Many research articles on the internet recently are exploring the growing interest in Mergers and Acquisitions (M&A) for non-profits. They tend to compare the rate of M&A’s with the for profit world, which grew in the latest economic downturn. Findings suggest that the rate for non- profits is much lower than for the profit world. But there have been enough successful efforts that the case studies are now available. ( See ‘Leaders Matter” by the Bridgespan Group, March, 2014).
In the collection of articles in the above issue of ‘Leaders Matter”, a particular series called ‘Mergers that Make a Difference” summarizes how certain non-profits overcame the stumbling blocks to merging. Some of the hard tasks were:
- Sourcing funds for due diligence to proceed;
- Identifying the toughest issues, such as, positions for key staff in the new formation, the roles for Board members, brand identities, and cultural differences.
- Taking the time to think through and plan for these important issues and not sweep them under the rug.
- Getting outside help; not just for financial issues but for the people challenges as well – organizational structure and branding. Skilled facilitators can add real value.
While these issues loom large in a struggling economy, and may be a necessary process for a struggling non-profit on the verge of folding, some findings are showing positive results that even a thriving agency may wish to consider.
What has transpired to make mergers and acquisitions appear more favorably to non-profits?
- Funders are more likely to consider the benefits of collaboration. In the past they looked for projects, especially new ones. Now they are willing to consider the increased benefits to the community as an important criterion.
- When successful, mergers may help to expand a non-profit’s mission, program capabilities, outreach, and revenue.
A good detailed description of this transformation can be found in the ‘Stanford Social Innovation Review’ of March 4, 2014. They also outline other forms of collaboration which I will address next time.
Author: Adrianne Geiger DuMond, Executive Coaches of Orange County, www.ECofOC.org