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3SC: Charity Strategy, Partnership & Merger Case Study

Eastside People

Charity mergers and partnerships and specialist services

Merger Support: Sector Expertise Proves Critical in Social Enterprise Acquisition.

Summary

  • Merger support: to help 3SC find a mutually beneficial partnership arrangement which would strengthen both organisations
  • Project duration: 7 months
  • Number of Eastside People team members involved: 3

Background

The Eastside People team helped to establish 3SC, which manages and wins public service delivery contracts on behalf of third sector organisations, in 2010. As Martyn Oliver, CEO at the time, explains: “Eastside People played an instrumental part in getting the organisation off the ground, formulating early business plans, securing a substantial amount of start-up capital, putting together a senior management team and were a key part of 3SC’s early success.”

Since then, 3SC has supported charities and social enterprises to access more than £92m of contract income in its role building and managing supply chains of primarily third sector organisations. Richard Litchfield, Eastside People’s CEO likes to describe it as a “bidding platform”, bringing together small and local charities to bid for bigger contracts than they would have the infrastructure to deliver on their own. Contracts have been delivered for central and local governments across the sectors of justice, young people, disabilities and employment, and third sector organisations involved in delivering these contracts include Leonard Cheshire, Capability Scotland and Groundwork.

In 2021, however, the 3SC board knew that change had to happen. One of its largest contracts was coming to an end and, while it was winning lots of smaller contracts, the board members knew that the social enterprise’s survival was at risk. They therefore decided that the best way forward was to acquire or join another organisation.

The Eastside People team worked hard to understand our hopes and ambitions and to identify potential best fit organisations.

John Swinney, Ex 3SC Chair

Project

While the board members all had private sector experience of mergers and acquisitions, they didn’t have contacts or knowledge among third sector-focused organisations. That’s when Eastside People’s Merger and Partnership team’s sector-specific expertise was brought in to help.

John Swinney, who was 3SC’s chair at the time, says: “The Eastside People team worked hard to understand our hopes and ambitions and to identify potential best fit organisations.”

He adds that 3SC appreciated the invaluable contribution that came through Eastside People’s understanding of the marketplace: “Understanding the culture is critical in these sorts of arrangements.”

The Eastside People team began with a needs assessment to identify exactly what 3SC was seeking. We carried out an industry review to expand the range of potential partners, created a shortlist and approached those that we wanted to explore further. We supported 3SC’s management team to present their business to potential partners as well as offering advice on negotiating and how a future organisation could be structured.

Solution

The Eastside People’s project identified a list of potential partners that would be the right fit for 3SC. “They were extremely proactive in driving the process and keeping us updated as a board,” says John. And although 3SC eventually chose a partner organisation it was already in contact with, the initial project was a success because it enabled the team at 3SC to have a clear idea of their partnership options and how best to manage a successful process. “Without Eastside People’s involvement we would almost certainly have spent much time down rabbit holes, chasing unsuitable partners,” concludes John.

In May 2022, Twin Group, which delivers employability, skills and education services for UK and international governments, acquired 3SC. The acquisition means that Twin, with the 3SC brand within it, will continue to support third sector organisations to win government contracts going forwards.

Successful exits are hard to achieve in the third sector, points out Eastside People’s Richard Litchfield. “Many organisations fear them because they think they will be perceived as a sign of weakness or failure.” In this case, he says, Eastside People’s support to put in place a competitive search process (adapted from the private sector to suit the unique nature of the third sector) helped 3SC to manage a successful exit with the best partner for it.

This is the kind of long-term relationship we like to have with our clients, across their whole lifecycle,” says Richard. “It’s great to see a good outcome for 3SC that guarantees its long-term future, as well as the opportunity to build more impact, and we’re delighted that aspects of our work helped them to achieve that“.