Is it Time to get Merger Curious?

(This blog is particularly aimed at organisations with a defined social purpose such as charities, social enterprises, and other non-profit organisations who are in receipt of public funds)

For organisations who exist to deliver a social purpose, now is the time to look hard and identify if you are best placed to deliver those outcomes for the beneficiaries. Would the social mission be better served, and the valuable activities made more sustainable for the people who need them, if you merged with another organisation?

I am passionate about the need for and value of the 3rd sector. I believe that the 3rd sectors ability to reach deep into communities, engage meaningfully, timeously and compassionately with people and communities to address real social need was never more apparent than during the lockdowns. As we emerge, the stark reality is that statutory health service will be protected and funds for the 3rd sector will not. The question is, how can we preserve the best of our social mission activities in a time of shrinking public finance and growing social needs?

I completely understand this is not what exhausted leaders and boards want to hear after being simultaneously, utilised, applauded yet undervalued during the pandemic by statutory bodies. All I can say is that we advocate prevention and early intervention because we know it is so much more difficult to get the best outcomes for people who are in crisis. It is also so much more difficult to think strategically and form viable collaborations and mergers in a crisis too.

I recommended the charity I led consider merging before I left. Don’t get me wrong, I think what we did was special, that we had a culture and brand that we had worked so hard to establish, we had an extremely healthy volume of reserves and we delivered incredible outcomes for so many people over many many years. However I no longer believe that the organisation is the best placed entity to deliver the social mission going into this new future. And that’s just it – the mission has to be more important than the preservation of the business itself.

The options for organisations, when they are able and willing to take the time to consider them, are considerable. Mergers and formal collaborations do take time, they do have risks and there are costs but they can also be hugely positive for those involved if done well. It can lead to innovation in operational models, efficiencies and add critical mass behind the particular cause you and a partner organisation share a passion for – rather than being forced to be competitors.

There are no Tinder sites (yet) for social firms to find a suitable partner, but this is one of the benefits of exploring this early – you can afford to be choosy. There are some legal and technical aspects, but the largest amount of the process is exploring the options, asking the difficult questions and facilitating the journey from concept through to well-into any subsequent merger.

Getting the board – on board is usually the first task. Understandably many directors feel they want to build out of the current situation and see it as a defeat if they do not preserve the organisation. That all needs to be taken into account, plus high levels of integrity and confidentiality are a must at this stage.

The call to action I am advocating is revisit your purpose. Do you really know what you are trying to achieve? Can you identify what is unique about how you are addressing the social mission you are striving to tackle? Is your model still relevant now and do you think it will remain relevant for the future? Unless your answer to all 3 is an unequivocal YES, then its time to get merger curious.