To Merge or Not to Merge Industry Updates

Authored by Corrine Siddles – Principal, Audit and Assurance

William Buck recently held a special panel presentation of ‘To Merge or not to Merge’.

The panel discussion was facilitated by Kevin Robbie (Director, Think Impact) and featured key members of the sector who have been through mergers in recent times:

  • David Crosbie (CEO, Community Council for Australia)
  • Paul Ronalds (CEO, Save the Children)
  • Jayne Myer Tucker (founder JMT Inc. and former CEO of Good Beginnings)
  • Mark Watt (CEO, Whitelion)

An audience of CEOs, CFOs, Senior Executives and Board members gathered for the discussion on the pros/cons, potential pitfalls of and lessons learned from mergers.  The event touched on many practical case studies, induced plentiful discussion and questions from the crowd.  A snapshot of some of the key points raised on the night are detailed below.

Consolidation within the not for profit sector is seen as being inevitable.  With increased levels of competition, reduced levels of government funding and declining levels of giving, smaller organisations are struggling to thrive.  The consensus from the panel was that significant change will be taking place in the next 5 -10 years.

Regardless of whether an organisation is poised to enter into a transaction, when considering the current status in the industry, organisational leaders need to be ready and open to the idea of a possible merger.  There is often significant lead time required when entering into such a transaction, organisations need to commence discussions from a position of strength, it’s normally too late once the organisation is distressed and failing.

Boards need to ensure that their organisations are adaptive to change.  As a first step it’s essential that an environmental scan is performed in readiness.  This will ensure that the Board and all involved understand the key internal and external factors impacting the organisation and assist to highlight key objectives.  This process may also identify that other collaborative options may be better suited over merging.  These could include opportunities to enter into partnership arrangements, share real estate or back office functions or enter into an auspicing arrangement.

Above all else, the key success factor is ensuring the focus remains on mission and purpose throughout the process.  Quite often the Board is somewhat removed from the organisations mission and can lack this vision.  It is therefore imperative that there is a strong relationship between the CEO’s, and open communication is maintained at all times.  The organisational structure and mechanics shouldn’t form the focus, but rather a means to achieve the final goal.

A recommendation was made to employ independent person to oversee the process towards the end of the merger project.  This person should not be looking at the transaction from a legal perspective but as a mediator with a commercial background to ensure that all key areas have been addressed and dealt with fairly.

Put personal or organisational differences aside and work towards achievement of the end goal.  The cultural approach in this scenario needs to be to that of collaboration.  If there is a larger organisation involved it shouldn’t necessarily be over ruling the smaller.  Systems and processes of both sides should be considered during the due diligence process.

Don’t underestimate resources required once the deal has been done, practically integrating can be much harder than anticipated.

Change is upon us and leaders need to embrace this, be bold and ensure the focus remains on strategy execution and the achievement of the overall mission.
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