The pros and cons of mergers and your business opportunities. Geraldine Howley Group Chief Executive Incommunities

Transcription

1 The pros and cons of mergers and your business opportunities Geraldine Howley Group Chief Executive Incommunities 15 July 2016

2 Introduction Why we considered a merger What we wanted to get out of it Key strategic due diligence questions What we achieved

3 Incommunities Merger Strategy Based on cultural alignment Not predatory or opportunistic Recognised geographic considerations Clear focus on local challenges around housing need in Bradford and the surrounding district Sufficient capacity to support smaller organisations

4 Why Incommunities was open to merger talks with Sadeh Lok Achievement of corporate strategic growth strategy Increases scale of the business, enabling greater operational efficiencies and long term investment opportunities Development potential in 3 Yorkshire Local Authority areas Add a workforce with expertise in BME provision Add 1,000 units to the balance sheet with net book value of 30m

5 Why Sadeh Lok was looking for merger Completed turnaround of financial and operational performance Followed by resignation of successful CEO Facing restricted financial resources and limitations of future growth: Medium term stock investment gap Restricting resources to improve service delivery Restricted capacity to build new homes Board worried about stagnation

6 What Sadeh Lok was looking for Better protection of Sadeh Lok s social housing asset Benefits to Sadeh Lok s tenants VFM benefits to both organisations and the enlarged group Benefits to stakeholders of both parties Career opportunities to the staff of both organisations

7 Key strategic due diligence questions Sadeh Lok Was Incommunities financially viable? Would the merger generate sufficient cost savings to deal with investment gap and create resources to grow? How aligned is Incommunities employee culture with Sadeh Lok s? How good is Incommunities service delivery? What would be operational offer look like?

8 Key strategic due diligence questions from Incommunities Governance and constitutional issues Effect of major contracts and leasehold properties Pensions TUPE Tenancy Agreements Loan agreements

9 Sadeh Lok Chair Assessment: Achievements Customer Service Excellence 5 compliance plus award Customer satisfaction improves from 89% to 95% Financial savings over 500k greater resilience in time for 1% rent cut Access to membership of Group Board(s) and committees Retained independent identity/brand Input to Group Strategy Pathway to 2025 Positive working relationships for staff and tenants Opportunity to develop more homes in Kirklees

10 Group Chair Assessment: Achievements Growth of the organisation an improved perspective Created wider development opportunities Positive learning from another successful organisation Enhanced career opportunities for both teams

11 Timeline 15 months.from to Jan 2014 Sadeh Lok Board reviews strategic partnership options April 2014 Sadeh Lok enters into partnership/merger discussions with Incommunities Regulators; funders and key partners informed May 2014 Boards agree and commence: Due diligence; Consultation with Sadeh Lok Residents; employee communication; formal consents September 2014 general meetings changing governing documents 1 st April accession of Sadeh Lok to the Incommunities Group

12 Looking further ahead Adopted merger strategy Capacity for more consolidation Track record of merger success Inclusive collaborative approach services, boards and employees More complex Group structure but good links between Boards Pooling Board expertise better position for future challenges Broader risk base greater long term strength

13 Question Time