If Local Government Reorganisation Is a Merger, What Can Councils Learn from the Private Sector?
- truthaboutlocalgov
- Oct 19
- 7 min read
Reframing Reorganisation: From Technical Restructure to Strategic Merger
Local Government Reorganisation (LGR) is often presented as a technical exercise an administrative reshuffle designed to streamline services, reduce duplication, and improve efficiency. But this framing risks missing the bigger picture. What if we viewed LGR through the lens of corporate mergers and acquisitions (M&A)? In the private sector, M&A is not just about combining balance sheets or rationalising operations; it’s a strategic, high-stakes endeavour that can unlock innovation, drive growth, and reshape organisational identity. Equally, it can destroy value, fracture cultures, and lead to long-term dysfunction if mishandled.
Councils undergoing LGR are not simply merging departments they are blending histories, cultures, leadership styles, and community identities. This is not just a change in structure; it’s a transformation in purpose, governance, and public perception. The stakes are high, and the lessons from the private sector are both cautionary and instructive. In successful corporate mergers, leaders invest heavily in integration planning, cultural alignment, and stakeholder engagement. They understand that synergy is not automatic it must be cultivated. Conversely, failed mergers often suffer from rushed timelines, unclear objectives, and a lack of empathy for the people affected.
“A successful merger is one driven by courage, blending clear goals with empathy, a sense of responsibility, and unwavering persistence.” Ina Wietheger, Roland Berger
This quote resonates deeply in the context of LGR. Councils must be courageous in their vision, empathetic in their execution, and persistent in their commitment to building something better not just bigger. Reorganisation should be more than a cost-saving measure; it should be a catalyst for renewal, innovation, and improved outcomes for communities.
1. The Reality Check: Most Mergers Fail
In the corporate world, mergers and acquisitions are often framed as bold strategic moves designed to unlock growth, streamline operations, and deliver shareholder value. Yet the reality is sobering: between 70% and 75% of M&A deals fail to achieve their intended outcomes. This failure rate is not just about flawed financial modelling or market misjudgement it’s often about people, culture, and execution. The most common reasons for failure include:
Cultural misalignment: When two organisations with distinct values, behaviours, and working styles are forced together, friction is inevitable. Without deliberate cultural integration, mistrust and disengagement can take root.
Poor integration planning: Many mergers falter because leaders underestimate the complexity of aligning systems, processes, and people. Integration must be treated as a programme in its own right, not a postscript.
Overestimated synergies: The anticipated cost savings or service improvements often prove elusive. Assumptions made in boardrooms don’t always translate into operational reality.
Loss of key talent: Change breeds uncertainty. If staff feel undervalued or unclear about their future, they leave and with them goes institutional knowledge and continuity.
“Every single time you make a merger, somebody is losing his identity. And saying something different is just rubbish.” Carlos Ghosn
This quote from the former Renault-Nissan CEO cuts to the heart of the issue. Mergers are not just about structures they’re about people. Identity, pride, and belonging are powerful forces. In local government, where place and community are central to purpose, the emotional impact of reorganisation can be profound.
Lesson for councils: Don’t underestimate the emotional and cultural impact of LGR. Staff, residents, and partners need clarity, empathy, and a sense of continuity. Reorganisation must be more than a technical fix it must be a human-centred transformation. Councils should invest in cultural diagnostics, change management, and internal communications from day one. The goal is not just to merge services, but to build a new shared identity that honours the past while embracing the future.
2. Integration Is Everything
In the private sector, integration is often the make-or-break phase of a merger. A study by PwC found that 83% of failed M&A deals cited poor integration as the primary cause. Integration isn’t just about aligning IT systems or HR policies it’s about creating a coherent organisation from disparate parts. For councils, this means going beyond structural charts and service directories to build a truly unified organisation. Key priorities include:
Mapping systems and services before merging: Councils must understand what each authority brings to the table its strengths, weaknesses, and legacy systems. This diagnostic phase should inform the integration roadmap.
Creating cross-council change teams: Integration should be co-designed by staff from all merging authorities. This builds ownership, surfaces risks early, and fosters collaboration.
Appointing digital and cultural champions: These individuals can bridge technical and emotional divides, helping staff navigate change and maintain morale.
Prioritising data reconciliation and governance: Merging financial, HR, and service data is complex. Councils must invest in data quality, security, and interoperability to avoid costly errors and reputational damage.
“Culture eats digital transformation for breakfast and it chews through IT mergers for lunch.” Mason Advisory
This quote is a stark reminder that technology alone won’t deliver transformation. Councils must align systems and cultures to create a unified organisation that can deliver for residents. Integration is not a phase it’s a mindset.
3. Rebranding with Purpose
In the corporate world, rebranding after a merger is more than a cosmetic exercise it’s a strategic move to signal change, build trust, and unify stakeholders. Councils should approach rebranding with the same intent and rigour. Steps to consider:
Develop a new mission and vision that reflects local identity: The new council must articulate a purpose that resonates with staff and communities. This isn’t about erasing history it’s about building a shared future.
Engage communities in shaping the new brand: Residents should feel part of the journey. Co-designing the brand can foster pride and legitimacy.
Avoid superficial logo swaps focus on values and purpose: A new name or crest means little without a clear narrative. Councils should communicate what the change means, why it matters, and how it will improve lives.
“Define a clear mission that aligns with the new structure and goals. Craft a compelling vision that inspires and guides.” Gate One
Rebranding is an opportunity to reset expectations, galvanise staff, and build public confidence. Done well, it can be a powerful tool for renewal. Done poorly, it risks confusion, cynicism, and disengagement.
4. Financial Control and Governance
In the private sector, mergers demand rigorous financial due diligence. Integrating two organisations means reconciling budgets, aligning financial controls, and ensuring that governance structures are fit for purpose. The same applies to councils undergoing LGR except the stakes are arguably higher, given the public accountability involved. Councils must:
Harmonise budgets and financial systems: Legacy systems may differ in coding structures, reporting formats, and financial cycles. Early alignment is essential to avoid confusion and ensure transparency.
Establish transparent governance frameworks: Decision-making structures must be clear, inclusive, and legally sound. This includes defining roles, responsibilities, and escalation routes across the new entity.
Ensure accountability for public funds: With multiple funding streams and statutory obligations, councils must maintain robust audit trails and financial oversight throughout the transition.
“Getting a firm grip on financial control and governance is essential, especially when integrating different balance sheets.” Gate One
Financial integration is not just about compliance it’s about building trust with residents, staff, and elected members. Councils must demonstrate that the new organisation is financially resilient and responsibly managed.
5. Engagement Is Not Optional
Unlike corporate mergers, councils operate in a democratic context. Reorganisation affects not just employees but entire communities. The Local Government Association’s toolkit rightly emphasises that meaningful engagement is essential. Councils should:
Consult widely with residents, staff, and partners: Engagement must go beyond statutory consultation. It should be proactive, inclusive, and ongoing.
Evidence how local views shape proposals: Feedback must be acknowledged and reflected in decision-making. This builds legitimacy and reduces resistance.
Address concerns about identity, service continuity, and representation: People care deeply about their local identity. Councils must explain how services will be protected and how democratic representation will evolve.
Engagement is not a tick-box exercise it’s a strategic enabler. Councils that listen well will transition better.
6. Legal Clarity Matters
Legal ambiguity has undermined past reorganisations. From property rights to employment contracts, the legal architecture of LGR must be watertight. Councils must:
Ensure legal continuity of contracts and property rights: Assets, liabilities, and obligations must transfer cleanly. This requires detailed legal mapping and early engagement with suppliers and partners.
Seek early legal advice on transfer schemes and governance documents: Statutory instruments must be clear, comprehensive, and future-proofed. Councils should avoid assumptions and ensure legal robustness from day one.
Legal clarity underpins operational stability. Without it, councils risk delays, disputes, and reputational damage.
7. Technology Is a Strategic Enabler
In successful mergers, technology is treated as a strategic priority not a bolt-on. Councils must do the same. IT integration is complex, but it’s also an opportunity to modernise, streamline, and future-proof services. Lessons include:
Audit legacy systems: Councils must understand what systems exist, how they’re used, and where risks lie. This includes infrastructure, software, data, and cybersecurity.
Standardise and integrate platforms: Where possible, councils should move toward common platforms that support collaboration, efficiency, and resilience.
Move to cloud with purpose, not panic: Cloud migration can unlock flexibility and scalability but only if it’s planned, secure, and aligned with service needs.
Smart councils treat IT as a strategic enabler of transformation. Those that don’t risk fragmentation, inefficiency, and missed opportunities.
Conclusion: Reorganisation Is a Merger Treat It Like One
Local Government Reorganisation is not just a structural reshuffle it’s a strategic transformation. When councils treat LGR as a technical exercise, they risk repeating the mistakes of failed corporate mergers: cultural clashes, disengaged staff, confused residents, and missed opportunities. But when they approach it with the same rigour, empathy, and foresight as a well-planned M&A, they unlock the potential for renewal, resilience, and better outcomes. The private sector teaches us that success lies in integration, identity, and intent. Councils must invest in cultural alignment, financial clarity, legal robustness, and digital transformation not as afterthoughts, but as core pillars of change. Above all, they must engage their communities with honesty and purpose, recognising that public trust is earned, not assumed. Reorganisation is a chance to build something better not just bigger. It’s an opportunity to redefine what local government means in the 21st century: more agile, more inclusive, and more attuned to the needs of the people it serves.
