How TRUST is Both the Driver and Inhibitor in Not-for-Profit Sector Growth Strategies of Merger, Acquisition or Takeover

Abstract

<p>This case study research is based on two not-for-profit organisations wanting to create synergies and efficiencies in back office operations and to increase the offerings of services to existing clients by joining together as one business unit. This study has followed the different stages of the proposed merger or acquisition from the initial signing of the Memorandum of Agreement (MOA), to the strategic planning for the new entity including the potential organisational structure, board structure and executive team recruitment. The method used in this research is the “lived experience”, as the researcher is a member of the Board of one of the organisations considering a merger. The negotiations have varied from the rejection of a takeover, to the proposal of a merger, to the consideration of the larger organisation acquiring the smaller organisation. These decisions were deliberated at great length by both organisations, but the clear driver in all negotiations was TRUST. But this trust also became an inhibitor at times, where trust was used as an excuse to not carry out all due diligence governance processes. This lived experience has shown that Trust is indeed an important factor in any proposed merger or acquisition but will never replace due diligence governance processes. In fact due diligence governance processes enhanced trust, and enabled for more transparent decisions to be reached by both parties at the negotiation table. The not-for-profit sector can learn a great deal from this case study and it should be used by other not-for-profit organisations to put into practice strategic merger and acquisition processes to create an organisation that is run efficiently and for the benefit of their clients, with a combination of trust and good governance practices.</p>