Monday, August 24, 2009
I recently facilitated a workshop for the Foster Family-Based Treatment Association with over 35 senior administrators for treatment foster care programs across the nation. During the workshop, I found that nearly everyone in the room had discussed the idea of a merger or acquisition (M&A) over the past six months.
About half of the administrators were actively exploring an M&A. The other half have been approached by other provider organizations seeking a merger or seeking to be acquired. For many, the current economic crisis has been the impetus for this increased interest in M&A. Although this may be one compelling reason to consider mergers or acquisitions, there are a number of critical issues that need to be considered before going forward. First, you need to clearly decide why your organization is considering M&A. Is it:
To enhance efficiencies and reduce administrative costs?
To improve market share?
Because organic growth is not possible due to a saturated (or shrinking) market?
To purchase clinical and/or programming expertise?
Because the founder or long-time CEO is leaving and this is a natural transition plan?
Because funding sources in many states prefer consolidation to deal with fewer providers, and integrated services to allow for ‘one-stop shopping?’
Any or all of the above may be sound arguments for pursuing an M&A strategy, but it is necessary to explore an M&A as part of your organization’s overall strategic planning process. Ask yourself, “Is everyone clear about the strategic rationale for considering a merger or acquisition, and about the potential benefits and barriers? Does a M&A strategy advance the organization’s mission?” If your organization has not formally developed a M&A strategy as part of its overall strategic plan, I would suggest that you do so. This should include the M&A strategic goals, approach (being acquired or acquisition strategy), and criteria for strategic partners. This is a critical decision to make during a critical time.
Steve Howe, M.S.W.
Senior Consultant, OPEN MINDS
Additional Free Resource
To read about Florida’s interagency coordination agreement impacting foster care education, access, “Five Florida State Agencies Sign Compact To Improve Foster Care Education.”