A+ Coaching

Let’s talk merger!   Yikes, I know.   It is not four letters but could be, right!

I still recall the very moment I talked to our board chair about a merger idea I had.   He immediately reacted with, “have you not been telling me something?  Why on earth would be thinking about merging?  Do you know the impact it could have on you personally?  So why?”

• Were we in financial trouble – no;
• Was it critical, no;
• Would it impact my role, yes;
• Would it serve our mission better, yes!  
• Did that prove to be correct – absolutely!  
• Was it easy – heck no!  

So why did I broach the subject?

It was the best plan to accomplish our mission and increase our collective impact.  It was the right thing to do to serve our market.   As a leader, I must put serving the mission above all else and as I explained that to my chair, he understood and came full force behind it.

Still it was an uphill climb and I hope to share some thoughts on it to help others with the journey.  I truly believe that nonprofit leaders, who are ahead of trends, will explore either strategic alliances or mergers as the way to really advance the mission of their organizations.    Look at the per capita ratio of nonprofits in your area.  Look at the mission similarities within your community.   As you study the landscape, you will recognize what I am saying.  Combined can mean greater impact.

A few years ago, we started seeing funders calling for strategic alliances.   They were recognizing how many similar missions were asking them for funding.   While they didn’t push mergers, they were strongly encouraging partnering.  It became a competitive advantage in grant proposals.  Today, the best grant proposals are including alliances.   So why is the word merger so scary?   Perception seems to be the answer to that question.

Thomas McLaughlin wrote in his book, Nonprofit Mergers and Alliances, “to some in the nonprofit field, the idea of mergers is scandalous and distasteful.”   The perception that strategic restructuring and mergers show weakness, leadership failure or financial distress is strong.  Few nonprofit leaders step forward and explore the idea for fear of what their donors or board members will think.   I say opposite – strategic alliances are helpful, and mergers should be explored. 

The Nonprofit Times reported that, “In 88 percent of mergers studied, interviewees from both organizations felt the new, merged organization was better positioned to achieve goals and increase impact.”  (www.chicagonpmergerstudy.org)  

When did I come to the conclusion that a merger made sense?   A similar nonprofit and my nonprofit came together to work on a common project.   I realized that while our methods differed, our mission was the same.  I understood that together, it could be a powerhouse.  This proved to be the case as assets grew, donor bases expanded and the mission was served significantly better post-merger.    This outcome was all because I took a risk to put it on the table.  

While in the moment, it was tough, exhausting and stressful, I managed to note some things that made the merger idea work.

1. The project based strategic alliance helped identify similarities and recognize the benefit of a mutually useful relationship
2. The lack of efficiency and amount of redundancy surfaced as our staff and board members came together for the project.
3. The project showed that our unique brands blended well into a common mission
4.  The project challenges and successes created a good case to bring forward to my board chair
5. My board chair had witnessed the project, which helped him visualize the case. 
6. A collaborative mission-based seed was planted among all project participants that was nurtured throughout the alliance
7. Discussions happened over a year of similarities, differences, working together models, agreements, legalities, etc. 
8. During the strategic alliance, the groups came together, fell apart, came back, fumbled over logistics and details, and struggled over control and alignment.   This set the stage for the same drama that happened throughout the merger process.

What were the biggest challenges in the merger?

1. Board alignment and territorial egos
2. Staff nervousness and motivation over future
3. Name and brand.   What a struggle!! 
4. Lack of staff and board communication
5. Details.  No kidding, the devil is in the details.

The key lessons learned by me included:

1. Mission and vision have to be front and center at each meeting. 
2. Trust is glue
3. Board chairs must be an advocate
4. Senior staff have to be involved
5. A neutral facilitator is essential

Nonprofits have critical work to accomplish.   Why not start with writing out the answers to these questions,

1.  What does the landscape look like for serving our mission?
2. What are the similarities in the organizations serving that mission?
3. What are the differences?
4. What could a strategic alliance look like?
5. What alliances do we have currently that could be stronger?

Working toward the same purpose in a competitive fashion could ultimately harm our missions, especially when another recession hits.   By coming together, we can achieve so much more!   So why not explore the idea of a merger?   I truly believe we have more to lose than gain by not bringing the thought forward.