Page 45 - C&A's Nonprofit Board Guide

TOO MANY NONPROFITS, TOO LITTLE M&A TOO MANY NONPROFITS, TOO LITTLE M&A

DOES THIS M&A SUPPORT OR ENHANCE Once the organization has had time to
THE ORGANIZATION’S MISSION? explore these thoughts, and if its leaders
decide to move forward at this point, a
Remember why the organization exists in more detailed analysis should ensue. Create If you decide to move forward from
the first place. Think about how the M&A a reasonable and realistic budget for the here, start designing the newly combined
would benefit or hinder the organization. M&A. Capture every cost you can think entity. Gather all contracts and historical
What would ultimately happen to the of including travel, legal and accounting business records from the original entities,
organization if the M&A didn’t occur? fees, additional compensation, etc. Don’t determine if the transaction will be a
Does the merging or acquiring entity have forget to leave room for unexpected costs. merger, acquisition, or joint venture, and
similar goals in its mission statement? Specific details from both entities should create a meaningful name. Who will be
be reviewed, including the latest set of on the Board? How will the assets and
WHAT CHALLENGES DOES THE financial statements, a list of donors, and liabilities from the originating entities
ORGANIZATION CURRENTLY FACE THAT organizational charts, among others. Once be integrated? Which overlapping costs
COULD HINDER THE M&A all vital information has been reviewed, could be eliminated from the combined
OPPORTUNITY AND HOW CAN THOSE consolidate it all into a summary that entity? Build this new organization using
CHALLENGES BE MITIGATED? lays out how the M&A will impact both each entity’s best features. Think about
organizations. This helps paint a picture and location, operational details, and review
Cost is an issue that faces many M&A will ultimately be a crutch in your decision- administrative procedures and agreements.
candidates. Both organizations should be making regarding whether to move forward Brainstorm new long-term and short-
writing up a formal business plan that paints with the M&A. This also shows that you
a picture for a fluid M&A throughout. This have done your due diligence and will leave term goals, as well as your plans to reach
should be prepared in a way that is ready to minimal room for surprises. those goals. What needs to be done to
ensure this new organization fulfills its
present to potential donors who would be mission? Which funders are most likely
interested in providing funds to help with to provide help? Make sure all employees
the process. Ensure the organization doesn’t
miss a beat by reviewing any compliance understand their new roles. Granted, the
requirements with laws and regulations. initial transition might be a bumpy ride, but
through practice and time, the M&A will be
something of the past and your organization
WHAT ADVANTAGES AND DISADVANTAGES
WOULD THE ORGANIZATION will be operating smoothly again.
FACE WITH THIS M&A?
In the nonprofit world, these opportunities
In addition to the expansion of geographic usually come when someone in a key
influence and the impact on a more management position is retiring or an entity
widespread population, some may find is in financial distress. This is a reactive
the advantageous expertise and long-term approach to M&A and the opportunity may
financial stability to be attractive factors. not come forth at the best time for you. If
Disadvantages the organization may want you treat M&A as a routine option for your
to consider include negative reactions nonprofit, you will take a more proactive
from donors or staff, programs that become approach and the opportunity will be there
muddled and don’t differentiate themselves when you’re ready. Gain a competitive
from one another, or a M&A candidate advantage in your nonprofit service area. At
that has goals so far from your own that least consider making M&A a streamlined
the organizations would not consolidate part of your organization’s business
seamlessly. strategy.

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