Mergers increasing but still few and far between, says report

The fifth Good Merger Index says 81 mergers took place in 2017/18, compared with 70 the year before

Charities are still failing to embrace mergers, despite an increase in the number of them taking place in the past year, says a new report.

The Good Merger Index 2017/18, the fifth annual survey of mergers in the charity sector carried out by the consultancy Eastside Primetimers, says only 81 mergers took place in 2017/18, involving 154 organisations.

This was an increase on the 70 mergers that took place in 2016/17, but involved just a small fraction of the more than 160,000 registered charities in England and Wales, the report says.

The 81 mergers involved charities with a combined total income of £1.3bn, the report says.

It adds that 69 per cent of mergers were takeovers in 2017/18, up from 56 per cent the previous year.

Only 21 per cent of mergers were considered "true mergers of equals", the report says, in which similar-sized organisations came together with "shared governance structures, combined staff and trustee teams or neutral rebrands".

More than half of all mergers completed in 2017/18 were in the health and social care sector, the report says, and a similar amount were between organisations with incomes of less than £1m a year.

The merger between the social care charities Choice Support and mcch is the largest deal cited in the report, with £69.5m worth of assets transferred, almost twice that of the second-largest merger, between CGL and the collapsed charity the Lifeline Project.

The mergers of Arthritis Research UK and Arthritis Care to create Versus Arthritis and of the Shaw Trust and Ixion Holdings were the only others involving the transfer of more than £10m of assets, the report says.

Richard Litchfield, chief executive of Eastside Primetimers, said: "Although these findings continue to show a sector slow to respond to financial and environmental challenges, we have found exciting examples of successful mergers and change among, for example, medical sector charities that are combining research efforts or bringing research and support expertise together in one organisation."

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