Acquiring a non-profit organization is a bit like running a marathon – it takes plenty of patience, stamina and perseverance. The definition of endurance is the ability or strength to continue or last, especially despite fatigue, stress, or other adverse conditions. This certainly defines my experience with merging or acquiring non-profits! One never knows how long it will take, how tired the parties will become, how stressful and demanding it can be (especially given other responsibilities), and how many unexpected challenges, large and small, arise in the process. However, like a marathon, the journey always provides great insight, increased strength, enhanced confidence, and a celebration at the successful completion. So, let’s explore that journey.
To embark on the merger journey, one must be willing to take risks. The entire process, including the outcome, carries risks that can halt the merger completely. Perhaps the biggest risk presents itself at the start of the journey. Consider all that one has to evaluate prior to deciding to run (or not!) a marathon. The same can be said for taking on a merger. Considerations such as the mental and physical toll, financial implications (fundraiser), and environmental impact must all be explored and addressed.
As a CEO, making a decision to acquire another entity is so much more than a growth consideration. It requires an evaluation of resource capacity, financial stamina, risk-mitigation, culture challenges, and, most importantly, passion. I can objectively answer most of these evaluation areas with numbers, charts, process tools, and logic, with the exception to this being passion. In my opinion, passion is the most critical part of the evaluation. I ask myself the following questions – Do I believe in their mission? Will I be proud to speak about their legacy? Are they, or do they, have the ability to meet my quality levels? Do they fit into our strategic plan? Will my Board support it? And finally, will I be proud to welcome their clients and staff into our non-profit? These questions are always the most challenging but they provide the pivotal point on merger decisions. All of them must be a resounding YES!
What is “due diligence?” Not only is it the next phase of the journey but it is where the detailed analysis take place. This is a pain-staking process that cannot be underestimated in terms of details, follow-through, and evaluation. Running a 26 mile course requires a thorough understanding of all conditions one will face so that a good decision can be made. Where the first part of the journey is about fit, mission, and passion, this process is all about numbers, facts, statistics, and truth. Seeking the truth and understanding the liabilities (all types) becomes the cornerstone of a strong merger. Again, there are risks. Decisions will need to be made about learnings – some will require more resources, some will be deemed inconsequential, and some will cause the merger process to end. If you get through this phase successfully, consider yourself fortunate!
So you’ve decided to run or merge – now the risk becomes more significant! You must now follow it through and move into full action. If you are running, get to the starting line and put one foot in front of the other – quickly! If you are merging, let the myriad of steps begin. It can feel as fast and exhilarating as a marathon at times, as well as slow, demanding, and never-ending like a marathon. There are many legal, financial, human resources, communications, and logistical steps that have to be perfectly executed and completed on-time. This is where the passion comes back into the picture to fuel the need to push through this process with precision. The closer the merger date gets, the more intense, tired, and stressed it can become – just like the last six miles of that very, very long run! One begins to wonder if it is truly worth it, as new obstacles come into play on a daily basis. Patience, stamina, and perseverance become the mantra and the CEO must lead by example.
As you cross that finish line or get the stamped Secretary of State confirmation of the merger, it is met with exhilaration, exhaustion, and a true appreciation for a job well-done. Suddenly, the weight of many months of planning and worrying are gone – it is complete and feels great! Like a warm-down after a marathon, much of the closing work still needs to be completed so while it is not over, it definitely feels calmer, within control, and executable. It truly is time to celebrate!
So if you think you have what it takes, start your journey, create your path, run fast, and with great heart….
By: Anne Colwell, CEO Cape Cod Child Development