Learning from Mergers - the case studies

Voluntary Action
Islington
London Borough of Islington

An inner-London borough, Islington has a large voluntary

sector with nearly three times more voluntary organisations
per capita than the national average.1 Islington Voluntary
Action Council (IVAC) and the Islington Volunteer Centre, two
of the major infrastructure bodies in the borough, merged to
January 2008 become Voluntary Action Islington in April 2009.
Initial discussions on
merger, prompted
Prior to the merger, IVAC was a membership body that provided
by Islington
Working Group Volunteer Centre; infrastructure support to voluntary organisations, many of which used
scopes out Working Group volunteers as a resource. Its work involved acting as a third-sector
possibility of merger set up representative in Islington, providing training and advice, and being a first
and produces
proposal for IVAC point of contact for organisations in need of support. They employed 20
board members of staff.

Islington Volunteer Centre was a smaller body, with five members of staff. It
focused on matching individuals seeking voluntary work with organisations
September 2008
who needed volunteers. Its work included a number of specific projects,
IVAC board
such as increasing diversity amongst volunteers.
approves merger

Prior to their merger into Voluntary Action Islington, the Volunteer Centre
Chief officer of was a member of IVAC and as the two main organisations in third sector
November 2008
IVAC undertakes support in Islington they were familiar with each other’s work. However the
preparations for IVAC’s AGM votes
in favour of merger
two organisations did not have a history of collaboration.
merger, working
closely with staff,
trustees and
external advisors
Motivations for merger

April 2009 The proposition of merger originated in this informal relationship between
Merger date the two organisations, and it was the Volunteer Centre who approached
IVAC about the possibility of merging.
December 2009
Post-merger phase Organisation For the Volunteer Centre, the financial stability offered by merger with a
changes name and larger organisation was a strong motivation. As an organisation reliant on
moves to new office
grant funding, staff were finding themselves spending more and more time
fundraising rather than delivering. This resulted in instability for staff, who
would swap between roles as funding for projects became available. The
centre was at risk of becoming unsustainable, and merger was one way of
securing their future.

1
OTS, 2009, National Survey of Third Sector Organisations, conducted by Ipsos MORI, London

Page 2
“The impetus was financial,
but we weren’t just looking
for a life raft. We had a
genuine belief that these
two organisations could get
together and have a lot more
clout”
Stakeholder
Learning from Mergers - the case studies
Voluntary Action Islington
However, a stakeholder from the Volunteer Centre recalls that organisational
fit was also a motivation for merger.
It was clear to IVAC too that the organisations offered complementary
services and bringing these together could benefit both of their user
groups. As their chief officer saw it: “there was a lot of synergy between
services for those who were interested in volunteering, and in the capacity
building of organisations who want volunteers. So it made sense to be
under one roof”.
The merger process
The merger was initially discussed by the two chief officers. More detailed
consideration was required and so a working group was formed, including
the chief officers and two trustees from each organisation. This group
considered the possibility in more depth, before putting a paper to the
IVAC board of Trustees to propose the merger.
The Volunteer Centre’s board were already supportive of the merger, but
for IVAC it was important to consider the Centre’s financial situation, and
whether the organisation would be an asset or a liability. Examination of
the organisation’s finances through due diligence, and further discussions
between the Trustees, led IVAC trustees to support the merger.
The merger process took 15 months from the point when it was first
considered, at the beginning of 2008, to the formation of a single
organisation in April 2009. The legal form of the merger was a transfer
of assets, with the Volunteer Centre closing and transferring its assets to
IVAC.
The chief officer of IVAC was the lead in the merger process, but worked
closely with a number of external advisors, staff and trustees.
• Lawyers drew up the merger agreement and led on other legal
requirements. The legal aspects of the merger were relatively
straightforward.
• Trustees who had particular knowledge of HR acted as advisors in
handling TUPE, the process that ensures employees in merged
organisations do not lose the employment rights in their existing
contract. The Terms and Conditions of IVAC’s contracts were more
favourable than the Volunteer Centre’s existing staff contracts, so no
extra provision was needed to meet duties under TUPE.
• Consultants were employed at two stages in the merger process.
Immediately prior to the merger process, a consultant was employed
to oversee the logistics of the merger, for example the Volunteer
Centre’s move into the IVAC’s offices. After the merger had been
completed a consultant was selected to provide an independent
view on the new organisation’s strategy. This included work on the
business plan and strategy for the new organisation, and spent time
on interviews and workshops with stakeholders.Both organisations
 Learning from Mergers - the case studies
Page 3 Voluntary Action Islington

undertook staff engagement activities, to inform staff of the changes

planned, and also to explore how the new organisation might work. A
number of social events for the two organisations were also held prior
to the merger taking place.

Once the merger had been completed in April 2009, the Volunteer Centre
staff moved into IVAC’s offices. The organisation continued to be known
as Islington Voluntary Action Council until December 2009 when it moved
into new premises and was renamed Voluntary Action Islington. The
legacy of two organisations is still evident and Voluntary Action Islington
retains two distinct functions of volunteer-matching, and voluntary sector
infrastructure support.

Success factors for the merger

The trustees, chief officer and stakeholders saw the merger as successful,
and felt that they had encountered relatively few problems and issues. Key
reasons for success included the willingness of each organisation to be
involved in the merger and the fact that trustees supported the merger.
Another factor contributing to a smoother process may have been that
there was no competition for the chief officer role in the new organisation,
as one of the chief officers had stepped down in the run up to the merger.

However, the really significant success factor identified by those involved

in the merger was the opportunity to move into new premises and take on
a new name. Even though the merger was a transfer of assets, the change
of name was seen as significant in showing an openness to becoming a
new organisation, rather than one ‘taking over’ the other. The commitment
to name change was made quite early in the merger process. The chief
officer argues that this helped both organisations to “see the merger as an
opportunity”.

Similarly, the new building contributed to the sense of positivity around the
merger. It was seen as symbolic of the new organisation, suggesting a fresh
start, and mitigating the sense that one organisation was being absorbed
by the other. In practical terms, the new offices are of better quality and in
a better location than IVAC’s old accommodation. Moving into open plan
offices allows staff to mix and meet, resulting in “a real buzz”.

Benefits of merger

“We’re never lacking 18 months after the merger, some benefits have already been realised.
opportunities for volunteers” Staff members have seen an increasing number of volunteer opportunities
Stakeholder coming to Voluntary Action Islington. The benefits of closer working are
evident in the number of volunteers being placed in organisations who
had previously only accessed IVAC’s support services and not those of the
Volunteer Centre. The new building, which is located in a busy area of
central London, brings greater visibility and gives the organisation a shop
front for the first time.
 Learning from Mergers - the case studies
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In addition, a clear benefit for the Volunteer Centre has been more financial
stability, as it has become part of a bigger organisation. Although the
organisations did not receive any external financial support for the merger,
the cost of £21,500 was carefully budgeted for by IVAC over two years, and
has not resulted in a loss to the organisation. It has not created savings,
either - but the merger was not undertaken to create efficiencies.

The new organisation has also started to develop a stronger strategic role
and is better positioned to offer leadership for volunteering in Islington,
encouraged by the local authority. For example, the Borough Council
influenced Voluntary Action Islington to recruit a new post as Head of
Volunteering at a higher grade to be both a manager, and a representative
for volunteering more strategically.

Challenges

Overall the merger was seen as a smooth process, notwithstanding

“irritations” such as integrating IT systems and details such as redirecting
post.

Voluntary Action Islington had a mixed experience with employing

professional advisors. Although external perspectives proved invaluable
in some areas of the merger, with hindsight the management were unclear
what value was added by one of the external advisors they hired. A second
issue came from the pro-bono legal advice accessed by IVAC in the first
stages of the merger. IVAC’s experience of this was a lack of clarity from
the providers, and it was only after a period of slow progress on the merger
agreement that the organisation decided to employ alternative solicitors.

Staff coming to Voluntary Action Islington from the Volunteer Centre faced
different challenges, as what the merger meant for them was less certain
than for IVAC staff. Staff knew that the merger would bring more stability to
their work, but felt unprepared for the changes associated with this. In one
case a project was cut, and one staff member remembers finding the merger
‘stressful’. They suggest that frank communication from management about
the possible negative impacts as well as the benefits would have been better.

One longer term issue arising from the merger is the refresh of governance
structure and board membership. IVAC was a membership organisation, and
therefore had a board elected by the membership, whereas the Volunteer
Centre’s board did not require election. Governance arrangements are
still to be fully reviewed. However, instead of seeing this as an obstacle,
the trustees and chief officer see a balance of the two models as a way
to strengthen the trustees as a group. For example having a number of
trustees elected by members and another number co-opted to allow
certain skills or knowledge to be brought to the organisation and result in
both a strong and representative board.

Also in the long term, from the staff perspective there is still some distance
to travel before the two staff teams feel like one. Details such as ex-
Volunteer Centre staff members still having Volunteer Centre contracts,
have been slow to be resolved.
 Learning from Mergers - the case studies
Page 5 Voluntary Action Islington
Lessons Learned
• Getting paid legal advice early on would have been worth the expense, compared to the delays caused by
waiting for the pro-bono service.
• Choose carefully what external advice is commissioned. Professional advisors can be valuable because
of their neutrality in the merger process as well as their expertise, but other forms of help may also be
appropriate and less costly.
• Getting new premises was fortuitous, and created an opportunity for the merger to create a more ‘level
playing field’ for staff as well as signalling to the public and service users that a new organisation had been
launched.
• Management should manage staff expectation with frank communications. Staff should be able to understand
the benefits of merger but also be aware of the potential negative impacts of the change.

For further information about this case study, please contact:

Mike Sherriff, Chief Executive Officer, Voluntary Action Islington

020 7832 5800, information@vai.org.uk