After the Merger: Getting to “Yes” is Only the Beginning

Merger is a valuable strategic option for nonprofits seeking to grow their impact. Since 1998, my colleagues and I have provided consulting support to more than 200 nonprofit partnerships, watching as merger has moved from novelty to mainstream and become common among organizations of all sizes, a legitimate subject of study, and a strategy supported by a growing number of educational campaigns and funder initiatives.

Still, some mergers fail to produce the hoped-for results. These shortcomings have many reasons but perhaps most common is poor execution after the deal is inked. By the time terms are negotiated, legalities are completed, and an agreement is executed, organizational leaders have devoted months to thoughtful negotiation, analysis, and deliberation, so concluding the merger feels like a major achievement. And it is—but it must also be a new starting point, not the finish line.

Post-merger integration brings all the months of negotiation and planning to life. It’s also where a merger succeeds or fails. Yet this critical effort is often viewed as an afterthought and is typically under-resourced. For process-fatigued staff and board members, as well as even the most supportive of funders, it is tempting to see the work of integration as simply part of getting back to the daily business of organizational life after the distractions of the past months. But there is no path back to the “old normal” for a newly merged organization, and a new normal doesn’t just happen on its own; people must intentionally create it.

Only through successful integration will the merged entities truly become one. Integration engages the strategy, people, programs, and systems of the entire newly-merged organization. Whether the primary motivation of the combination was to gain market share, expand program services, increase advocacy capacity, or attract highly-skilled board members or staff, a merged entity must address these fundamentals head-on, persistently, and effectively, to achieve its goals.

The Four Keys to Success

We advise clients to plan around ten functional areas of integration, distilled here into four major categories:

1. Strategy: Almost without exception, mergers are driven by strategy. Increasing impact, leveraging resources, growing geography, and strengthening business models are all key motivations. So, joint strategic and business planning is usually high on the newly-merged organization’s to-do list. Getting strategy right (or even agreeing on a strategy) can be especially challenging when the merging organizations have different data, definitions, and drivers of success. So it is crucial to set the terms of the strategy conversation early on and as clearly as possible. Despite these challenges, creating a strategy is also a great vehicle for the new team to learn to work together.

2. People: Board integration, creating a unified management team, and encouraging staff and volunteers into a cohesive body is the second critical step in the integration process. People coming together from different organizations can be expected to have different understandings of “how things are done,” making cultural integration as important to success as creating new organizational structures and policies. Intentional board and staff integration activities, such as retreats and cross-training, attention to senior leadership team composition, and carefully structured approaches to strategy, systems, and program integration, will go a long way in producing a strong, coherent culture for the newly-merged entity.

3. Program: Integration of two or more organizations’ mission-related work is among the most daunting challenges post-merger, and the most consequential. It may entail the consolidation of some programs and the development of new linkages among others. It could lead to dramatic expansion in some areas while requiring cutbacks or closure of others. When a program or focus of work no longer fits within a newly-adopted strategy, sometimes a program can be transferred to another home. Program strategy and increased impact are key motivations for merger, but the advantages of the partnership will come only through leveraging program alignment and synergies.

4. Systems: The fourth critical step in the integration process is the consolidation of all financial, human resources, fundraising, communication, and information technology systems as well as rationalizing facilities use. Collectively, these areas comprise the unseen but essential infrastructure that keeps an organization humming along. Merger provides an opportunity to review existing systems, which often leads to the realization that it is time (or long past time) for some serious upgrades. Systems integration challenges may require not only upgrading outmoded tools, but also changing deeply ingrained habits and developing new skills.

The good news is that the seeds of successful integration in each of these key areas are planted in the merger negotiations phase. The trust and goodwill forged during protracted and at times difficult negotiations will serve the parties well as they get to work solving problems together. By the time integration begins, the merging organizations should have already developed, at least at a high-level, the following four areas of integration:

• Agreement on their desired strategic outcomes from the merger
• Deeper and more trusting relationships among staff and board leaders, as well as an understanding of respective organizational cultures
• Clarity about programmatic fit, leverage, and priorities moving forward
• Agreement on major systems integration issues, including high-level guidance for what needs to be done, how soon, and who needs to be involved

Still, managing the full scope of activities within the necessary timeframe, usually the hectic first months immediately post-merger, requires a dedicated process, plan, and resources.

Forming the Integration Team

Integration requires keeping the big picture front-of-mind while managing myriad details. It means identifying issues across functions and departments while managing numerous and intersecting timelines. To accomplish all of this, it is usually best to form an integration team, led by the executive director or other C-Suite leader who tasks that group with overall coordination of and communication around the integration process. Because each merging organization has different needs and capacities, there is no single prescription for post-agreement integration success. Some groups may be highly self-sufficient in defining and driving the integration process; others may need to contract for extra help for a fixed period.

For example, when Rainforest Alliance and UTZ merged in January 2018, creating a $40 million global NGO, each assigned a full-time director to form a cross-Atlantic integration staff team. Margriet Glazenborg from UTZ is based in Amsterdam while her partner in this effort, Kiku Loomis from Rainforest Alliance, works from New York City. They coordinate the efforts of managers and the approximately 500 staff located across multiple countries worldwide, as well as a multinational board. Critically, the two formed a close working relationship during the negotiations process, report to the CEO, and model the deep partnership the new Rainforest Alliance seeks to form across the whole organization.

The newly-merged Rainforest Alliance and UTZ management team and board members. (Photo by David La Piana)

Reflecting on their joint role in integration management, Glazenborg and Loomis agree that they play a key role in facilitating the teamwork needed by providing the framework for debate and joint decision-making. Loomis also notes that timing is important, sharing that they set up integration activities with “two-in-a box” paired leadership, which facilitates rapid team integration. “Implementing changes as soon as possible reduces the anxieties staff experience in their integration journey,” Glazenborg adds. “To the extent that you cannot move quickly, providing clear communication can help staff navigate the uncertainties of an integration.”

In smaller organizations the executive director can be more hands-on, such as when Joelle Gomez led the integration of Women’s Center-Youth & Family Services in Stockton, California. Creating specific plans for each functional area and tying these to frequent and ongoing communication about progress and next steps (delivered in staff and management meetings, board meetings, staff and board retreats, and electronic newsletters), not only helped her to oversee and coordinate activities, but kept everyone on the same page and moving forward for a smooth integration.

For Women’s Center-Youth & Family Services, which serves adults and children affected by abuse, the stewardship of client data posed a unique integration challenge. “We had an integration committee [made up of management and coordinators from each one of our programs] bring together every single form and process, so that we could look at them to make sure we were changing all documentation to reflect the new organization, maintaining compliance with funder requirements, and streamlining the forms to the degree possible,” says Gomez. This also gave rise to a major project: the creation of a unified client database that incorporates appropriate levels of protection to ensure legally required confidentiality while enabling staff to coordinate services to meet individuals’ needs.

Whether using a single integration team, or multiple work groups, it is essential that both (or all) merging organizations are represented at every level of the effort. This is more than a formal appearance of fairness. It is a key to building new systems and culture, and to avoiding or responding to the rumors, negativity, and resistance that can sometimes make integration that much harder to accomplish.

Plan the Work, Work the Plan

A solid integration plan is essential, it provides a map to the multifaceted process of creating a new organization out of those that have merged. It includes a clear set of desired outcomes and objectives for each major area of organizational integration, an action plan and timeline for achieving those objectives, and a formal set of parameters guiding management of the integration process itself.

The first 100 days following the date of legal merger are typically critical to success. As noted earlier, some planning around strategy, people, programs, and systems integration may well have begun during the negotiations phase. However, during the first few months after execution, work in all areas must get underway in earnest. Most integration activities extend into the third month, and some, such as culture, will require ongoing attention for the first year to eighteen months of post-merger life.

Communication efforts warrant special mention as they cut across every other area of work in the integration plan. Time and again, organizations that go through mergers learn (sometimes the hard way) that communication is key. Effective communication is critical for aligning staff and board members in a new organizational culture, for ensuring public announcements about the merger are both timely and accurate, and for getting the integration work itself done.

Internally, creating opportunities for staff and board members to ask and answer questions, build mutual rapport, and forge a new culture can be particularly powerful. Externally, thoughtful communications planning means that authorized spokespeople have a common understanding of the messaging and their roles in sharing news of the merger. Communication should be early, often, and intentional, targeting board and staff members, clients, funders, donors, and other key stakeholders.

Defining, creating, and nurturing a new organizational culture is of utmost importance and, much like communication, pervades all areas of effort. Every merger brings together different cultures, which are sets of lived, real-world experiences. The key to successfully integrating these cultures is to recognize them as distinct ways of seeing, and of being, which first need to be made explicit, and ultimately must be brought into harmony as something new.

When mergers turn sour, it’s not because the organizations cannot integrate their financial systems or personnel policies, but because they tend to want to hold onto their own individual cultures and thus fail to create a new one. Leaders of the merged organization must resist the view that organizational culture is a natural phenomenon that will simply “evolve in its own time.” The strength of the old cultures will make this difficult. Leaders must be intentional and diligent in seeding the new culture, tending it, and helping it to take root.

Attention to communications and culture must be ongoing. “Everything we were doing around integration had a relationship to the new culture and building that culture,” says Gomez. “All those activities built a sense of unity, which helped us see where there were opportunities for further integration to better serve our clients.”

Making Merger Matter

Where merger was once viewed through a lens of scarcity (to avert an imminent financial crisis, for example), it is increasingly valued as a positive strategy for seizing opportunity. But the promise of a merger cannot be realized without intentional planning for the post-merger reality that awaits. As with any strategy, execution is everything, and for mergers, the integration process that follows the merger itself is essential. A merger is hard work, but also exciting, and if guided by an executive-led implementation team with a robust plan, it can bring to reality the aspirations that inspired the partnership in the first place.

Read more stories by David La Piana.