Learning from Mergers - the case studies

Voluntary and
Community Action Wirral
Wirral, merseyside

Voluntary and Community Action Wirral (VCAW) was formed

in April 2008, bringing together four of the five local councils
for voluntary service (CVSs) into a new organisation.

Before VCAW was formed, there were five CVSs operating in the Wirral:
Wirral; Bebington; Heswall and District; Hoylake and District; and Wallasey.
2006
Chief officers start Wirral CVS worked Wirral-wide, focusing uniquely on providing
to discuss merger
Preparatory work to
infrastructure services. It also hosted the Wirral Voluntary and Community
scope out merger Sector Network. In contrast, the other four CVSs functioned as
providers of infrastructure services, but also delivered services direct to
June 2006
communities. Heswall CVS, for example, delivered holiday coaching
Decision in principle
to merge taken courses and summer playschemes; Bebington CVS provided Befriending
by the five chairs; and Counselling services. All provided some volunteering services,
Steering Group although not all were funded to deliver volunteer bureaux. Of the district
set up
CVSs, Bebington was the largest and the only one to be a charitable
company; the others were unincorporated charities.
June 2007

Merger
New charitable On the whole the CVSs worked separately, but some history of joint working
company set up
preparations: underpinned the merger. For example, two of the CVSs had previously
each organisation delivered a joint BIG Lottery project in partnership. They had also worked
undertakes due
closely with another of the CVSs, which suffered a tragedy when its chief
diligence and
consultations officer died suddenly in 2006. Rather than appointing a new chief officer
December 2007
immediately, two other chief officers gave support, for example to carry
New chief officer
appointed; Wirral out monitoring for funders. Similar support was offered to another CVS
CVS pulls out of whose chief officer was on long-term sick leave.
merger

April 2008
Motivations for merger
Merger date
Chief officers recognised that there was considerable similarity between the
services that the district CVSs provided, and potential for some duplication
Post-merger phase
with the infrastructure support delivered by Wirral CVS. Those running
volunteering services recognised that these could be more effective and
consistent across the Wirral if there was more collaboration.

There were also some capacity issues
amongst staff and trustees, not least
because two CVSs were operating
day-to-day without a chief officer.
The prospect of merger offered
staff the opportunity for more
management support and security.
“With the chief officer issues, we
started to think we’re all too small
to cope with this - the CVS who lost
its chief officer only had one other
staff member and was otherwise
volunteer run.”
Stakeholder

Page 2
“We recognised that the
external environment was
changing and that external
funders were sick of talking
to five about the same thing.”
Chief Officer
“We didn’t want to be forced
to merge, we wanted to do it
in our own time and for it to
be our decision.”
Stakeholder
“We didn’t want a takeover.
We wanted a merger of
equals.”
Stakeholder
Learning from Mergers - the case studies
Voluntary and Community Action Wirral
At the same time, there was an acceptance that the funding environment
was unlikely to keep supporting five similar organisations. Although
external funders had not explicitly encouraged the CVSs to merge and
funding was not under threat at the time, some funders had encouraged
joint bids. Chief officers and chairs also perceived that the local authority
would prefer to work with one organisation rather than five. The Citizens’
Advice Bureaux in the Wirral had recently gone through a merger, working
closely with the local authority in doing so, and there was a sense that if
the CVSs did not act of their own accord, in future they might be under
pressure to do so.
The merger model
The decision in principle to merge was taken in June 2006 at a meeting
of the five CVS chief officers and chairs. Following this meeting, a steering
group including the five chairs and chief officers was set up to oversee the
merger.
The CVSs looked around for suitable models on which to base their
merger, and chose a similar model to that used in Cumbria - at the time,
a high profile example of a CVS merger. Steering group members visited
Cumbria CVS as part of the process.
This model was chosen to enable each CVS to be equal partners in the
new organisation, rather than making it feel like four were being taken over
by another. It was felt to be “workable” locally, and “fairest to the chief
officers”, who could compete on an equal basis for the chief officer role in
the new organisation.
A new company was set up in 2007, with the five CVS chairs as its directors.
This company started to look for funding straight away. The directors fed
back to each CVS and all decisions were taken back to the five CVS boards
for approval - although for decisions to be passed, it was not necessary for
all CVS boards to agree, only a majority.
A launch date for the new merged organisation was set (April 2008), and
it was agreed that at this point each existing CVS would dissolve its assets
and put them into the new company.
The merger process
In preparing for the merger, each organisation worked through the NCVO’s
due diligence checklist and each employed a solicitor and external auditor
to go through these. One organisation’s finance officer visited the others
to review their finances.
The CVSs kept local authority funders informed of the process, inviting them
to some of the steering group meetings. Prior to the launch, they gained
agreement from the local authority to put the core funding for 2008/9,
which otherwise would have distributed across the five organisations
separately, into the new company.

Page 3
“We made the conscious
decision that we wouldn’t
get rid of people. Although
we talked to staff that there
might be changes in what
they did and where they did
it, they didn’t have to worry
about their jobs going.”
Stakeholder
Learning from Mergers - the case studies
Voluntary and Community Action Wirral
An external consultant worked with trustees to draft a first business plan for
the new organisation, to which staff then contributed.
A chief officer for the new organisation was appointed in December 2007,
from amongst the chief officers of the existing organisations. Having taken
advice from external HR advisers, an employment lawyer and the Advisory,
Conciliation and Arbitration Service (ACAS), the CVSs overall took the view
that an internal appointment needed to be made as the role was essentially
the same as the chief officers’ existing roles. This meant that if an external
appointment was made, the chief officers could have been in a position to
sue for unfair dismissal. However, one of the CVSs had expressed a strong
preference for an external appointment.
However, the merger did not go ahead quite as planned. Towards the end
of 2007, Wirral CVS decided to pull out. As a result, VCAW was launched
in April 2008, formed of four of the five local CVSs, while Wirral CVS
continued in its previous form.
Success factors for the merger
In going through the merger process itself, success factors included
making sure staff were kept informed and involved. Joint consultation
events were held with staff as well as sessions with staff from individual
CVSs. Some local frontline organisations had gone through mergers
recently, and officers from these came in to speak to CVS staff about the
process. Although some staff were concerned about the change, others
were “looking forward to it”, as the new organisation would give them
access to more management and administrative support. Staff were also
reassured that their jobs were safe.
Support from the Charity Commission was also invaluable. The Charity
Commission’s case worker gave the steering group the different options
available to them, and advised on the legal processes they would need
to go through to set up the new company, inform the Commission of the
changes, and so on. In the end, the legal process of setting up a new
company was actually “quite straightforward”.
Benefits of merger
VCAW is seen by staff, trustees and funders as a “stronger organisation”
since the merger. It is funded by the local authority under service level
agreement to deliver community engagement and lead on the Wirral
Compact, and also now hosts the Wirral Third Sector Assembly (formerly
called the Voluntary and Community Sector Network). VCAW represents
the voluntary sector on Wirral’s Local Strategic Partnership and being
one organisation means that staff are kept more closely in touch with
developments at a strategic level.
Financial benefits so far have mainly been around achieving economies of
scale, for example with insurances, and in paying for professional services
such as audit.
 Learning from Mergers - the case studies
Page 4 Voluntary and Community Action Wirral

The impact on staff overall has been positive. No staff were made
redundant during the merger. This was possible because apart from the
chief officers, there were no repeated roles within the four organisations
that merged. Since the merger, there have been two redundancies, but
these were related to the loss of project funding rather than restructuring.
Nevertheless, some staff have taken on new roles. For example, three new
senior manager posts have been created and are now the chief officer’s
only direct reports. Previously, she line managed the majority of staff, so
this has freed up time to focus on strategic management.

Some staff have moved from back office functions to frontline delivery.
For example, one staff member has moved from an administrative role
to a funding advice role, having been supported to achieve a level 3
qualification in Information, Advice and Guidance. A key benefit for those
who previously worked in smaller organisations has been that they now
have more management support and better structures. The organisation is
seen as “more professional”. It has recently achieved Investors in People
accreditation.

VCAW has maintained its local presence, operating from four locations
across the Wirral. Frontline organisations are now offered a more
structured route through VCAW’s support services, with different managers
responsible for providing advice on starting up a new organisation, seeking
funding opportunities and strategic influence, and moving towards income
generation. Working across the Wirral, volunteers now get a wider range
of opportunities and some are involved in more than one service, which
would not have happened before. As yet, VCAW has not evaluated the
effectiveness of its support for frontline organisations and volunteers, but
staff expect and hope that the impact has been positive.

The board of trustees has been significantly strengthened. Following the

merger, a skills audit was carried out, and several new board members
have been recruited to fill the skills gaps identified. As a result, staff now
feel better supported by their trustees.

The organisation has set a new, clearer strategic direction and has taken
a decision to focus more on infrastructure support and less on service
delivery to individuals living in local communities.

Challenges

Although the merger process itself was quite straightforward, it took

considerable time – around two years – and one of the reasons for this
was the pressure on resources. The steering group was meeting weekly
in the few months heading up to the merger, and staff were carrying out
tasks related to the process “on top of their day jobs”. When the chief
officer was appointed at the end of 2007, she was also still working as chief
officer of Bebington CVS. No additional funding was received to support
the merger process, which is estimated to have cost around £50k in total
which each CVS contributed to. Additional administrative and research
 Learning from Mergers - the case studies
Page 5 Voluntary and Community Action Wirral

support - “a practical pair of hands” - for example to carry out research in

preparation for board meetings, would have been helpful.

“We were relying on staff to
do things over and above
their day job, for no financial
reward. It put pressure on
everybody. Which is why we
couldn’t do it faster.”
Stakeholder
By summer 2010, VCAW had been running as a merged organisation for
just over two years. During this time, there has been a focus on “getting
people working together as a new organisation”. This hasn’t always been
easy – one stakeholder described it as “an uphill struggle… but now we’re
there or thereabouts”.
The organisation has had to tackle some cultural issues, such as differences
in working practices and management styles. Communication continues
to be a challenge, as it’s necessary to make more of an effort to keep
staff across different offices informed of what’s going on. Issues around
staff contracts and people being paid differently for the same types of
work also arose at first. Getting staff to feel as if they are part of the same
organisation has also taken some time – in VCAW’s first year, for example,
each office had its own Christmas party; in its second year, a conscious
decision was taken that the organisation should have a joint ‘do’.

An ongoing challenge has been the impact of Wirral CVS withdrawing

from the merger. Although this did not derail the merger, it has meant that
there is still some duplication in local service delivery, so the full benefits
of merger in this sense haven’t been realised. Stakeholders also report that
external funders have been less willing to provide funding for infrastructure
in the Wirral unless VCAW and Wirral CVS collaborate, but this has been
difficult after the breakdown in this element of the merger.

Lessons Learned
• The more you can communicate with staff before, during and after the merger process, the better. Inviting in
people from organisations that had already been through a merger to talk to staff was one method VCAW’s
predecessors used successfully to help reassure their employees.
• Setting up the new company and appointing a chief officer some time before the new organisation was
launched was helpful for VCAW, although it was a considerable challenge for the chief officer at the time, who
was also continuing to run one of the CVSs that was to merge. Appointing the new chief officer even earlier, so
that this person could give the steering group more guidance, might have been helpful.
• Don’t underestimate the time it takes for a new organisation to start delivering to its full potential. For VCAW,
the period after merger has probably been more challenging than the merger process itself.
• Anticipating issues such as differences in working practices, staff pay and conditions prior to the merger
could help ease the process afterwards.

For further information about this case study, please contact:

Annette Roberts, Chief Officer, Voluntary and Community Action Wirral

0151 203 2111