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Mergers as a Strategy for Success Toolkit

Developed and provided by Mission + Strategy Consulting

How to Successfully Navigate Your Merger

The decision to merge is a big one, and the process of successfully bringing two (or more) organizations together is rarely straightforward. Mergers are a strategy for organizations seeking to strengthen their long-term financial sustainability, increase the blend and depth of coverage of the services they provide, trade complementary skill sets, strengthen board and staff leadership, expand geographic reach and footprint, or stand out in a crowded field.

This toolkit is designed to help users understand the opportunities and challenges of merging and serve as a reference point along each stage of the merger journey. Access the tools provided on the path, and learn new skills to help you on your merger journey. The toolkit is divided into three chronological stages based on the merger strategy process:

  • Me

    The Pre-Merger Stage

    When a solitary nonprofit organization analyzes its own strategy options, including a merger, and decides which organization(s) to merge with

  • Me+You

    The Merger Negotiation Stage

    When two (or more) nonprofits are now at the table and are learning about each other and deciding whether to proceed to a merger negotiation or not

  • We

    The Merger Negotiation and Implementation Stage

    When two (or more) nonprofits have completed the negotiation process, voted to merge, and begun integrating the organizations

  • As you follow the merger path, please note the stoplights , which indicate decision points. Also, each step along the path has been assigned to a
    Staff member or a
    Board Member.

Finally, the process recommended here has been successful for many nonprofit leaders; however, feel free to alter it to fit your particular needs.

Identify Critical Organizational Issues Create a Merger Committee Getting the Help You Need < I n t e g r a t i o n P r o c e s s I d e n t i f y Due Diligence Items Each B o a r d V o t e s o n Closing Documents Identify Merger Costs Seek Board A p p r o v a l for LOI Seek Board Approval for a Merger Strategy Tool Learn About Merger Strategy Tools Info Selecting a Merger Partner Tools First Conversation a b o u t Merger with Staff Info Tool A p p r o a c h P o s s i b l e P a r t n e r s Info V i s i o n f o r M e r g e r Info P r e p a r e a n LOI Tool Tool E x c h a n g e D u e D i l i g e n c e I t e m s Info I d e n t i f y N P M e r g e r A t t o r n e y Info S t a r t I n t e g r a t i o n M e r g e r F u n d r a i s i n g Info P r e p a r e C l o s i n g D o c u m e n t s Info P r e p a r e D u e D i l i g e n c e R e p o r t a n d S h a r e Info Tool B r i n g i n g B o a r d s a n d S t a f f s T o g e t h e r Tools P r e p a r e P r o g r a m P l a n Info D e s i g n A d m i n i s t r a t i v e P l a n Info C r e a t e H R Plan Info me S e e k B o a r d A p p r o v a l f o r M O U a n d B u d g e t we m F o r m J o i n t S t a f f I n t e g r a t i o n C o m m i t t e e Info P l a n n i n g S e s s i o n f o r Integration Tool D e s i g n i n g a N e w W o r k P l a c e C u l t u r e Tool P r e p a r e a C a s e S t a t e m e n t Tool F o r m J o i n t N e g o t i a t i n g C o m m i t t e e Tool me y ou N e g o t i a t e a n MOU Tool


Identify Critical Organizational Issues



Create a Merger Committee

We recommend that you create a Board committee to assist with reviewing a merger strategy for your organization. This can be composed of two or three individuals with knowledge of, or experience with mergers, but importantly who are respected and trusted by the full Board of Directors and who have an open mind about a merger strategy.


Approach Possible Partners

Remember that approaching a prospective partner is as easy as calling someone up to have coffee. We suggest you start the conversation by saying, “I’d like to have a conversation with you about how our two nonprofits could potentially collaborate even more closely together than we have in the past. Would you be willing to have coffee with me to explore this?”


Getting the Help You Need



Vision for Merger

Develop the theme of your shared vision together. This is a short-term vision, geared for three years out, that expresses what the merged organization will achieve (greater reach, continuum of services, increased quality in administration, etc.). This will propel you forward.


First Conversation about Merger with Staff

Maintaining a transparent relationship with the staff is critical. That is why after an LOI is signed, it is usually good to share the news with the staff. You are a long way from a decision, so be sure not to forecast if the merger will take place or not. And don’t ever lie.


Form Joint Negotiating Committee


Prepare Program Plan

Consider such questions as: which programs will you be keeping as they are? Which will you be combining? Which will be subsumed by another? What will be easier or harder to fund if the format is changed? Prepare staff program committees to develop the plan.


Design Administrative Plan

What is the plan for finance/accounting? Information technology? Database integration? What is the facilities plan? Identify the staff teams to develop the administrative plan.


Create HR Plan

Consider such questions as: what positions currently exist in each nonprofit and how will they be consolidated? What will be the new org chart? What job descriptions do you need to update? How will salary and benefits differentials be addressed? The goal is to have employees feel their concerns are addressed and that there is one “company handbook” on day one of the merger. What is necessary to ensure that happens?


Identify Due Diligence Items



Exchange Due Diligence Items

Each organization will identify their own process for completing their due diligence. This can be a Board committee composed of volunteer lawyers and accountants, or fee-for-service professionals engaged by the nonprofit. Each nonprofit identifies the items they wish to review, and then provides the requested items in a limited period of time and answers questions through the due diligence period.


Prepare Due Diligence Report and Share

Each nonprofit's due diligence committee should report the results of the due diligence process. Note that areas of concern should not necessarily be seen, in and of themselves, as reasons to abandon the merger, but viewed as issues to solve between the nonprofits involved.


Identify NP Merger Attorney

In nonprofit mergers, it is generally thought that once an agreement in principle is arrived at there is no need to introduce opposing counsel. Instead, the practice is to hire or appoint one attorney with nonprofit merger experience who represents all the parties and to have the parties sign a waiver of conflict acknowledging that they are being represented by the same person.


Start Merger Integration Fundraising

This process should begin as soon as possible, at least quickly after the MOU is approved, to give the new organization the capital it needs to invest in the systems, personnel, and activities to implement the merger. It will take time to raise the funds, and to fully implement the merger, so the sooner you start the better.


Prepare Closing Documents

The attorney will prepare all of the closing documents which will depend on the model of merger you choose, your bylaws, the MOU, and the laws for the state where your nonprofit is incorporated. These documents will be legally binding, and therefore it is imperative that your Board members fully understand the decisions on which they will be voting.


Form Joint Staff Integration Committee

The Joint Staff Integration Committee should be composed of the key staff decision makers from each nonprofit, and those most in support of the merger. Other members of the staff executive team can be “ad hoc” members of the committee and participate as needed. Typical functions represented include: Executive, Operations, Finance, Programs, Technology, Quality, Facilities, Development, Human Resources, Marketing/Communications.


Planning Session for Integration



Designing a New Work Place Culture