Learning from Mergers - the case studies

Coast and Moors

Voluntary Action
Scarborough, North Yorkshire

Coast and Moors Voluntary Action was formed in 2007 as the

result of a merger between two former CVSs – Scarborough
District CVS and Whitby and District Voluntary Action (Whitby
VA). Prior to the merger, both CVSs were operating in one
district, the Borough of Scarborough on the North Yorkshire
The two
Coast, a large area with a mix of urban and rural communities.
organisations Whitby VA covered the north, while Scarborough CVS covered
cooperate over
the course of at the south of the district.
least 10 years, with
partnership working
intensifying in 2005 Early 2006 Talks about a potential merger first emerged from an early partnership
Chief officers working agreement in 2005. It was apparent at this time that there was a lot
discuss possibility of of duplication in the sector, for example, two representatives normally in
merger
attendance at local strategic partnership meetings. As Scarborough CVS
and Whitby VA were both small organisations, both wanted to address
Preparatory scoping duplication in their workloads. Both parties also wanted a single and
work
May 2006 stronger voice for the voluntary sector in the area.
Organisations
agree in principle Both organisations could see that “The VCS was not together. There
to merge; shadow financial efficiencies could be made were two sets of memberships, but
board established; through a merger. By cutting down some organisations worked across
new chief officer
Organisations on the strategic and back office the whole of the borough. We
appointed shortly
undertake due
after functions, chief officers and finance wanted one voice and a clear set of
diligence and
consultations with departments, they could move more services for members”.
staff and members; February 2007 resources into the delivery of front Chief Executive Officer, Coast and
changes are made Extraordinary line infrastructure services. Moors Voluntary Action
in the organisational general meetings
structure and a at which members
The two organisations had “Our joint working arrangements
business plan vote in favour of
for the new merger also established good working had been going very well and
organisation is relationships over a period of ten we felt that merger would bring
prepared years. More recently they worked
1 April 2007
benefits of economies of scale,
on a joint project (funded through efficiency savings of a single
Merger date
Post-merger phase Capacitybuilders ChangeUp grant) organisation and that we would be
looking at possibilities of closer better able to represent the third
collaboration, initially with a further sector. Our relationship was such
neighbouring CVS. Trustees were that we felt it could work.”
very positive about the idea and by
Chief Executive Officer of
the end of 2005, both organisations predecessor Whitby & District
had established partnership working Voluntary Action, now Enterprise
arrangements and some joint project Manager, Coast and Moors
funding arrangements. Voluntary Action

Page 2
“It was like the small fish
swallowing the big fish.
But this was just done as a
legal device and everyone
understood that.”
Chief Executive Officer of
predecessor Whitby & District
Voluntary Action, now
Enterprise Manager, Coast
and Moors Voluntary Action
Learning from Mergers - the case studies
Coast and Moors Voluntary Action
The decision to merge
In early 2006, the two chief officers held talks to progress the merger
proposal. They then held initial conversations with their respective trustees.
In May 2006, the organisations agreed in principle to go ahead with merger.
One of the first things the organisations did was to consult a lawyer with
experience in mergers. Whitby VA was an incorporated body (limited by
guarantee) and Scarborough was unincorporated and a registered charity,
so they sought advice on appropriate legal form for the new body and
how to merge given their different status. Securing legal advice at this
stage gave trustees assurance that they were on the right path from a
governance point of view. Very early on in the process the lawyer held a
briefing for both sets of trustees individually to talk through the process
and answer their questions.
The legal form of the merger was decided at an early stage. Because Whitby
VA was already incorporated, it was decided that it would in effect ‘take
over’ Scarborough CVS and then change its name and nature to reflect the
new organisation. This would be the most straightforward legal process, as
there was no set up of a brand new company structure, and Scarborough
CVS’s assets and liabilities could be transferred easily. This option was
chosen even though Whitby VA was a much smaller organisation, both
financially and in terms of staff capacity. Because this was agreed very early
on, it then helped the organisations to map out the rest of the merger
process.
The merger process
The chief executive of the new organisation was appointed at an early
stage, so it was very clear who was leading on the process and responsible
for its progress. This was an internal appointment, with the chief officer
from Scarborough CVS taking the role, but both chief executives worked
closely together to drive the process.
The aim was to merge on 1 April 2007, which gave the organisations one
year to complete the process. This timeframe was achieved.
As a next step, the organisations looked at their staffing structure. The
merger provided the opportunity to create a more efficient organisation
and to put more resources into service delivery. A consultation on a new
structure was carried out with staff in May 2006. A confidential external
mentor for staff was brought in – something that the organisations felt was
very important. Some 45 staff members were affected by the restructure,
either directly or through their line management. Some redundancies
were made and new teams established. The staffing issues were all dealt
with by autumn 2006, so it was decided that the new structure would be
implemented on 1 January 2007, prior to merger.
The structure included a new enterprise team to focus on developing
business, new ideas and maximising income generation. The previous chief
officer of Whitby VA became the new enterprise manager. A membership

Page 3
“This funding was really
helpful. It demonstrated
we had backing from
Capacitybuilders and the
Consortium and made it
possible for us to do a
thorough and professional
job in these areas.”
Chief Executive Officer,
Coast and Moors Voluntary
Action
“The planning process gave us
the opportunity to re-assess
the needs in the sector and to
incorporate a gap analysis so
that we could look at projects
that could meet unmet needs
in the community. It’s more
pro-active - quite a radical
rethink.”
Chief Executive Officer,
Coast and Moors Voluntary
Action
“It was a good process –
a lot of [the trustees] had
been around a long time, so
were happy. They decided
it between themselves, and
identified four who wanted
to invest a few more years
in taking it forward. So the
shadow board focused on
the future – branding, new
organisation etc. The rest
duly resigned and the new
trust started.”
Trustee, Coast and Moors
Voluntary Action
Learning from Mergers - the case studies
Coast and Moors Voluntary Action
and partnership team and corporate services team (providing back-office
support) completed the structure, and the three team leaders joined the
chief executive to form a senior management team. This marked a departure
from the previous ‘flat’ structures, where the chief officers provided most of
the line management support for all staff.
Once the staffing issues had been dealt with, a clear timetable was set up
outlining every key activity that needed to be done. They key things on the
list included rebranding and IT redesign.
The two organisations had completely separate IT systems in place.
Consultants were brought in to design and deliver the system changes
and provide IT support during the first year of merger.
The new branding was found to be challenging as both towns involved
have very strong identities. The organisations decided not to incorporate
the names of the towns into their new brand, but took the opportunity
to establish a new name that reflected the area but at the same time was
neutral. The new name was established in discussions with both staff and
trustees. Designers were invited to pitch for the new logo and branding.
Funding of £20,000 was secured from Capacitybuilders through North
Yorkshire and York Infrastructure Consortium, and was used to help towards
legal fees, rebranding and IT redesign.
A new business plan for April 2007 and beyond was drafted and agreed.
It was a radical departure from the legacy organisations’ business plans
and provided the new organisation with the opportunity to start afresh
and focus on sustainability, maximizing efficiency, generating income and
becoming less reliant on grant income. Other key features of the business
plan included:
• Ensuring support and development services to the sector were
effective and delivered across the whole Borough (two sites in Whitby
and Scarborough)
• Running community buildings and contributing more to funding VCS
development and support services from self-generated income
• Building and running a new £1.5million community building, the
‘Green Lane centre’ in Whitby
• Laying out realistic project management fees, to generate income to
cover organisational overheads
Trustees were engaged and involved right through the merger process. Bi-
monthly meetings were held with the two boards, which were presented
with recommendation reports to enable them to make key decisions at
every stage. In July 2006, a shadow board was established, comprised of
four trustees from each existing board, which eventually became the board
for the new organisation. The trustees not involved in the shadow board
resigned on 31 March 2007.
Communication with staff and frontline organisations took place throughout
the process. Forums were held with member organisations to ensure that
they understood the process and a detailed member survey was conducted

Page 4
“Our aim is to spend more
and more through generating
income. It hasn’t been a
downward trend – we want
to be on an upward trend. We
want to do more”.
Chief Executive Officer,
Coast and Moors Voluntary
Action
“Public bodies now come to
us and ask us to do things
because we’ve shown we can
deliver. We now have good
track record”
Chief Executive Officer,
Coast and Moors Voluntary
Action
“We can appreciate the
benefits it’s brought to the
organisation e.g. one clear
voice [for the sector]. From
a partnership perspective a
good relationship has been
maintained. We continue to
do joint working and Coast
and Moors is very active in
the LSP”
Community Partnerships
Manager, Scarborough
Borough Council
“Everyone attends meetings,
it’s very rare that people
don’t show up. Everyone feels
involved in process – we still
meet monthly. People feel
involved, know what’s going
on – this is very important”
Trustee, Coast and Moors
Voluntary Action
Learning from Mergers - the case studies
Coast and Moors Voluntary Action
in September 2006. Newsletters were sent out and press coverage helped
to familiarise local organisations with the new brand.
In February 2007, two months prior to the merger, extraordinary general
meetings of the two predecessor organisations took place. These were
to formally agree the transfer of assets from Scarborough CVS to Whitby
VA, and for Whitby VA members to agree the changes. New memoranda
and articles were prepared for the new organisation, with assistance from
lawyers.
Success factors and benefits
Merger has led to some financial benefits for the new organisation. Although
saving money was not a specific motivation, benefits have been accrued in
terms of efficiency, diversifying activity and building in sustainability.
Positive relationships have been built, particularly with the Borough Council
and the local strategic partnership (LSP). Through establishing the new
organisation, Coast and Moors Voluntary Action has improved its profile
and established a new brand in the area. Through new work and service
delivery it has built a good reputation with stakeholders. Coast and Moors
is now regarded as a ‘bigger player’, and on the back of this has the ability
to secure more funds.
The merger has enabled the organisation to support more local voluntary
organisations in Scarborough and Whitby, through increasing delivery of
general support and reaching more groups. Coast and Moors also feels
that its increased visibility means it has raised the sector’s profile and can
represent the sector better.
The merger has enabled Coasts and Moors to ‘do something new and
different with CVS’. They have built in sustainability, income generation
and enterprise, something that they feel two smaller organisations would
never have had the resources to do.
A success of the process was the way in which the board was fully engaged
all the way through. Trustees felt involved in the whole process, and as a
result are now very engaged in the new organisation. The board is now
deliberately smaller (nine members compared with 12-15 in each of the
previous organisations), regular monthly meeting continue to take place
and attendance is exceptional. Trustees are very bought in to the new
organisation and business plan.
Challenges and pitfalls
One of the key challenges was the additional workload that the process
placed on chief officers. Because a lot of the work was confidential,
particularly regarding staffing issues, they were not able to delegate much
of this work to wider staff. They found it difficult to engage staff in some of
the work because of the restructure that was taking place.
 Learning from Mergers - the case studies
Page 5 Coast and Moors Voluntary Action

It took quite a long time to align staff contracts after the merger, and a small
number of staff who remained in post felt upset about the redundancies
that had been made. Such things had to be managed carefully after the
merger.

Occasionally legal issues crop up from time to time. For example, the old
Scarborough CVS charity has not yet been dissolved. It doesn’t have any
assets or liabilities, but because it is such an old organisation (formed in
1913), there were still some issues to be tied up after the merger, such as
grant agreements.

The organisation also has to address a perception by some voluntary

organisations that since the merger, Coast and Moors has become a large,
well financed organisation and has lost its ‘more traditional’ roots as a
voluntary sector organisation. Its more professional, modern and outward
looking brand contributes to this perception. Coast and Moors are working
carefully to manage this perception, but it is proving a tricky balancing act
between being visible and trying not to send out the wrong message.

Lessons Learned
• Be very clear about why you are doing merger in the first place and understand what you want to achieve
before you start. Because there’s so much work involved, you have to be sure. Ask yourself ‘is there another
way, such as collaboration, to consider first?’
• A good cross organisational relationship to begin with is beneficial – so there’s no unfamiliarity and you know
you can work together.
• Make sure you have full commitment from all parties at all levels – trustees, management and staff. It’s a non
starter if there are any doubts.
• Get support from members and stakeholders in the sector – so you are working altogether with one voice.
• Get good legal advice started very early and speak to lawyer to help resolve unanswered questions you may
have and ensure you are on right path – this saves a lot of uncertainty and gives trustees assurance.
• Get good advice, good communications and good HR processes.
• Plan with appropriate timescales - things shouldn’t be rushed.
• A very clear business plan means that staff are clear and understand the process.
• Staff and trustees need to be prepared to put in lots of extra hours!
• Merger can bring so many new opportunities, some unexpected – be prepared to seize them.
• Use the full year before the merger to get things right in terms of governance, management and staffing.
• Strong leadership is really important – having a chief officer leading the process who is capable, competent
and business-like was seen to be hugely beneficial and brought a fresh, different approach.

For further information about this case study, please contact:

Stephanie Sturrock, Chief Executive, Coast and Moors Voluntary Action

01723 362205 stephanie.sturrock@coastandmoors.org