Nonprofit Mergers and Alliances, 2nd Edition

Acknowledgments xiii

Introduction xv

Chapter 1 A Valid Strategic Option for the Future 1

Government’s Retreat

Chapter 2 The Freestanding Nonprofit and Other Rugged Individualists 5

Why Nonprofi t Services Are Fragmented: A Story

A Nonprofi t’s Economics Are Part of Its Strategy

Chapter 3 Logic of Integrated Service Delivery 17

Applications of Integrated Service Delivery

Elements of Integration

Chapter 4 Deciding to Collaborate 25

Rescue Mergers

Merger from Strength

Deciding to Collaborate as a Function of Larger Forces

Chapter 5 Preserving Identity 33

Nonphysical Components of Organizational Identity

What Is Not Part of “Identity”—and What Is

Chapter 6 The Role of Funders 37

What Funders Can Do

Funding Collaborations

Models for Funding Collaborations

Quality Assurance through Foundations

Chapter 7 C.O.R.E. Continuum of Collaboration 47

Our Model

Applying the C.O.R.E

Chapter 8 Economic-Level Collaboration 53

Sharing Information

Bidding Jointly

Joint Purchasing

Chapter 9 Responsibility-Level Collaboration 57

“Circuit Riders”

High-Integration Collaboration Models

A Cautionary Note

Chapter 10 Operations-Level Collaboration 61

Shared Training

Joint Programming

Joint Quality Standards

Chapter 11 Corporate-Level Collaboration: Merger 65

Authority Is Concentrated

Offi cial Start Dates May Be Anticlimactic

What It Means to Merge

The Essence of a Nonprofi t Merger

Advantages and Disadvantages of a Merger

Chapter 12 Models of Collaboration: Merger by Management Company 83

Structure

Control and Governance

Advantages of a Management Company

Disadvantages of a Management Company

Faulty Integration in a Management Company Model

Chapter 13 Models of Collaboration: Alliances 93

Structure

Chapter 14 Models of Collaboration: Partnerships with and between Nonprofits 99

Structure

Control and Governance

Special Considerations

Partnerships with For-Profi t Companies

Limited Liability Companies

Chapter 15 Merger Myths 107

We Will Save Administrative Costs

There Will Be Massive Job Cuts

We Will Lose Our Identity

Let Us Figure Out the Structure First

Shhh

Only Failing Organizations Merge

Increase in Mergers Is a Product of an Economic Downturn

Chapter 16 First Steps 113

Geographic Proximity

Absence of a Permanent CEO

Nonoverlapping Markets

Industrializers and Prototypers

Compatibility of Services

Special Assets

Role of Culture

Role of Class

Quick Culture Check

Building Trust

Seeds of Trust: Disclosure, Consultation, and Collaboration

Chapter 17 Merger or Alliance? How to Decide 131

Corporate Control

Chapter 18 First Phase of a Merger: Feasibility Assessment 147

Informal Phase of a Collaboration

Role of Consultants

Form a Collaboration Committee

Why Due Diligence?

What Is a Due Diligence Investigation?

Governance

Finances

Assets

Liabilities and Obligations

Some Financial Red Flags

Valuations

Carrying Out the Valuation

Pro Forma Financials, Including Cash Flows

Regulatory Filings

Human Resources Information

Assess the Feasibility

Chapter 19 Second Phase of a Merger: Implementation Planning 175

Form Subcommittees of the Collaboration Committee

Internal Communication

External Communication

Some Sample Collaboration Committee Structures

Who Will Be the Boss?

Some Tools to Accomplish a Leadership Transition

Once the Selection Is Made . . .

Creating the Formal Agreement

Merger Announcement (Create a Splash)

Chapter 20 Third Phase of a Merger: Integration 205

Time Required for Integration

Common Sources of Resistance

Chapter 21 The Seven Stages of Alliance Development 219

Categories of Alliances

Seven Tasks of Alliance Development

Task One: Initiate, Explore, and Analyze

Task Two: Synthesize and Plan

Task Three: Establish Shared Objectives

Task Four: Develop Working Committee Structure

Task Five: Gain Quick Victories

Task Six: Secure Institutionalize Buy-in

Task Seven: Implement and Evaluate

Chapter 22 Postscript and Conclusion 251

About the Author 253

Index 255