diff --git a/app/services/merge/merge_organisations_service.rb b/app/services/merge/merge_organisations_service.rb
index c45ade893..68ca6939a 100644
--- a/app/services/merge/merge_organisations_service.rb
+++ b/app/services/merge/merge_organisations_service.rb
@@ -66,17 +66,19 @@ private
   def merge_schemes_and_locations(merging_organisation)
     @merged_schemes[merging_organisation.name] = []
     merging_organisation.owned_schemes.each do |scheme|
-      next if scheme.deactivated?
-
       new_scheme = Scheme.create!(scheme.attributes.except("id", "owning_organisation_id", "old_id", "old_visible_id").merge(owning_organisation: @absorbing_organisation))
+      scheme.scheme_deactivation_periods.each do |deactivation_period|
+        SchemeDeactivationPeriod.create!(deactivation_period.attributes.except("id", "scheme_id").merge(scheme: new_scheme))
+      end
       scheme.locations.each do |location|
-        next if location.deactivated?
-
-        new_scheme.locations << Location.new(location.attributes.except("id", "scheme_id", "old_id", "old_visible_id"))
-        LocationDeactivationPeriod.create!(location:, deactivation_date: @merge_date)
+        new_location = Location.create!(location.attributes.except("id", "scheme_id", "old_id", "old_visible_id").merge(scheme: new_scheme))
+        location.location_deactivation_periods.each do |deactivation_period|
+          LocationDeactivationPeriod.create!(deactivation_period.attributes.except("id", "location_id").merge(location: new_location))
+        end
+        LocationDeactivationPeriod.create!(location:, deactivation_date: @merge_date) unless location.deactivated?
       end
       @merged_schemes[merging_organisation.name] << { name: new_scheme.service_name, code: new_scheme.id }
-      SchemeDeactivationPeriod.create!(scheme:, deactivation_date: @merge_date)
+      SchemeDeactivationPeriod.create!(scheme:, deactivation_date: @merge_date) unless scheme.deactivated?
     end
   end
 
diff --git a/spec/services/merge/merge_organisations_service_spec.rb b/spec/services/merge/merge_organisations_service_spec.rb
index 31230fea4..b4d2aea83 100644
--- a/spec/services/merge/merge_organisations_service_spec.rb
+++ b/spec/services/merge/merge_organisations_service_spec.rb
@@ -154,21 +154,47 @@ RSpec.describe Merge::MergeOrganisationsService do
           expect(Rails.logger).to receive(:info).with("\tfake name (fake@email.com)")
           expect(Rails.logger).to receive(:info).with("New schemes from fake org:")
           expect(Rails.logger).to receive(:info).with(/\t#{scheme.service_name} \(S/)
+          expect(Rails.logger).to receive(:info).with(/\t#{deactivated_scheme.service_name} \(S/)
           merge_organisations_service.call
 
           absorbing_organisation.reload
-          expect(absorbing_organisation.owned_schemes.count).to eq(1)
-          expect(absorbing_organisation.owned_schemes.first.service_name).to eq(scheme.service_name)
-          expect(absorbing_organisation.owned_schemes.first.old_id).to be_nil
-          expect(absorbing_organisation.owned_schemes.first.old_visible_id).to be_nil
-          expect(absorbing_organisation.owned_schemes.first.locations.count).to eq(1)
-          expect(absorbing_organisation.owned_schemes.first.locations.first.postcode).to eq(location.postcode)
-          expect(absorbing_organisation.owned_schemes.first.locations.first.old_id).to be_nil
-          expect(absorbing_organisation.owned_schemes.first.locations.first.old_visible_id).to be_nil
+          deactivated_scheme.reload
+          deactivated_location.reload
+          expect(absorbing_organisation.owned_schemes.count).to eq(2)
+
+          # moves active schemes and locations to absorbing organisation
+          absorbed_active_scheme = absorbing_organisation.owned_schemes.find_by(service_name: scheme.service_name)
+          absorbed_active_location = absorbed_active_scheme.locations.find_by(postcode: location.postcode)
+          expect(absorbed_active_scheme.service_name).to eq(scheme.service_name)
+          expect(absorbed_active_scheme.old_id).to be_nil
+          expect(absorbed_active_scheme.old_visible_id).to be_nil
+          expect(absorbed_active_scheme.locations.count).to eq(2)
+          expect(absorbed_active_location.postcode).to eq(location.postcode)
+          expect(absorbed_active_location.old_id).to be_nil
+          expect(absorbed_active_location.old_visible_id).to be_nil
+
+          # deactivates active schemes and locations on merging organisation
           expect(scheme.scheme_deactivation_periods.count).to eq(1)
           expect(scheme.scheme_deactivation_periods.first.deactivation_date.to_date).to eq(Time.zone.today)
-          expect(scheme.locations.first.location_deactivation_periods.count).to eq(1)
-          expect(scheme.locations.first.location_deactivation_periods.first.deactivation_date.to_date).to eq(Time.zone.today)
+          expect(scheme.locations.find_by(postcode: location.postcode).location_deactivation_periods.count).to eq(1)
+          expect(scheme.locations.find_by(postcode: location.postcode).location_deactivation_periods.first.deactivation_date.to_date).to eq(Time.zone.today)
+
+          # does not deactivate inactive locations on merging organisation again
+          expect(scheme.locations.find_by(postcode: deactivated_location.postcode).location_deactivation_periods.count).to eq(1)
+
+          # moves inactive schemes and their locations to absorbing organisation
+          absorbed_inactive_scheme = absorbing_organisation.owned_schemes.find_by(service_name: deactivated_scheme.service_name)
+          expect(absorbed_inactive_scheme.scheme_deactivation_periods.count).to eq(1)
+          expect(absorbed_inactive_scheme.scheme_deactivation_periods.first.deactivation_date).to eq(deactivated_scheme.scheme_deactivation_periods.first.deactivation_date)
+          expect(absorbed_inactive_scheme.locations.count).to eq(1)
+          expect(absorbed_inactive_scheme.locations.first.location_deactivation_periods.count).to eq(0)
+          expect(deactivated_scheme.scheme_deactivation_periods.count).to eq(1)
+
+          # moves inactive locations of active schemes to absorbing organisation
+          absorbed_inactive_location = absorbed_active_scheme.locations.find_by(postcode: deactivated_location.postcode)
+          expect(absorbed_active_scheme.scheme_deactivation_periods.count).to eq(0)
+          expect(absorbed_inactive_location.location_deactivation_periods.count).to eq(1)
+          expect(absorbed_inactive_location.location_deactivation_periods.first.deactivation_date).to eq(deactivated_location.location_deactivation_periods.first.deactivation_date)
         end
 
         it "moves relevant logs and assigns the new scheme" do
@@ -327,17 +353,47 @@ RSpec.describe Merge::MergeOrganisationsService do
             expect(Rails.logger).to receive(:info).with("\tfake name (fake@email.com)")
             expect(Rails.logger).to receive(:info).with("New schemes from fake org:")
             expect(Rails.logger).to receive(:info).with(/\t#{scheme.service_name} \(S/)
+            expect(Rails.logger).to receive(:info).with(/\t#{deactivated_scheme.service_name} \(S/)
             merge_organisations_service.call
 
             absorbing_organisation.reload
-            expect(absorbing_organisation.owned_schemes.count).to eq(1)
-            expect(absorbing_organisation.owned_schemes.first.service_name).to eq(scheme.service_name)
-            expect(absorbing_organisation.owned_schemes.first.locations.count).to eq(1)
-            expect(absorbing_organisation.owned_schemes.first.locations.first.postcode).to eq(location.postcode)
+            deactivated_scheme.reload
+            deactivated_location.reload
+            expect(absorbing_organisation.owned_schemes.count).to eq(2)
+
+            # moves active schemes and locations to absorbing organisation
+            absorbed_active_scheme = absorbing_organisation.owned_schemes.find_by(service_name: scheme.service_name)
+            absorbed_active_location = absorbed_active_scheme.locations.find_by(postcode: location.postcode)
+            expect(absorbed_active_scheme.service_name).to eq(scheme.service_name)
+            expect(absorbed_active_scheme.old_id).to be_nil
+            expect(absorbed_active_scheme.old_visible_id).to be_nil
+            expect(absorbed_active_scheme.locations.count).to eq(2)
+            expect(absorbed_active_location.postcode).to eq(location.postcode)
+            expect(absorbed_active_location.old_id).to be_nil
+            expect(absorbed_active_location.old_visible_id).to be_nil
+
+            # deactivates active schemes and locations on merging organisation
             expect(scheme.scheme_deactivation_periods.count).to eq(1)
             expect(scheme.scheme_deactivation_periods.first.deactivation_date.to_date).to eq(Time.zone.yesterday)
-            expect(scheme.locations.first.location_deactivation_periods.count).to eq(1)
-            expect(scheme.locations.first.location_deactivation_periods.first.deactivation_date.to_date).to eq(Time.zone.yesterday)
+            expect(scheme.locations.find_by(postcode: location.postcode).location_deactivation_periods.count).to eq(1)
+            expect(scheme.locations.find_by(postcode: location.postcode).location_deactivation_periods.first.deactivation_date.to_date).to eq(Time.zone.yesterday)
+
+            # does not deactivate inactive locations on merging organisation again
+            expect(scheme.locations.find_by(postcode: deactivated_location.postcode).location_deactivation_periods.count).to eq(1)
+
+            # moves inactive schemes and their locations to absorbing organisation
+            absorbed_inactive_scheme = absorbing_organisation.owned_schemes.find_by(service_name: deactivated_scheme.service_name)
+            expect(absorbed_inactive_scheme.scheme_deactivation_periods.count).to eq(1)
+            expect(absorbed_inactive_scheme.scheme_deactivation_periods.first.deactivation_date).to eq(deactivated_scheme.scheme_deactivation_periods.first.deactivation_date)
+            expect(absorbed_inactive_scheme.locations.count).to eq(1)
+            expect(absorbed_inactive_scheme.locations.first.location_deactivation_periods.count).to eq(0)
+            expect(deactivated_scheme.scheme_deactivation_periods.count).to eq(1)
+
+            # moves inactive locations of active schemes to absorbing organisation
+            absorbed_inactive_location = absorbed_active_scheme.locations.find_by(postcode: deactivated_location.postcode)
+            expect(absorbed_active_scheme.scheme_deactivation_periods.count).to eq(0)
+            expect(absorbed_inactive_location.location_deactivation_periods.count).to eq(1)
+            expect(absorbed_inactive_location.location_deactivation_periods.first.deactivation_date).to eq(deactivated_location.location_deactivation_periods.first.deactivation_date)
           end
 
           it "moves relevant logs and assigns the new scheme" do
@@ -669,21 +725,47 @@ RSpec.describe Merge::MergeOrganisationsService do
           expect(Rails.logger).to receive(:info).with("\tfake name (fake@email.com)")
           expect(Rails.logger).to receive(:info).with("New schemes from fake org:")
           expect(Rails.logger).to receive(:info).with(/\t#{scheme.service_name} \(S/)
+          expect(Rails.logger).to receive(:info).with(/\t#{deactivated_scheme.service_name} \(S/)
           merge_organisations_service.call
 
           new_absorbing_organisation.reload
-          expect(new_absorbing_organisation.owned_schemes.count).to eq(1)
-          expect(new_absorbing_organisation.owned_schemes.first.service_name).to eq(scheme.service_name)
-          expect(new_absorbing_organisation.owned_schemes.first.old_id).to be_nil
-          expect(new_absorbing_organisation.owned_schemes.first.old_visible_id).to be_nil
-          expect(new_absorbing_organisation.owned_schemes.first.locations.count).to eq(1)
-          expect(new_absorbing_organisation.owned_schemes.first.locations.first.postcode).to eq(location.postcode)
-          expect(new_absorbing_organisation.owned_schemes.first.locations.first.old_id).to be_nil
-          expect(new_absorbing_organisation.owned_schemes.first.locations.first.old_visible_id).to be_nil
+          deactivated_scheme.reload
+          deactivated_location.reload
+          expect(new_absorbing_organisation.owned_schemes.count).to eq(2)
+
+          # moves active schemes and locations to absorbing organisation
+          absorbed_active_scheme = new_absorbing_organisation.owned_schemes.find_by(service_name: scheme.service_name)
+          absorbed_active_location = absorbed_active_scheme.locations.find_by(postcode: location.postcode)
+          expect(absorbed_active_scheme.service_name).to eq(scheme.service_name)
+          expect(absorbed_active_scheme.old_id).to be_nil
+          expect(absorbed_active_scheme.old_visible_id).to be_nil
+          expect(absorbed_active_scheme.locations.count).to eq(2)
+          expect(absorbed_active_location.postcode).to eq(location.postcode)
+          expect(absorbed_active_location.old_id).to be_nil
+          expect(absorbed_active_location.old_visible_id).to be_nil
+
+          # deactivates active schemes and locations on merging organisation
           expect(scheme.scheme_deactivation_periods.count).to eq(1)
           expect(scheme.scheme_deactivation_periods.first.deactivation_date.to_date).to eq(Time.zone.today)
-          expect(scheme.locations.first.location_deactivation_periods.count).to eq(1)
-          expect(scheme.locations.first.location_deactivation_periods.first.deactivation_date.to_date).to eq(Time.zone.today)
+          expect(scheme.locations.find_by(postcode: location.postcode).location_deactivation_periods.count).to eq(1)
+          expect(scheme.locations.find_by(postcode: location.postcode).location_deactivation_periods.first.deactivation_date.to_date).to eq(Time.zone.today)
+
+          # does not deactivate inactive locations on merging organisation again
+          expect(scheme.locations.find_by(postcode: deactivated_location.postcode).location_deactivation_periods.count).to eq(1)
+
+          # moves inactive schemes and their locations to absorbing organisation
+          absorbed_inactive_scheme = new_absorbing_organisation.owned_schemes.find_by(service_name: deactivated_scheme.service_name)
+          expect(absorbed_inactive_scheme.scheme_deactivation_periods.count).to eq(1)
+          expect(absorbed_inactive_scheme.scheme_deactivation_periods.first.deactivation_date).to eq(deactivated_scheme.scheme_deactivation_periods.first.deactivation_date)
+          expect(absorbed_inactive_scheme.locations.count).to eq(1)
+          expect(absorbed_inactive_scheme.locations.first.location_deactivation_periods.count).to eq(0)
+          expect(deactivated_scheme.scheme_deactivation_periods.count).to eq(1)
+
+          # moves inactive locations of active schemes to absorbing organisation
+          absorbed_inactive_location = absorbed_active_scheme.locations.find_by(postcode: deactivated_location.postcode)
+          expect(absorbed_active_scheme.scheme_deactivation_periods.count).to eq(0)
+          expect(absorbed_inactive_location.location_deactivation_periods.count).to eq(1)
+          expect(absorbed_inactive_location.location_deactivation_periods.first.deactivation_date).to eq(deactivated_location.location_deactivation_periods.first.deactivation_date)
         end
 
         it "moves relevant logs and assigns the new scheme" do
@@ -842,17 +924,47 @@ RSpec.describe Merge::MergeOrganisationsService do
             expect(Rails.logger).to receive(:info).with("\tfake name (fake@email.com)")
             expect(Rails.logger).to receive(:info).with("New schemes from fake org:")
             expect(Rails.logger).to receive(:info).with(/\t#{scheme.service_name} \(S/)
+            expect(Rails.logger).to receive(:info).with(/\t#{deactivated_scheme.service_name} \(S/)
             merge_organisations_service.call
 
             new_absorbing_organisation.reload
-            expect(new_absorbing_organisation.owned_schemes.count).to eq(1)
-            expect(new_absorbing_organisation.owned_schemes.first.service_name).to eq(scheme.service_name)
-            expect(new_absorbing_organisation.owned_schemes.first.locations.count).to eq(1)
-            expect(new_absorbing_organisation.owned_schemes.first.locations.first.postcode).to eq(location.postcode)
+            deactivated_scheme.reload
+            deactivated_location.reload
+            expect(new_absorbing_organisation.owned_schemes.count).to eq(2)
+
+            # moves active schemes and locations to absorbing organisation
+            absorbed_active_scheme = new_absorbing_organisation.owned_schemes.find_by(service_name: scheme.service_name)
+            absorbed_active_location = absorbed_active_scheme.locations.find_by(postcode: location.postcode)
+            expect(absorbed_active_scheme.service_name).to eq(scheme.service_name)
+            expect(absorbed_active_scheme.old_id).to be_nil
+            expect(absorbed_active_scheme.old_visible_id).to be_nil
+            expect(absorbed_active_scheme.locations.count).to eq(2)
+            expect(absorbed_active_location.postcode).to eq(location.postcode)
+            expect(absorbed_active_location.old_id).to be_nil
+            expect(absorbed_active_location.old_visible_id).to be_nil
+
+            # deactivates active schemes and locations on merging organisation
             expect(scheme.scheme_deactivation_periods.count).to eq(1)
             expect(scheme.scheme_deactivation_periods.first.deactivation_date.to_date).to eq(Time.zone.yesterday)
-            expect(scheme.locations.first.location_deactivation_periods.count).to eq(1)
-            expect(scheme.locations.first.location_deactivation_periods.first.deactivation_date.to_date).to eq(Time.zone.yesterday)
+            expect(scheme.locations.find_by(postcode: location.postcode).location_deactivation_periods.count).to eq(1)
+            expect(scheme.locations.find_by(postcode: location.postcode).location_deactivation_periods.first.deactivation_date.to_date).to eq(Time.zone.yesterday)
+
+            # does not deactivate inactive locations on merging organisation again
+            expect(scheme.locations.find_by(postcode: deactivated_location.postcode).location_deactivation_periods.count).to eq(1)
+
+            # moves inactive schemes and their locations to absorbing organisation
+            absorbed_inactive_scheme = new_absorbing_organisation.owned_schemes.find_by(service_name: deactivated_scheme.service_name)
+            expect(absorbed_inactive_scheme.scheme_deactivation_periods.count).to eq(1)
+            expect(absorbed_inactive_scheme.scheme_deactivation_periods.first.deactivation_date).to eq(deactivated_scheme.scheme_deactivation_periods.first.deactivation_date)
+            expect(absorbed_inactive_scheme.locations.count).to eq(1)
+            expect(absorbed_inactive_scheme.locations.first.location_deactivation_periods.count).to eq(0)
+            expect(deactivated_scheme.scheme_deactivation_periods.count).to eq(1)
+
+            # moves inactive locations of active schemes to absorbing organisation
+            absorbed_inactive_location = absorbed_active_scheme.locations.find_by(postcode: deactivated_location.postcode)
+            expect(absorbed_active_scheme.scheme_deactivation_periods.count).to eq(0)
+            expect(absorbed_inactive_location.location_deactivation_periods.count).to eq(1)
+            expect(absorbed_inactive_location.location_deactivation_periods.first.deactivation_date).to eq(deactivated_location.location_deactivation_periods.first.deactivation_date)
           end
 
           it "moves relevant logs and assigns the new scheme" do