Not for profit organisations often decide that they could better pursue their goals by putting in place a formal relationship with another organisation. That’s where our experience with mergers and acquisitions come into play.
Organisations may be able to provide better services to their clients when they share resources, skills and experience. Two organisations that merge or work together on a specific project can attract improved public funding and may be able to reach a wider range of potential clients.
Available options for combining the strengths of two organisations
In a merger, two organisations come together to form a new organisation. In these circumstances, the assets, liabilities, business and staff of both organisations will be taken over by a new organisation, and the two merging organisations will cease to exist.
A merger is likely to promote economies of scale, as a single organisation with more resources may be able to operate more efficiently than two smaller organisations working in isolation.
In a takeover, one organisation acquires or buys another organisation. In these cases, one organisation will take over the assets, liabilities, business and staff of another organisation. The other organisation will then cease to exist.
A joint venture
A joint venture is a formal contractual relationship under which two or more organisations agree to contribute resources for the purposes of a particular project or undertaking.
Joint ventures may involve setting up a separate organisation or trust through which to conduct the venture. They are a flexible form of a legal arrangement that may be tailored to reflect the particular goals or circumstances of the organisations and the project that they wish to set undertake.
Auspicing is a process by which an incorporated not for profit organisation takes an unincorporated not for profit organisation under its wing for a specific project that the unincorporated organisation wishes to undertake.
While each auspicing agreement will differ, it is generally the case that the incorporated organisation will agree to receive funding for the project on behalf of the unincorporated organisation, and will cover the activities of the unincorporated organisation under its insurance policy.
How can we help?
The legal arrangements and due diligence processes that must be put in place as part of a merger, acquisition, joint venture or auspicing agreement can be complex. It is often difficult to know which legal structure will best achieve the purposes of your organisation.
We can help you by:
- Advising you as to whether a merger, acquisition, joint venture agreement or auspicing agreement is appropriate for your organisation.
- Advising you as to the appropriate due diligence process and helping you to conduct that process.
- Drafting legal documents associated with mergers, acquisitions and joint venture agreements and auspicing agreements.
Contact our solicitors to find out how they can help your organisation to achieve its strategy and further its charitable purposes through a formal relationship with another organisation.