Last week, I wrote about the “people factors” in non-profit mergers, In Non-Profit Mergers, People Trump Positioning – including board of director perceptions of the market, future executive team roles, and loss of organizational identify. My colleague Howard Shiffman shot me a note with a great addition to the discussion. His comment:
“The only other reason boards don’t want to merge is the history of the organization. This is implied as loss of identity, but it is deeper than this. There is this feeling that they are on the board to preserve what happened in the past and to bring this forward into the future. A merger is not seen [as] commensurate with this idea. Somehow the mission feels less achieved if a merger is considered. So it is about mission, past and future. They miss the present compelling reasons to move into a merger.”
I think this is a valid point. Identifying from the perspective of the board of directors isn’t only about the future – but the concern that the contributions of the organization in the “past” will be invalidated by a merger where there is loss of identity. And, like the other “people factors” in non-profit M&A, this concern must be addressed in the early stages of discussion for a possible merger or acquisition to happen. While this issue is more about “emotion” than facts, I do think the facts about organizational longevity are revealing:
- “The average life expectancy of a multinational corporation – Fortune 500 or its equivalent – is between 40 and 50 years” (see THE LIVING COMPANY: Habits for survival in a turbulent business environment).
- “A full one-third of the companies listed in the 1970 Fortune 500, had vanished by 1983 – acquired, merged, or broken to pieces” (see THE LIVING COMPANY: Habits for survival in a turbulent business environment).
- “The average lifespan of a company listed in the S&P 500 index of leading US companies has decreased by more than 50 years in the last century, from 67 years in the 1920s to just 15 years today” (see How To Stay In Business For 100 Years).
- Based on historical U.S. IRS data, in a period of five years, 16% of U.S. non-profit organizations go out of business.
These statistics (which shocked me a bit when I did the research) speak to the relatively temporary nature of commercial institutions, whether for-profit or non-profit. The numbers themselves don’t address the emotional toll of organizational mergers – whether you’re a non-profit board member, an entrepreneur, or an employee of an acquired organization. But they certainly explain why reports of organizational acquisition, merger, or dissolution make the trade press and the local press every day.
For more resources on mergers and acquisitions, check out:
- Should Your Organization Explore Mergers & Acquisitions?
- Where Does ‘Big’ (& ‘Collaboration’) Fit In Planning?
- 10 Keys To Successful Collaboration
- Planning To Sell Your Organization?
- How Do You Pick The Right ‘Partner’?
- Collaboration Model – The LAST Decision You Should Make
- Friends Or Foes? – The Ten Commandments of Collaboration and Competition
- 88% Of Health Care Executives Plan To Pursue Mergers & Acquisitions During 2014
- How To Successfully Join Forces: Planning For & Managing Mergers & Acquisitions
- Planning A High-Performance Merger: The CEO Perspective