Top tips for achieving success through merger

Gail Jackson, deputy CEO at YMCA Lincolnshire, shares her experience from the perspective of a small charity leader of merging with a larger charity.

Mergers come in many forms and are so often viewed with suspicion – with the terms to describe the process including “take-over” or “acquisition”, it is no wonder that charity mergers are often considered a desperate last act. The subject of mergers as a means of achieving better charity outcomes has been a particular interest of mine over the last 10 years in charity leadership positions, having witnessed first-hand the increasing sense of rivalry between charities competing for decreasing amounts of funding. Having recently had the opportunity to lead through this process, I wanted to share my top tips in the hopes that it will inspire others to consider merger as an opportunity for innovation and growth.

In 2017 I became a first-time CEO of a 93-year-old regional community development charity at a crossroads. The charity had for many years enjoyed core funding but like so many others, had felt the effects of austerity when nearly all core funding was cut. My first year was devoted to refreshing the vision, mission and business plan and identifying a clear path forward including new potential routes to funding. We achieved a surplus position and despite the many challenges faced, the future was looking cautiously optimistic. So why is it that I then posed the idea of a charity merger to my board? It wasn’t because I couldn’t see a future alone for our charity, nor that we were in financial difficulty – we’d enjoyed many recent successes in fact. It was because I could envisage even more being achieved through partnership; by joining with another charity to stretch our ambition, pool our resources and in particular our routes to funding, and build on our collective skills leading to bigger and bolder impact. The board needed to see merger as a positive choice.

My first tip is to engage your board with a strong vision of merger potential by opening up the thinking and debate on what might be possible through true partnership.

The concept of merger was introduced as an ambitious vision for the future and having been through a robust governance refresh, my board were energised and ready for innovation. They recognised immediately the potential for growth of impact through merger. The biggest challenge would be identifying the right partner.

Charities most often choose merger partners where services being delivered are the same or similar. Given our driver for merger was based on the potential for innovation, we very purposely sought a partner where there would be a synergy of values and charitable objectives, but where there were also differences. Our ultimate partner was not an obvious match, but our respective boards and leadership teams came to see it as a unique and exciting opportunity for innovation for both charities.

My second tip, therefore, is to be ambitious about your choices: it is often differences, rather than similarities, that lead to creative opportunities for change.

As a relatively small charity, we wanted to identify a merger partner that was bigger and more financially robust than we were, to help secure a stronger combined future. Although this would fit the definition of a take-over, we also knew that we had much to offer our merger partner.

My third tip is to ensure to think about the language used to describe the merger.

Although we all appreciated the process of “take-over”, both boards and senior teams approached it in the spirit of a merger – and used this language throughout – both with each other and with our respective staff teams as well as externally –  mutually recognising and appreciating one another’s strengths and the value the merger would bring to both. Red lines were agreed early on: no job losses, retaining branding and integrity of services offered and creating minimal change for beneficiaries.  To further cement this, our merger partner warmly accepted the majority of our board onto their own – this clearly demonstrated, from the top down, their commitment to the spirit of a merger. For us, this approach has reaped many benefits, including a smoother transition and high staff morale and engagement throughout.

I’m sure many will be curious about the financial challenges inherent in mergers. It is true that there are unavoidable costs to merging, including staffing resource and legal costs, and it is our duty to ensure we invest our resources wisely. It is easy to assume that we don’t have the necessary skills or experience to lead our charities through merger, and many appoint consultants and external agencies for this reason.

My fourth tip would be to build up your own level of expertise on merger process – and make use of the many free resources available.

While financial investment is unavoidable, there are ways and means to keep costs down. We managed to keep costs manageable by completing as many steps as we reasonably could in-house. The level of financial investment made to achieve our merger was a justifiable one as it will help us to achieve and sustain our charitable outcomes over the longer term.

My fifth and final tip is about leadership support.

This for me has been the single, biggest learning point throughout the process and critical to achieving merger success. Alongside having tenacity, courage of conviction and resilience – one must be prepared to accept a great big dose of humble-pie – ego has no place in charity mergers. Ultimately, there cannot be two CEOs. As charity leaders, we should be compelled to think bigger than ourselves and our own jobs –– we must put achieving the best outcomes for our beneficiaries at the heart of all of our decision making. In my case, choosing to merge with a larger charity meant giving up my status as a charity chief executive. I won’t pretend that this has been plain sailing, but there certainly are things that have made it easier. A supportive and encouraging board, an open and honest relationship between charity CEOs and external mentoring and advice, including from ACEVO, have all been instrumental.

We are in the early days post-merger and there is still a great deal of work to be done –  but the potential for development and impact that inspired us all at the start of this process, remains in very sharp focus, and we are revitalised by finally having taken the plunge– the possibilities suddenly seem endless.

Photo by Brandi Redd on Unsplash

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