merging clubs

Nancy Chamberlin on

Any thoughts or advice on merging 2 small investment clubs?
We're losing members, but don't want to disband.

iras1 on

Due to the complex tax laws regarding the contribution of assets other than cash to a partnership and the inability of any investment club accounting software to handle these computations, the only way for two clubs to merge is for one (or both) of them to disband and the members join the surviving club with cash contributions.

Ira Smilovitz

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In a message dated 06/22/10 13:54:01 Eastern Daylight Time, jnchamb@bivio.com writes:

Any thoughts or advice on merging 2 small investment clubs?
We're losing members, but don't want to disband.

Laurie Frederiksen on

Hi Nancy,

There are many aspects to this question. Here are a few things to consider:

1. What is the optimal size for a club?

a. This is a subjective question and will depend on the people involved. There are many successful clubs that go on for years with as few as 3-4 members. Others are not comfortable if their membership falls below 20. Some people feel that 20 is too cumbersome. Size doesn’t determine how successful a club will be.

2. Accounting Issues

a. There is no way to merge two clubs accounting-wise. You will need to completely disband one and then have the members contribute the funds they receive to join the second one.

3. Operational Issues

a. You will need to feel that all the members of the new combined club can work together, just like you need to know when you bring anyone new into your club. Most partnership agreements have prospective members participate in club activities for 3 months or so before the final decision to join is made by both sides. If you are going to merge two groups of people, it would probably still be wise to operate together for this type of time period prior to making the final decision to go through the process of disbanding one club and having members join the new one.

4. Positive Outcome

a. If the combination of the two clubs means that you now have a group where everyone is equally engaged in the club’s activities, any work involved with combining the groups will have been worth it.

Laurie Frederiksen

www.bivio.com

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