What percentage of business partnerships fail? Depending on which source you refer to, the failure rate is in the 40-80% range. These are not confidence building statistics. Why so high? Last week I wrote that you can increase the likely success rate of your collaborations by using a structured process (see 10 Keys To Successful Collaboration all members).
Yet even with the right process, you still need the right partner. So, how to pick? There is no secret formula – but I think there are four “traps” to avoid when considering an organization to work with on a merger, acquisition, or other collaboration:
Don’t overlook potential collaborators – Collaboration can come from anywhere – mental health, chemical dependency, and developmental disability providers are crossing into each other’s territory. Industries outside the health and human service field are also starting to compete for behavioral health and social service resources. And, managed care is organizing providers into larger, full service entities that are better able to compete. All of these offer the chance to team up with organizations you may be inclined to overlook. Who is your competition? They should also be on the list of potential collaborators.
Don’t focus your collaboration on social ties – I’m not saying you can’t collaborate with someone you know, like, and respect. I’m saying that it is important to understand that every collaboration should have a specific, stated business purpose. Additionally, joining forces with another organization because it “might” help one or both of you survive, or committing to a “loose” collaboration without a well thought out strategy won’t cut it.
Don’t collaborate with organizations you don’t trust – Or, look at it this way: Don’t “date” an organization that you wouldn’t want to “marry.” It rarely makes sense to pursue collaboration discussions with an organization if you would never consider merging with them. Keep in mind this isn’t the same as personal trust. Can you depend on the other organization’s leadership, service lines, profitability, geographic service area, customer markets, operational competencies, and positioning?
Don’t waste your time with a bad match – Most of the time it takes research and the due diligence to “do things right” before you know if another organization is a good match for a collaboration. But, if you have to spend more than six months “planning” a collaboration, it probably isn’t going to work. This is not to say that organizations should skip corners, but collaborative opportunities cannot be kept alive indefinitely. If you decide to merge, plan it well and execute it promptly. If not, save yourself time and money, and cut ties as soon as possible.
It’s easiest to avoid these pitfalls by doing your strategic thinking first, and collaborative action second (if at all).
For another free resource, see: How Big Is Big Enough? all members