I am a strategic re-structuring consultant and I love to collect stories about nonprofit mergers and partnerships. Daily I find cases in my in-box from all over the country, and most are so run-of-the-mill that they are not distinctive enough to write about in my blog, but today I have one that is. It comes via The Maui News, June 21st, which reported that three nonprofit mental health and substance abuse agencies on the island of Maui announced a merger of their organizations - Maui Youth and Family Services, Malama Family Recovery Center, and Aloha House. They are consolidating because "it will make us stronger," according to Judd Cunningham who will be the new CEO of the combined organization.
A lot of their merger story is ordinary. Their motivations for a merger were quite typical - they wanted to improve back-office administration, create seamless programs for their clients, and grow their services. As with other mergers, they combined all three boards into one entity and selected one board member, Peter Cahill, the former chairman of the MYFA Board, to lead the consolidated governing structure. Then the board selected Cunningham from Aloha House to be the new CEO of the combined entity.
But this merger is different in one very interesting respect: the name. In most consolidations the nonprofits would agree to choose one name for the merged organization, but not in this case. The three agencies expect to operate under their individual names.
Why would they choose do that?
I can think of two reasons. By keeping the individual names they are sending a message to the community that the merger has not caused any changes in the programs which they have come to rely on. In fact, the merger impacts administration and governance of the programs, and not the individual programs themselves. If they were not paying attention, most people in the community would have no idea that a merger occurred at all, and that is ideal from a client perspective.
Another reason to consider keeping separate identities is the concern about inappropriately mixing customer groups. The clients of a family agency may not want to integrate their children into a nonprofit which provides addiction treatment services to adults. By maintaining separate identities and separate program locations, the community does not need to be concerned that the client populations will be inappropriately consolidated into a single organization or location, and the consolidation can then proceed in the areas where it needs to most: administration and governance.
It will be interesting to see how this strategy of keeping the three names works in the future. If you are aware of a merger that has kept separate identities, write and let me know how it has worked out.
Jean:
I am aware of another merger in which the both groups kept their names -- one became a subsidiary of the other, but both saw the value in keeping the name of the acquired organization and over time strengthening the brand connection between them. It's a fairly common strategy in the private sector and where it is not followed, often the acquiring company looses a great asset, the brand name customer loyalty of the acquired brand.
Jeff Schwartz
President
Kela Associates
310 Piliwale Rd.
Kula, HI 96790
jeff@kelaassociates.com
www.kelaassociates.com
Posted by: Jeff Schwarz | August 17, 2008 at 10:13 PM