Page 45 - Sustainability and entrepreneurship for CSO's and CSO networks Cambodia 1 November 2018

Loans, joint ventures and franchise
For feasible business, you can apply for commercial loans, based on a business plan and collaterals. Business people seek investments from relatives, business partners and bank loans. Setting up joint ventures with co-investors can be a good opportunity if you have not enough assets (capital, knowledge, networks, staff, and market position) to start on your own. Seek for complementary investors to start. Franchise: as part of your business model you can start a social enterprise, a laundry service for example. When the business runs well, you can open more laundries, you can also decide to franchise the next laundry to another businessman who opens the business under your brand, with your laundry machines, detergent, publicity, administration etc. You share risks, have less employees on your pay list and get your commission.
Consortia and federations
Forming a consortium with other CSOs to apply for funding is almost standing practice. A consortium (temporarily) scales and complements your organisational and implementation capacity. It may give you a lead competing with other applicants. Important is to know and trust each other; when winning the tender, you have to do the job together. In cases where there is a lead agency and one or more implementing agencies, as a lead agency you have to be careful delegating power, activities and budgets to the implementing agencies. You need to remain flexible when circumstances require you to reconsider your project design, your budgets and/or your activities. Forming a federation (or a network) gives you the advantage of bringing expertise, organisational capacity, staff, logistics and marketing under one umbrella. The NGO Education Partnership (NEP) is such an example, where national and international CSOs and government collaborate to improve education in Cambodia. A federation becomes a disadvantage if it becomes static and ritualised or when many partners try to operate under one umbrella while having different cultural and operational backgrounds and conflicting, competitive interests.
Takeovers and mergers
“In a general sense, mergers and takeovers (or acquisitions) are very similar corporate actions - they combine two previously separate firms into a single legal entity. Significant operational advantages can be obtained when two firms are combined and, in fact, the goal of most mergers and acquisitions is to improve company performance and shareholder value over the long-term. The motivation to pursue a merger or acquisition can be considerable; a company that combines itself with another can experience boosted economies of scale, greater sales revenue and market share in its market, broadened diversification and increased tax efficiency. However, the underlying business rationale and financing methodology for mergers and takeovers are substantially different.
A merger involves the mutual decision of two companies to combine and become one entity; it can be seen as a decision made by two ‘equals’. The combined business, through structural and operational advantages secured by the merger, can cut costs and increase profits, boosting shareholder values for both groups of shareholders. A typical merger involves two relatively equal companies, which combine to become one legal entity with the goal of producing a company that is worth more than the sum of its parts.
A takeover, or acquisition, on the other hand, is characterised by the purchase of a smaller company by a much larger one. This combination of ‘unequals’ can produce the same benefits as a merger. Unlike in a merger, in an acquisition, the acquiring firm usually offers cash to buy the other organisation”. (Gallant)
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