Mergers within Social Housing: The Inside Track

In the fast-evolving landscape of social housing, mergers and acquisitions have become a defining trend in recent times. The recent spate of mergers involving Johnnie Johnson/Sanctuary, Swan/Sanctuary, SBHG/Guinness, Network/Sovereign, Southern/Optivo, and One Housing/Riverside (to name but a few), has many scratching their heads as to why this splicing of organisations is so prevalent right now and what the wider implications are for the sector as a whole.

In this article, Mobysoft enterprise business development director, Peter Steele (PS), and strategic director, Julie Lorraine (JL), look to answer those questions and more, as well as shedding some light on the pitfalls and challenges that can result when two organisations become one…

PS: Julie, every week seems to bring a new social landlord merger in England, what do you think are the key drivers behind this seemingly unprecedented activity?

JL: Some will be born out of necessity – it’s increasingly difficult for smaller associations to operate effectively in meeting all conflicting demands currently expected of them. Striking a balance between investment in existing stock, meeting demand for new stock, and addressing net zero pressures whilst keeping customer focus at the heart of all they do often proves too difficult a balancing act

There are other more strategic drivers around growth too, one of the most prominent being building financial resilience. Strengthening governance can be a factor for some, with growth in scope and scale allowing a wider geographic spread and, of course, lower overhead costs across a wider base.

Finally, I wouldn’t be giving a complete picture if I didn’t mention another reason that mergers happen, and that is the ego driven acquisitive growth commonly associated with the private sector. For me, maybe some mergers could be safely filed under the ‘Vanity Project’ banner.

PS: What are the main advantages of organisations coming together in this way?

JL: Combined scale and financial strength, ability to weather a storm, injection of fresh ideas and new ways of doing things, and greater potential for growth and success – all of which ultimately combine to make a bigger and better difference for customers.

PS: Typically, what will the first 6-12 months of a newly merged organisation look like?

JL: Chaotic. People feel fearful and worried, defensive, partisan, and a little competitive (often in a negative way). In worst case scenarios, I’ve witnessed teams enjoying the failings of the ‘other side’ rather than celebrating the triumphs of each. Differences between staff terms and conditions and what have been important cultural norms such as Christmas parties, lottery syndicates, and even biscuits can cause friction. On the plus side, it’s a real opportunity for a new senior team and board to communicate, recognise good practices, and reward great team outcomes.

PS: What do you think are the recipes for a ‘successful merger’ (particularly in terms of the impact on tenants and staff)?

JL: Detailed planning if possible! Reassurance for all and building effective relationships, shared values and behaviours is key. Open communication is fundamental to a successful merger – ensuring that the transition is seamless for customers is imperative. You could say that it’s about acquiring the gift of swimming like swans…on the surface, to those looking on, everything appears to move gracefully, but under the water all are paddling their little legs like mad!

My advice to those overseeing a merger is to be open and honest with staff and customers as to why the merger has happened and provide clarity on what the objectives are. Be mindful of people’s feelings too – some may feel a sense of failing or even grief for the firm they were at that they now feel is lost, rather than viewing it as an attractive addition to a new organisation that can be better and stronger together.

PS: Looking back at the mergers you’ve been involved in, is there anything you would have done differently and/or key learnings within that first 6-12 months?

JL: Accept that it’s going to take a lot longer than you think and be quite a bit harder than you think too, but when you get it right (which you will) things will be better than you ever thought they could be! For those wanting to get a handle on just how long these things take – I’d say that 6 to 12 months is an extremely optimistic estimate.

It bodes well to have a phased plan in place from the off also. Phase one should focus on alignment with customers experience/service standards, this means finding ways to adapt existing systems to operate to a single customer experience, be it repairs standards or income management. Being able to access a single dataset pulled from different systems is critical here, as is a single approach across multiple legacy data systems. The second phase should centre on integration towards single systems. It’s very easy to merely take the approach of adopting whichever current option is best, but in doing this an organisation risks opting for ‘least worst’ solution, rather than the solution that is actually best for the new business.

Finally, accept that no matter how thorough they may be, due diligence processes can only go so far. Legacy issues will undoubtedly emerge – the trick to successfully overcoming them is to stick together and avoid apportioning blame. Spending time on team bonding is also extremely beneficial – be sure to make it as inclusive as possible and involve everyone from the board and execs, all the way through the organisation. Always be welcoming to the ‘new’ staff also as, post-merger, they often feel they walk on eggshells when seeking to improve or change things that were part of legacy ways.

Hopefully this feature has provided valuable insights into the implications of these mergers and their impact on the social housing sector. Collaboration and consolidation have the potential to proactively shape a positive future of social housing, however, it’s not always plan sailing (as we’ve explored here). Providing that mergers are undertaken for the right reasons, and the process is handled with care and diligence, strategic partnerships can and do result in greater efficiency, innovation, and ultimately, improved outcomes for customers and communities.

Peter Steele