Review of the Registered Clubs Industry in NSW - Clubs NSW

11 Making it easier for clubs to amalgamate
11.3 Overcoming the barriers to amalgamation
IPART found that there are a range of factors that make amalgamation difficult and
less likely to be used effectively to protect and preserve a financially unviable club’s
assets and their benefits to the community. These include:
the complexities of the amalgamation process
uncertainty about whether the amalgamation will get final approval
the costs associated with amalgamation
the challenges associated with clubs considering amalgamation in a timely fashion
restrictions on transferring gaming machine entitlements.
Each of these barriers and IPART’s recommendations for overcoming them are
discussed below.
11.3.1 The complexities of the amalgamation process
The current amalgamation process is complex, due to the various legal instruments
and government bodies that feed into it. After discussions with stakeholders, IPART
found that a great deal of this complexity is unavoidable, particularly the steps
related to the negotiations between the clubs and the due diligence investigations.
This is because a merger between two businesses is inherently complex.
However, IPART considers that the difficulties this complexity poses for clubs –
particularly smaller clubs – could be reduced by developing a step-by-step guide to
help clubs navigate the amalgamation process. Such a guide would also be timely,
given the recent legislative changes affecting amalgamation (see section 11.1.2).
IPART envisages that this guide would serve as the main reference document that
informs clubs (both parent and other) about amalgamation.
Although the guide is not likely to be able to cover all facets of amalgamation in
exhaustive detail, it should be comprehensive enough to help clubs begin the
amalgamation. The guide should be written in plain English and cover a wide range
of issues, including:
Information on ways to approach an amalgamation, such as:
– options for amalgamation structures, including the parent-other model and the
partnership/merger model
– use of management agreements as an alternative or a stepping stone to
possible amalgamation.
The legal steps required, and when and how each of these steps should be taken.
Financial considerations that all clubs party to the amalgamation should
investigate, such as:
Review of the Registered Clubs Industry in NSW IPART 181