Are Mergers on Your Mind?

Conversations concerning mergers are now occurring across the country more frequently than ever before. We are seeing collaborations and merger discussions across every sector, including healthcare, human services, and even higher education. We believe there is real value in considering mergers as a strategy, but many organizations may not be prepared for the journey. This leaves many to wonder: What needs to be done while considering a merger?

There is no quick answer to this question due to the numerous factors and variables involved. However, we’d like to offer you the following tips from our own merger facilitation experience to help get you started:

  • Engage your Board. The Board of Directors is the single most important stakeholder when considering this type of strategy, so setting a plan for Board engagement and communication is critical. Even more important is making sure that the Board is part of this process from its inception and that the engagement remains consistent. 

  • Your why. What needs are you trying to fulfill in your organization? What value and benefit would a collaboration add? Understanding what your organization needs and how it can be improved, provides the foundation to support assessment and decision making.

  • Build it or Buy it. For those organizations that have reached a size where organic growth is no longer a viable approach, considering mergers as a means of addressing growth strategy, cost savings, quality, or competitiveness is a viable solution.

  • Understand risks and capacity demands. It takes a significant amount of time to build strategy, find candidates, manage the deal, and then integrate once the merger deal is finalized. This could translate to an organization being unable to undertake any other initiatives during this time. Factoring this in to planning avoids the pitfalls of being overburdened or strained.

  • Answer difficult questions first! Once the process is underway, there are several critical questions concerning the surviving entity that need to be answered in order to avoid wasting time: Who will serve as the Executive Team and Board Officers? What will the surviving brand be? Who will serve on the Board of Directors? Answering these questions early on will make decision making much easier as the process moves ahead.

  • Make the tough decisions. Once the merger contract is signed, the implementation process begins. It is during this phase that decisions need to be made around restructuring. These decisions are often very difficult and stressful but, with the right approach, frustrations can be minimized. For our insights on restructuring during an Organization Design project, click here.

  • Mergers are about people. An organization’s culture is formed over time through shared values and mergers begin with the people who make up that culture. In part, a merger is the unification of two cultures, so you’ll need to allow ample time for due diligence. During this phase difficult questions will arise as an in-depth review of financials, governance, human resources, organization charts, and planning documents will occur. This is also a time to become more familiar with people and their abilities through engagement, communication, and feedback.

Considering a merger is a significant decision for any organization but preparedness is key. A successful merger will help an organization eliminate competition, acquire talent, save money, expand geographic impact, and improve quality of service, among other countless benefits. Most importantly, a merger can ensure survival in a highly competitive marketplace and allow organizations to continue the positive impact they have on society.

If you have an interest in learning about merger strategy and discussing whether it is a viable approach for you, please connect with us here.

The Heat is On!

The pace of mergers and collaborations in the market is heating up. Costs, regulations, technology, and the need for talent are now leading many to the conclusion that merger strategy is an option to be considered when planning for future sustainability. So much so, in fact, that the majority of leaders we speak with are now including the topic as part of their Board of Directors meeting agendas. 

As anyone with merger experience knows, they are complex and involve many moving parts. From the initial strategy conversations concerning the reasons to merge, all the way through to how to successfully integrate two organizational cultures, people, and systems; we have found that preparation is key and experience is essential. 

Long before any strategic discussions take place, Leaders must determine their organization’s merger readiness. Knowing the As-Is state of an organization will dictate both when merger discussions should take place and with whom.  Leaders must know and be able to answer the following 7 questions as the first step in the merger process:

  1. Why would we consider merging at this point in time? 

  2. What is the business case and strategic value for a merger?

  3. What are our strengths and weaknesses as an organization?

  4. What are we looking for from a partner?

  5. Would we considered being acquired? Merging with an organization of similar size? Or acquiring a smaller organization?

  6. Is there value to merging with a partner outside our sector or with an organization that provides the same services?

  7. What opportunities exist in the market now and do they align with our strategic need?

While these are some of the most difficult questions to answer, they are also the most important.   Having a clear and concise view of an organization’s merger readiness will reduce frustrations and increase efficiency when initial discussions begin. 

Mergers in the nonprofit sectors often have different considerations compared to the for-profit world. In addition, we have found that organizations can face dramatic differences in the level at which Leaders, Boards, and Stakeholders are engaged and participate in the process.

We recommend that Board of Directors be intentional and clear with merger strategy to ensure all Board members and key Leaders are operating with a common understanding. It is critical that all parties involved have clarity on the answers to the questions below when moving forward and setting terms for a potential merger agreement:

  1. What are we willing to consider regarding leadership changes?

  2. What are we willing to consider with regard to our brand?

  3. What are we willing to consider for Board seats?

A successful merger or collaboration between organizations of any size can: eliminate competition, expand service offerings, acquire talented staff, reduce expenses, improve quality of service, expand geographic reach, diversify revenue, improved service delivery, and allow for greater investment in technology.

Most importantly, a merger or collaboration can ensure survival in a highly competitive marketplace and allow organizations to remain relevant and viable in the years ahead. 

Community Quarterbacking

For firms focused on achieving their internal goals, it is easy to let big-picture thinking get lost in the fray, and opportunities for collaboration can be missed. The “community quarterback” model typically refers to an actor aligning resources to address the various elements of community development behind a single project, amplifying the impact a project can make. This can be a lead agency in a community, a third-party acting to organize multiple competing service providers, or a public-sector leader seeking to amplify the impact of public investment in a space. Once a leader is identified and everyone on the field begins to trust their decision making, new opportunities to get points on the board are identified, and the entire community can score. 

Finding your quarterback

A good quarterback needs to fit a few criteria. They need to be trusted by all stakeholders within a community. They need to have a clearly articulated vision for the future; a strategic plan that aligns the goals of every community partner and translates these goals into value adds for each organization. And finally, and maybe most importantly, the quarterback needs to be invested in remaining engaged with all stakeholders throughout the execution of whatever strategy is decided upon. Finding a partner that meets all of these specifications may seem impossible, but in reality, identifying existing overlap among the missions of community organizations can be done with the help of the right supporting organization. Engaging with a strategic planning partner like Curtis Strategy to conduct the stakeholder identification can help to find the best candidates to quarterback in your community, or help you position your organization to take the lead.

Quarterbacking stakeholder alignment

Quarterbacks see and understand the entire field ahead of them; they are calling the plays for their offense, keeping an eye on the defense, and calling audibles when they think a quick adjustment needs to be made. In housing, it is impractical to expect any developer to be able to understand the full picture, especially when a firm measures success not by profit on a project, but outcomes related to human development and long-term success of tenants. Finding a quarterback for your process lets you focus on the hard-work of delivering outcomes to your constituents, and gives you a partner to keep their eyes downfield. In the hustle to address the already busy day-to-day workload at a nonprofit developer, it is easy to miss a signal from a potential partner, or not see a chance to change formation to make your organization more effective. 

Breaking down barriers

Its easy to get caught in the silo of our own work; housing developers are focused on building new units of housing, human service organizations measure their success with counts of the number of people reached, and other economic development stakeholders are caught up in the rush to measure success to ensure continued funding. This approach leaves value on the table, not only for constituents who navigate a complicated roadmap to have their needs met, but also for the community development organizations that are missing out on ways to connect their services to improve the outcomes that led to the isolation in the first place. When a quarterback is leading, outcomes can be better connected, and organizations can multiply their resources through collaboration.

With a community quarterback leading, a community of service providers can be connected, and new partnerships can be formed. When considering how to best serve your organization’s constituents, you aren’t focused solely on metrics that count people reached, homes built, or products delivered; you’re seeking to improve outcomes that are impacted by a complex range of factors. Better outcomes are driven by smarter planning; so when service providers working in the same community open themselves up to new partnerships and strategies, everybody can win.