A merger process is driven by leadership:

Creating the willingness to even engage in a merger process is an act of political advocacy. Certain individuals with authority in each organization have come to believe that a merger may well be a good thing for the people served by both organizations.

These individuals effectively push both organizations to make the investment in the merger inquiry.

Obviously, consultants brought in to assist with the process should not be advocates for the merger itself. “Success” in a merger process is the execution of procedures that will be perceived to have had a high integrity by the participants – no matter what the result.

Early meetings between the consultant and the presidents and executive directors of the merging entities should generate the list of draft preliminary agreements about the merger process that will go to both boards to kick the process off.

Don’t expect too much from data and research:

Individuals -especially generalist board members – tend to be uncomfortable making decisions until they think they have “all” the information. There is a tacit assumption that more is better.

Data and research will not prove a merger good or bad, right, or wrong. In any merger inquiry, board members must make a very basic, yes-or-no judgment in an environment of uncertainty and risk. Yet a decision to merge is rarely based on data and information. This raises a host of paradoxical questions as to the source of any decision.

In short, due diligence is a multifaceted concept. Information is generated that illuminates aspects of both organizations. But the most subtle and important dynamic revolves around a “sense” about whether the merger would be good. This comes from the sheer investment in attention, thinking, and discussion.

Due diligence may well inform, but will never prove the following:

• Availability of funding: Organizations find that they cannot project funding streams into even the near future.
• Needed future programs: Organizations find that various “gap analyses” and “needs assessments” prove little. Need is a highly debatable social and political construct, not something that can be proved.
• Economies of scale: Organizations find that there are many variables in making such calculations. Even the more linear-thinking accountants will have difficulty being definitive.
• Relative strengths of each organization: Organizations find that various analyses containing long lists of each organization’s respective strengths, weaknesses, competencies, values, opportunities, and threats are labor-intensive and generally inconclusive. Meetings end with lists.
• Congruence of organizational cultures: Organizations mistakenly think that major investments in internal surveys, interviews, and discussions can determine the “fit” of the two organizational cultures. Such methods will be inconclusive. A process of listening to different points of view within the organization can be valuable. The assumption that organizational fit can be proven will waste time.

The truth is that board members must convert a lot of messy, unrelated information into a simple, deeper sense of whether the merger is either good or not good. Yes or no. The final vote is always as simple as that.

Without early agreements to limit due diligence, members will quickly find themselves in an endless quest of gathering information.

Rely on experience:

On every board, there are usually members who have had experiences with long, convoluted processes and who can help their peers understand the leap of faith that is always part of a decision to merge.

As the process heads into its latter stages, participants begin to make comments such as, “It seems like the right thing to do,” or “I don’t get a sense of there being a big problem.” Or conversely, “It’s just not making sense to me.”

A merger is an entrepreneurial act. A merger inquiry will fail every time if board members remain critically scrutinizing and analytical. Instead, participants must learn to lean forward, get excited, and be willing to act while accepting the essential uncertainty and risk within any decision.

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