One of the reasons we see so few successful For-Purpose mergers is that there are many myths out there.
Today we are “busting” those myths.
Many strong organisations merge to increase impact, scale services, or unlock new funding – not just to survive. Whilst it can be an alternative strategy when business as usual isn’t working, merging can also be to maximise impact. When we created The Arthritis Movement (from Arthritis NSW and Arthritis Queensland) it was to scale our impact by combining two already strong organisations. It has more than doubled the number of people helped, strengthened the balance sheet and added real energy to the team.
Good mergers create a new, stronger identity or protect the mission and culture of both partners. Changing a brand can be risky, but a thorough stakeholder consultancy process minimises that risk. A For-Purpose merger might be the catalyst to upgrade your brand, your culture and your relationship with stakeholders.
In the NFP sector, mergers are usually collaborative and mission-driven, not takeovers. With no $ incentive for the parties, no one gets rich. All are guided by loftier goals. For-Purpose partners always have some shared purpose – similar missions, client groups etc. By aligning their vision, a merger is an extremely positive outcome for the beneficiaries they serve.
Alas the truth is here there are considerable costs. The nature of the two organisations entering the partnership might inform who pays what. Merging from a point of financial desperation certainly limits your options, and maybe then your merge partner will have to meet the costs. But even better if you don’t have to get to that stage.
Consider if there are far-sighted funders that might cover the merger costs (advisors, legal, branding, systems integration etc). Whilst in the medium to long term, the investments almost always pay off, savings and efficiencies might take 1 – 3 years to realise the initial investment.
Bigger brings complexity. Without careful planning, larger merged entities can lose agility or become disconnected from communities. The beauty of many For-Purpose organisations is the close connection to beneficiaries. This is so valuable and shouldn’t be lost. A good merger can preserve and build on this connection.
Good For-Purpose mergers are strategic, not mathematical. Partners come into a merger with different strengths and weaknesses. Assets, programs, or leadership roles can be blended in various ways based on need and future goals. A “merger of equals” can look quite different to a merger of a small entity into a larger – neither is better or worse, they simply reflect where the partners are at.
Whilst there are quicker models that can be used in crisis situations, a proper merger typically takes 6 – 24 months from exploration to full integration. I know of several aligned organisations who have talked about collaboration and merger for decades, but never got any momentum.
Acting upon opportunities (eg. personnel change, funding challenges/opportunities, changes in regulatory frameworks or the environment they operate in) can often provide the first step forward. In addition, objective, outside voices can be very powerful in moving conversations along.
While some duplication can be addressed and more efficient ‘business models’ built through a merger, many actually protect jobs and services that would otherwise be at risk if organisations kept operating on their own. At The Arthritis Movement we ensured there would be a role for all staff, and some people moved from administrative roles to service delivery which helped scale up our impact whilst reducing ‘overhead’.
Increasingly, major funders and governments encourage mergers when they improve impact and sustainability. If one of your funders raises the idea of a merger, maybe they might consider supporting some of the associated costs (see above!).
Consider the “myths” of For-Profit merging busted. If you’re interested in having an expert in For-Purpose mergers on your side, check out how Loom Consulting can help you succeed here.