Merging for purpose: Legal issues for not-for-profits to consider early

Mergers between not-for-profit organisations are rarely driven by financial logic alone. Mission alignment, service continuity, workforce stability and governance integrity often sit at the heart of the conversation.

But even when values align, legal complexity can derail a transaction if key issues aren’t identified and addressed early. Based on recent merger activity across aged care, disability and community sectors, the following considerations consistently prove critical:

Structuring the deal

The legal mechanism chosen will shape every aspect of the merger. It determines which liabilities transfer, how governance operates post-merger, and what consents are required. Structuring decisions should be informed by a wide range of drivers including risk profile, brand objectives, regulatory impacts, resourcing and operational alignment.

Governance and board alignment

Early agreement on governance principles helps avoid disputes later. Where two boards remain involved, clarity is needed on decision-making authority, transitional arrangements, and how any future divergence will be managed.

Regulatory and licensing issues

Disability and aged care mergers often involve NDIS or Aged Care Act registrations and DGR/PBI status. These may require bespoke regulatory engagement or new applications — with associated timing and compliance risks.

Employment and workforce transition

Transfer of business rules under the Fair Work Act may apply. These can trigger obligations under enterprise agreements, impact redundancy entitlements, or affect award coverage. Missteps here are a common source of legal and industrial risk.

Property and contracts

Leases, grant funding agreements, service contracts may contain change of control clauses or other transfer restrictions. Due diligence should identify these early to allow for renegotiation or novation planning.

Stakeholder communication and timing

Board, staff, funders, regulators and participants may all require different messaging and engagement at different stages. Legal can support this process, but timing is everything.

 If you’re exploring a not-for-profit merger or acquisition, we can help identify structural risks, assess regulatory pathways, and support an efficient transaction that meets your objectives. Contact Amber Crosthwaite at 0400 143 677 or amber.crosthwaite@lavan.com.au to discuss.

Disclaimer

The information contained in this publication does not constitute legal advice and should not be relied upon as such. You should seek legal advice in relation to any particular matter you may have before relying or acting on this information. The Lavan team are here to assist.