Mergers are sometimes necessary in the housing and homelessness sector, for strategic or financial reasons. But mergers are fraught with challenge and need to be handled carefully. At the London Housing Foundation we have helped a number of organisations with complex mergers over the last few years. Here are our key rules for a successful merger!
1. Senior people in each organisation must maintain excellent communication and act in harmony. In particular, negotiating positions should be cleared internally before being shared with partners. Offers made and then withdrawn can seriously damage good relations between partners.
2. Each partner needs to agree a core team to manage merger talks. Having the same people work on the negotiations throughout helps to build trust and understanding.
3. There should be a ‘rapid response’ approach to decision-making on both sides, with well-understood rules for delegation. This helps to ensure the process does not get delayed.
4. Partners should be clear at each stage about whether negotiations are exclusive, and stick to their position. Most negotiations start as non-exclusive and end as exclusive. Other approaches can work if they are explicit.
5. Partners must disclose significant fundraising activity during the negotiation period. This helps to prevent confused messages. Once in-principle agreement to merge has been reached, partners should not be fundraising for an independent future.
6. Partners need to be conscientious in identifying and communicating any hidden deal-breakers. Partners can work with deal-breakers they know about, but it is very difficult to deal with problem issues that have not been declared. In our experience organisations don’t so much hide deal-breakers as fail to mention ones they think are obvious.
7. Partners must deal early with the thorny question of who will lead the merged organisation. It is important to deal with the CEO, staff leadership team and board roles.
8. Both parties need to recognise that mergers in the voluntary sector are not negotiations for commercial advantage; they should be driven by shared overarching goals. Everyone should focus on how the merged organisation will bring about the delivery of the shared vision, rather than attempt to preserve the ‘heritage’ of the two organisations.