibility - Operations
I
Merger Strategy
II
III
Integration
Planning
Feasibility
IV
Integration/
Execution
Operations
Topic area:
Questions to Consider
1. What portfolio of services would the merged charity offer? What is the operational
model through which these new services will be delivered?
2. What it the key property and accommodation issues to be decided?
• What accommodation will the merged charities need?
• Can it be provided within their existing estate or will new arrangements
need to be made?
3. What are technological requirements needed to support it? How capable is the
existing ITC infrastructure of supporting the new model?
4. What are the headline cost items in delivering a common technology platform?
• Are the existing client databases, finance and HR systems compatible?
• Which, if either, would be the preferred choice for a single consolidated
technology platform?
5. Are there any opportunities for combining backoffice functions within a single
entity? (Fundraising, HR, Finance, Communications, ICT, Policy & Research.
The Skylark Merger Framework
Outputs
1. Develop a proposed operating
model for the combined charity
2. Inventory of property and ICT
assets
3. Develop outline merger budget
Tips – including supporting tools
 Focus on the operating
requirements of new charity,
rather than technology
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Stage
The Skylark Merger Framework
Stage II: Feasibility – Legal & Financial Due-Diligence, Options and risks
I
Merger Strategy
Topic area:
II
III
Feasibility
IV
Integration
Planning
Integration/
Execution
Legal & Financial Due-diligence, Options and Risks
Questions to Consider
1. What types of professional advice are going to be needed and how are they best
provided?
• Legal
• Pension
• Identify any potential “show stoppers” at outset
• HR
2. How should the due diligence process be undertaken, in order to minimise risk to
the merged organisations?
3. Are there any constitutional and other legal issues to deal with?
4. What are the implications of the merger on pension arrangements in general and
for defined benefit schemes in particular?
5. Are there any property issues to deal with? Eg leases that prohibit sub-letting
6. What is the outline three year business plan outline for the NewCo?
7. What are the main risks in realising the plan?
The Skylark Merger Framework
Outputs
1. Outline 3year business plan
2. Approach potential legal &
financial due diligence providers
3. Decide on the use of an
independent facilitation
Tips – including supporting tools
 Identify any potential “show
stoppers” at outset eg. Pension
liabilities, property obligations
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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 NewCo 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
The Skylark Merger Framework
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