Kate Sayer: Before you join a consortium, work out how you can leave

It might sound gloomy, but it pays to put together a pre-nuptial agreement while everyone is still friendly, writes our columnist

Kate Sayer
Kate Sayer

As the Brexit process is illustrating all too vividly, leaving a consortium can be much more difficult than joining one. So it's worth thinking carefully about how you set one up in the first place.

Consortium arrangements are a good way to scale up without a full merger. Each organisation retains their independence and you can join forces with other charities and social enterprises just for one particular area of work. In today's world of commissioning and formal tenders, consortium bids might be a way for smaller organisations to access funding.

If you are considering working in this way, it's a good idea to think about who you are happy to collaborate with. It is better to form the relationships before a bid is on the horizon because the timescales for tenders are very short. Consortia and joint working most often go wrong over cultural issues. Before you are committed to a joint endeavour, explore what the others' values are, but don't just take their word for it: visit their projects and their offices, judge the atmosphere for yourself and work out whether they live their declared values.

Some basic due diligence is worth it too. You need to see their latest accounts, but you can ask for more recent financial information, since you will be working together. I would ask for the current year's budget and most recent management accounts. If alarm bells are sounding when you review these, do not ignore them but ask for more information – and talk to the charity. A consortium bid will not necessarily deliver all the solutions they need, and you need to know that the other members will be able to deliver their parts of the contract.

The most important part is getting your people together. As well as making sure you have complementary skills and knowledge on paper, you need to form a new team if you win a joint contract.

It sounds gloomy, but you need to think about how you are going to leave at a time when you are all friends and everything is upbeat. It's a bit like having a pre-nuptial agreement when you're getting married, and it feels a bit weird to be talking about divorce before you've even got hitched.

If you are working together on an innovative solution, you might be creating new intellectual property, such as a training course or way of working. Who owns this? If you leave the consortium, do you take the right to use the intellectual property with you, do you both keep rights, or do you walk away empty-handed?

What are the financial arrangements if you leave? Is it like a job, where you have to work your notice? It's not uncommon to have notice periods of six months, allowing the remaining partners to find another way to deliver your part of the work. You might even have to pay to leave, having been committed to obligations made jointly.

The memorandum of understanding can cover these points and make you have these conversations early on, when they are much easier.

Kate Sayer is a partner at specialist auditors Sayer Vincent

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