Edition 5
A merger is one of the most significant moments any charity faces. It comes with tensions as well as excitement, invites existential questions, forces fundamental compromises, and leads to permanent and irreversible change. To work, mergers should be treated with caution and thought through patiently and diligently.
This guide, written with the help of legal and charity experts, aims to help you do just this.
M&A as stewardship, not absorption
Bonnie Chiu shares lessons from the combination of three social impact organisations
Key insights
- Discussions have inherent value – regardless of outcome
Periods of economic uncertainty have shown that organisations are more likely to survive and, over time, thrive if they are open to asking pivotal questions about themselves such as: Who are we? What are we trying to achieve? What is the best vehicle to use to make that happen? Asking these questions honestly is valuable in itself – merger may turn out to be the right answer, or it may not. - Coming together should be guided by the needs of beneficiaries
Charities have a relational and place-based component to their work which merger discussions ignore at their peril. Even if you enter merger explorations on the back foot – preoccupied, say, by survival rather than growth – it’s still important to work out what the change could mean for beneficiaries, and to make the case for that. For example, keeping a service going might not be the boldest ambition, but it may be the right one for now. - Don’t underestimate the emotional work
Merger involves ‘head’ work – meetings, plans and decisions – but also ‘heart’ work – loss, anxiety and shifts in power. Paying attention to each organisation’s history and traditions, and being deliberate about which cultural elements to carry forward, helps the two sides come together. Ignore the emotional side and it will resurface anyway – usually as delay. - Know when merger isn’t the answer
However worrying your prospects, merger may not be a silver bullet. Do you and your partner(s) have enough in common, enough shared values, to trust in the potential of a merger to work? There is no shame in concluding that you do not. For organisations whose aims are no longer appropriate, or for whom sources of public funding on which they were dependent no longer exist, or who have not been able to make a transition to a new environment or find a sustainable alternative business model, it may be more responsible to close down rather than compete with others or struggle on.
