First major study of charity mergers is published

19 Aug 2014 News

Some 4 per cent of people working in the charity sector were involved in a merger last year, suggests a comprehensive new study of mergers in the sector.

Some 4 per cent of people working in the charity sector were involved in a merger last year, suggests a comprehensive new study of mergers in the sector.

The research, by Eastside Primetimers, aimed to collect data on mergers that occurred in England and Wales between January 2013 and April 2014, where the transferring organisation was a registered charity.

The researchers identified 189 organisations that undertook 90 deals, affecting more than 32,000 employees or 4 per cent of the charity sector workforce.

The biggest deal was the merger between St Mungo’s and Broadway, while the most complex deal was Community Action Suffolk which was established from the merger of ten organisations.

Just over half of all the deals analysed by the study occurred in the health and social care sector, followed by intermediaries (23 per cent), faith organisations (17 per cent) and community groups (15 per cent).

Some 43 per cent were deemed to be takeovers – where the acquired organisation completely lost its identity and autonomy, while just 23 per cent were genuine mergers.  However, the researchers also found that charity executives had described their deal as a merger in 58 per cent of cases, when in fact fewer than half of these were real mergers, and only 12 per cent of deals were called takeovers.

The Good Merger Index report stated: “The emerging picture was one of a small number of large transformative mergers, and a comparatively long tail of local small mergers. The largest ten deals represented 85 per cent of the income changing hands through merger.”

It also said the main driver for merger was the external funding environment.

The study sourced information from the Charity Commission’s Register of Mergers and news in the sector press. It intends now to use the findings as a baseline of data that can be used to measure and report on the future progress of charity mergers and provide a benchmark for spotting consolidation trends.

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