Mergers that mean more than survival

The distressed economy has brought to the surface the topic of non-profit mergers and acquisitions/affiliations (M&A) as a means by which struggling nonprofit organizations could survive the economic downturn. A recent Bridgespan study, Nonprofit M&A: More Than a Tool for Tough Times, polled 117 nonprofit executives on this very issue and found that 20 percent stated that it could play a role in their response to survive these lean times. Bridgespan suggests that while some nonprofit leaders may consider M&A reactively, “the time is also ripe for the leaders of healthy organizations to consider M&A proactively—as a way to strengthen effectiveness, spread best practices, expand reach and—yes—to do all of this more cost-effectively, making best use of scarce resources. Unfortunately few organizations think of M&A in this way.”

A key focus of Sunny Hills’ strategy for the last decade has been to seek out like-minded mission-based organizations with which we could align. The way we see it, our options to realize the agency’s long-term plans for growth are: one, to grow organically by developing our own programs, or two, to grow via strategic use of M&A. It would be incorrect for me to say that Sunny Hills has favored one path over the other; rather, our approach has been an intentional blend of the two. Chiefly, we see M&A as a strategic tool by which the agency can 1) maintain our relevance by staying abreast of market demands 2) enter new markets, including new geographic territories and/or new service areas and 3) leverage our administrative infrastructure.

Over the years, Sunny Hills has explored a number of opportunities; some we pursued, others we walked away from for one reason or another. But my point is this: as an agency, we are strong believers in the potential of M&A to advance our mission and increase our social impact. Too often, the concern over bridging two organizational cultures stymies even the best of intentions. In our experience, there are ways to manage the integration so that the best of what each agency has to offer is retained and ultimately enhances the profile—some might even say the “mojo”—of the new merged entity.

Most recently, Sunny Hills merged with Bay Area Youth Centers (BAYC), an East Bay agency providing supported housing, case management and integrated mental health services to transitional age youth. Coming soon, Josh Leonard, Executive Director of BAYC, and I will share our perspective on the merger process, what worked well and why. Stay tuned…