Why the "M" Word Needs to Be on the Table More Often or Do You Love Your Clients Enough to Consider a Merger?
Three cases of mergers in the City of Richmond
Many organizations, from small nonprofits to large corporations, find themselves in various degrees of change, growth, and struggle throughout their lifetime. Regardless of whether you feel called to expand your organizations reach or aren’t sure how you will make payroll in six months, the answer to your problems could very well be “the M word”. That’s right, we said it…merger.
The thing about mergers and acquisitions is that there is always more than one side and no one size fits all. Every organization is different, as are their circumstances, their options, and their outcomes.
Maybe you are looking to add a new service to your existing nonprofit, but aren’t sure how to build the capacity to achieve it? There might be an existing nonprofit that can come onboard and help. Perhaps you are an emerging nonprofit that is competing for funding and public support with a larger established nonprofit? Maybe that larger organization would be interested in working with you to help turn your visions into actions. Or possibly you’ve been around awhile and things just aren’t working like they used to? There might just be an organization out there that loves what you do and wants to help you keep doing it by bringing you onboard.
Over the past year The Spark Mill has been hired by three organizations to assist them during their merger or acquisition process. As two of them are still in the midst of that process, the details remain anonymous.
CASE 1: VIRGINIA HOUSING ALLIANCE
The newly formed Virginia Housing Alliance. This was a nine-month process facilitated by an outside firm. The Spark Mill was brought in to facilitate the first joint board retreat between the then Virginia Housing Coalition and Virginia Coalition to End Homelessness with a goal of walking out that day with an agreement to move forward and vote to support the merger. This merger was successful because the organizations were willing to put in their due diligence work and focus on cultural transformation by assembling a core team of representatives from both boards who worked for months on the issue and placed a high focus on transparency and board engagement. You can read the case study here.
CASE 2: LOCAL NONPROFIT WITH SUSTAINABILITY CONCERNS
An anonymous local nonprofit that presented with sustainability concerns. The Spark Mill started by gathering a significant amount of information from key stakeholders including staff, donors, funder, board, and clients. After presenting this information we shifted to testing the local temperature for potential merger possibilities. We have since been facilitating ongoing conversations, implementing short term and long term budget evaluations, instituting a 12 month action plan and facilitating negotiation terms with multiple participants. In this case the process of considering a merger led to a business model transformation. Our work with this nonprofit has included heavy involvement with staff and board members.
CASE 3: SMALL NONPROFIT + LARGE NONPROFIT
An anonymous small local nonprofit that presented with some overlapping services of a larger more well known nonprofit in the area – leading to questions of effectiveness and sustainability. The Spark Mill began by working with a core team of board members to get an idea of where this organization was, what was most important to them, and what their future possibilities might include. Since then, we have been facilitating the negotiation of merger terms with the larger nonprofit. This process will result in a soon to be approved MOU. This process has been successful because both organization came to the table openly and worked through the sticky details of a merger with one focus - what was best for Richmond.
WHAT DID THESE THREE CASES HAVE IN COMMON?
1) Significant work to engage in an internal inquiry process re: value vs. capacity
2) Active board and staff involvement
3) External facilitation of negotiation of terms
We have chosen to make this our Valentine’s week blog because we want your organization to love yourself enough to have the scary conversations. Determine if your current or future circumstances call for a reevaluation of your business model or if you should be considering a merger/acquisition.
If you find yourself having that conversation and don't know what to do next – shoot us an email or give us a call. The Spark Mill would love to chat over a cup of coffee and help you figure out where you are and how to make the next leap.