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Charitable organizations seek mergers due to growing demands, rising costs, and exploration of opportunities for sustainability.
12th March 2025: Number of charity mergers surges by 31% and overall deal size by 500% as organizations face growing demands, rising costs, and explore opportunities for sustainability.
Charity and social enterprise consultancy Eastside People has today launched the 11th edition of the Good Merger Index (2023/24), the review of merger data across the charitable sector in England and Wales. After two years of decreasing numbers, this year’s report has identified significant increases in both the number and value of charity mergers. The 63 mergers involving 131 organisations is a 31% increase from 2022-23 and a 24% increase from 2021-22.
The significant involvement of larger organisations in mergers contributed to a remarkable year-on-year growth in the overall value of deals, measured by the income size of the organisations merging. In 2023-24, the total value of these deals reached £192 million, representing a huge increase of over 500% compared to the previous year.
The latest analysis suggests that mounting financial pressures such as rising minimum wages, higher Employers’ National Insurance (NICs) contributions, recruitment challenges, and shrinking budgets for outsourced contracts, are prompting a growing number of charities to explore mergers as a viable solution.
While takeovers continue to dominate as the most prevalent merger type, the research found a proportional increase in the number of mergers of equals, group structures and subsidiary models in 2023-24. Most notably, mergers of equals represented 16% of all mergers, compared to just 8% in the previous report.
The latest data also highlights a significant trend in independent school mergers. Even before the VAT change and its confirmed implementation, 9 of the top 20 mergers this year involved independent schools—a substantial increase from just one the previous year. This notable shift underscores a growing trend toward consolidation within the independent education sector.
“Over the last 12 months we have seen a greater than 30% rise in the number of merger-related projects managed by our consultants.” said Cara Evans, Head of Partnerships and Mergers at Eastside People. “Additionally, there is an increasing interest in using merger as a strategic approach to achieving sustainability against a background of growing demand and rising costs. Eastside People are pleased to say that we have supported a number of the charities listed in the report with their merger projects including Kisharon Langdon and Rennie Grove Hospice Care.” added Cara.
“We firmly believe that together we will be a stronger organisation, able to provide a wider range of choices and services to the 450 people who now rely on us every day. Hopefully over time, as our vision turns into reality, Kisharon Langdon will serve as a model for other organisations across the community to show the benefits of cooperation, collaboration, and the pooling of resources for the greater benefit for all.” Said Kisharon Langdon Trustee Andrew Loftus.
“We need to be prepared for the growing population of people needing end-of-life care. A bigger, more efficient organisation will be able to deliver equality of care across the area, as well as reaching out to different groups of people who haven’t engaged with the hospices before.” Said Stewart Marks, Chief Executive of Rennie Grove Hospice Care. “We received really good, sage advice from Eastside People. They drew upon their experience of many mergers and gave lots of options about how to approach different situations. The benefit of working with a consultancy like Eastside People is that there is a portfolio of expertise behind your main contact, I know there will always be someone at Eastside People who can offer advice if I pick up the phone.” Added Stewart.
Key Stats: Mergers, in most cases, do not happen quickly. Decisions taken to merge may be made a year or more before the completion of the merger. Because many mergers are announced in early April each year, we use a 12-month period running from 1st May 2023 to 30th April 2024 for the data in the report.
After two years of record low levels of activity, the number of mergers recorded (63) and the total number of organisations involved (131) marks a return to pre-COVID-19 levels of activity. This is a 31% increase from 2022-23 and a 24% increase from 2021-22
The notable rise in activity among larger organisations indicates that current economic challenges and societal changes are affecting charities of all sizes, leading to consolidations right across the sector
While mergers among smaller organisations also increased, the number was proportionally far less significant than for larger organisations. 65 organisations under £1m were involved in mergers, compared to 59 in 2022-23 and 50 in 2021-22. By contrast, 115 were involved in mergers in 2020-21 and 84 in 2019-20
The higher number of larger organisations involved in mergers has caused a notable increase in the total value of the organisations involved in mergers to £1,030 million, a rise of £547 million on the previous year. This is a 113% increase in total value over 2022-23 to 2023-24 (on a 31% increase in the number of mergers)
The relatively high number of larger organisations involved in mergers this year has also resulted in a huge year-on-year increase in the total value of deals. In 2023-24 the total value of deals was £192 million, a more than 500% increase on the previous figure
The 20 largest mergers by the amount of income transferred in 2023-24 represented £182,200,000 of income transferred, significantly higher than in 2022-23 (£30,900,000) and 95% of the total financial value transferred in mergers this year
9 of the top 20 mergers involved independent schools, even before the implementation of the 20% VAT change
Historically, most transferees have tended to be in surplus whilst most transferors tend to be in deficit. In 2021-22 and then again in 2022-23, we saw a lower than usual proportion of transferring organisations in deficit. This year we have seen a return to pre-COVID-19 norms among transferors.
Watch the recording of the Good Merger Index launch event held on 12th March 2025
Need guidance when it comes to merging a charity? Get in touch with our team now.
Over the last 12 months we have seen a greater than 30% rise in the number of merger-related projects managed by our consultants. Additionally, there is an increasing interest in using merger as a strategic approach to achieving sustainability against a background of growing demand and rising costs.
Cara Evans, Head of Partnerships and Mergers, Eastside People
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