Considering a Merger

 

Dave Blankenhorn

Dave Blankenhorn

In the corporate world mergers and acquisitions are a part of doing business as a means to enhance the economic return to the owners. Ideally combining two like businesses results in ecoconomies of scale with reduced expenses on increased revenues thereby creating higher productivity and profitability. Does this always happen? The answer is no but enough that the process continues.

While the nonprofit sector has mainly avoided this activity there are organizations that should consider doing so when they know of like firms performing the same mission and competing for the same dollars to achieve the same ends. By combining resources more can be done to benefit the end users.

If your nonprofit has identified a possible partner, form a board committee to research the subject. Knowing people in the other organization can be very helpful and can be used as contacts in moving forward. Consider working with a knowledgeable outside party for this project. When contact is made and there is interest from the other party form a joint committee of key board members and staff from each side to decide on the various issues. This is where the hard work takes place.

Both management and board members need to be objective and open minded. The easy part is analyzing the combined financials and identifying the savings for both groups. The hard part is resolving the people and ego issues. Who will be the ED? Who stays on the Board? How do we make the staff cuts? What name survives? Can we blend the cultures? Will certain donors drop out? The most difficult challenge in this process is to remain collegial and not let strong emotional feelings get in the way. Negotiations are always difficult.

Hopefully a deal can be struck. If not the process can still be unifying for the organization and can strengthen ties among its board and management.

Author:  Dave Blankenhorn, Executive Coaches of Orange County, www.ECofOC.org