August 18, 2025 • 25 mins
Nonprofit organizations face unprecedented challenges in today's uncertain environment. With financial pressures mounting and workforce shortages continuing, many organizations are exploring strategic partnerships as a path forward. But what separates successful nonprofit mergers from failed ones?
The answer lies in mission alignment. The most effective mergers begin not from financial desperation but from a shared vision of expanding impact and improving service quality. As one expert puts it, these partnerships create situations where "one plus one equals three" - allowing organizations to serve more people, improve quality, expand reach, and innovate in ways they couldn't accomplish alone.
Take the case of three small IDD providers in Maine who recently merged to become the state's largest provider organization. By combining forces, they've retained their local community presence while upgrading technology, improving benefits, and enhancing service consistency. This exemplifies how thoughtful mergers can preserve and strengthen an organization's mission rather than diminish it.
Getting there requires navigating complex human dynamics. Boards must transition from routine oversight to strategic leadership, which means creating focused task forces, providing education about the merger process, and ensuring members don't let personal fears derail progress. Staff communication presents equally delicate challenges – share information too early, and you risk unnecessary anxiety; share too late, and you undermine trust essential for successful integration.
Outside expertise proves invaluable throughout this journey. Beyond technical specialists in legal, financial, and HR matters, strategic advisors who understand nonprofit culture can keep everyone focused on the mission when tensions rise. They serve as both architects and confidants, providing CEOs a safe space to express concerns they can't share with their teams.
As we navigate this challenging landscape, remember: "You're either at the table or you're on the menu." Having a growth strategy isn't optional anymore. The most successful organizations proactively seek partnerships that allow their missions to flourish beyond any individual leader's tenure. Join us to learn how your organization can approach mergers as strategic evolution rather than surrender.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:03):
Welcome everyone to the Nonprofit Leader's Guide
podcast.
I'm your host, scott Light.
Our theme for this episode Inthese uncertain times, what can
organizations do to improvetheir chances of success in a
potential merger?
Now, to partly answer that, I'mgoing to tee up an article from
the Nonprofit Times and it'stitled 10 Keys to Success for
Nonprofit Mergers.
The keys range from trust,being mission-driven to paying
(00:27):
attention to culture and doingyour homework, so we've got a
lot to dive into.
I've got two terrific expertguests today joining me and
joining you.
Stacey DiStefano is the founderand CEO of Consulting for Human
Services.
That's a national advisory firmguiding providers and investors
through strategic growth,mergers, market intelligence and
(00:49):
modernization in the behavioral, health and IDD sectors.
A trusted thought partner toC-suite leaders across the
country, stacey brings deepexpertise in system
transformation, organizationalsustainability and values-driven
expansion.
Karen Carlone is the directorof Boundless Advantage.
Her former roles include chiefexecutive officer of Southern
(01:11):
Maryland Community Network,chief operating officer of
Cornerstone Montgomery and vicepresident of market intelligence
at Open Minds At BoundlessAdvantage.
She brings over 30 years ofdiverse experience in health and
human services.
Boundless Advantage.
She brings over 30 years ofdiverse experience in health and
human services and also in herrole here.
She ensures merger transitionsare smooth and mission centric,
(01:32):
so we're certainly going to talkabout that as we go.
First, welcome to you both.
It's good to have you here.
Speaker 2 (01:35):
Good to be here, thank you.
Thank you so much.
Speaker 1 (01:37):
Boundless has developed all kinds of
strategies and resources tosupport partnerships with
like-minded organizations.
So let's jump into this.
I'm going to come back to partsof that top 10 list that I
mentioned off the top here andwe're going to kind of thread
that through the conversation.
So I've got a quote that I lovefor both of you to kind of, you
(01:58):
know, touch on this right outof the gate, and it's this quote
the most successful mergers aremission driven.
That sounds simple, but we knowit is very complicated.
So in your expertise, stacey,why don't you start us off here?
In your experience, yourexpertise, what does that look
like?
What does a mission drivenmerger look like, and can you
(02:18):
provide some examples of mergersthat indeed improved mission?
Speaker 3 (02:26):
Yeah, certainly the most successful merger that I've
seen support organizations thatreally start from that place of
mission alignment, not fromfinancial desperation and not
from looking at a P&L.
So a mission-driven mergerreally just means that the
organizations involved, theysort of see a clear path to
doing more of what matters tothem and that could be serving
more people, could be improvingquality, expanding their reach
(02:46):
or innovating in ways that theycouldn't do alone.
And a great example, just apress release this week I'm
working with three small IDDproviders in Maine and they've
got long, proud histories intheir community but all of them
individually kind of strugglingwith that workforce shortage,
you know Medicaid issues thatwe're all dealing with now,
leadership transitions andrather trying to wade through
(03:09):
that crisis individually.
What they did was come together, you know, with our support, to
form a more unifiedorganization.
So they are going to be merginginto one which will create the
largest provider organization inMaine and by doing that they've
retained their local presence.
But they've upgraded thingslike technology and you know
(03:29):
different insurance benefits,things for the folks that they
hire and certainly the folksthey support.
And I think the most importantthing there is the quality of
life for the people they servereally improve because now they
can offer a more consistent,coordinated support and lower,
you know, administrativeoverhead.
So it really makes sense andit's an area where one plus one
(03:50):
makes three.
Speaker 2 (03:50):
Well, I certainly agree with Stacey's perspective
on how mergers can really growthe organization's capacities in
so many ways.
I think successful mergers arean opportunity for an
organization to deeply engagewith its mission and the value
that that organization brings tothe community, both now and in
(04:12):
the future.
Engaging with a larger or morestable organization can
sometimes offer the chance toachieve possibilities that a
smaller organization might notbe able to do on their own.
And for my part, I would givean example.
In my previous role as the CEOof a small semi-rural behavioral
(04:33):
health organization, we hadgrown in size, we had doubled
our revenue and tripled ourservice area, but we were not
able to achieve the goal ofdeveloping integrated services.
We had a number of differentcapacity and financial issues in
meeting that goal and we choseto merge with a certified
community behavioral healthclinic in another county and
(04:57):
that gave us the opportunity tooffer integrated services and
grow our scale.
And then, as a smallerorganization, we brought some
specific areas of expertise tothe joint organization, and that
organization is thriving tothis day.
Speaker 1 (05:13):
That is terrific perspective out of the gate.
Let's dive in a little deeperto that article I mentioned and
I'll come to this.
And it said said boards andboard chairs have to be
advocates in order for themerger to be successful.
So what are the best practiceshere?
What are the do's and don'tshere when it comes to boards and
(05:34):
board chairs?
Speaker 3 (05:35):
Well, I can jump into that.
I think the board is always thewild card.
You know, we we have abouteight transactions in play right
now here at CFHS and everysingle one of them has a
different board dynamic.
Some organizations you know thesmall legacy nonprofits who
have folks on there 30 years,family members in service, all
the way up to multi-state youknow very sophisticated, high
(05:58):
business acumen boards.
It changes the dynamic as youwalk forward.
It changes the dynamic as youwalk forward.
So during a merger, boards ofany size really need to evolve
from an oversight to more of astrategic leadership role.
And that's difficult for some,but I think the best ones are
the ones that can get educatedearly, that can stay mission
focused and don't negotiate froma place from fear, but really
(06:20):
stay focused on that place, fromvision.
And if they can do that, theboard really plays a critical
role in the success or thefailure, to be honest, of a
nonprofit merger.
So I would say, based on that,one of the best practices that I
can think is making sure theboard understands their role
during that merger process.
The CEO is taking them on ajourney, the CEO is leading and
(06:41):
the board is supporting there,so they move from that routine
governance you know, quarterly,monthly, whatever it is that
they're meeting to being morestrategic decision makers and
really I would say, culturestewards and ambassadors for
that change.
And in order to do that, itreally requires the education up
front.
So some boards just don't haveany experience with M&A and it's
(07:02):
a good CEO who gives them thatopportunity for education, to
learn about that M&A process,including the risks, but really
focus on the potential and whatsuccess looks like.
And I do have a couple of do'sand don'ts from experience.
Do you want me to outline them?
Speaker 1 (07:17):
Sure.
Speaker 3 (07:18):
I would say do create a clear board task force or
some kind of working group sothat decision-making is nimble.
You know you don't want 17board members having to find
consensus for every decision.
So some kind of a task force,you know, giving them the tools,
data, metrics, real-worldexamples, but having a focused
group of board members who arereally acting as champions of
(07:40):
the transaction and don't letboard members kind of negotiate
from their personal fear.
I've had lots of instanceswhere a board member had an
experience in their day job of amerger went bad and they carry
that into the transaction forthe organization.
So we've got to really carvethat out and give those some
boundaries so they keep thoseout of that experience.
(08:01):
I've also seen post-mergerproblems because board concerns
weren't voiced early enough.
So I'd say have those hardconversations first and boards
you know really need supportlike staff.
Do.
So if you bring in an outsideadvisor or somebody to guide
them through the process, givesome perspective, even a coach
sometimes can you know,individually help members get
there as far as being on boardwith the decision, that can
(08:24):
really help make all thedifference.
Speaker 1 (08:26):
Okay, karen, go ahead .
Speaker 2 (08:28):
I agree with everything that Stacey is saying
and I think that you have anopportunity to set the stage for
a successful process with yourboard by thinking about your
board recruitment, developmentand communication early on.
I would say the do's aroundrecruitment is recruiting a
board with a wide variety ofprofessional and lived
(08:50):
experience and being intentionalabout filling roles that will
support that strategic processlater.
And then, in the area of boarddevelopment, making sure that
you're regularly sharingbriefings with your board from
state associations and industryexperts to set them up for
strategic discussions when apartnership is on the table and
(09:14):
a little don't to throw in isdon't expect your regular
cadence of board communicationto be enough during merger
discussions.
Like Stacey's saying, I thinkyou need a task force and it's
an efficient way to keep theboard abreast of what's going on
throughout the process toanswer those questions, so that
(09:34):
you don't end up with some ofthose post-merger pains that
she's talking about.
Yeah, good advice there.
Speaker 1 (09:40):
Yeah, so a little bit for both of you and our
audience here has heard me talkabout my former media days.
So I was a journalist fornearly 30 years and my next
question is about when staffstarts to hear, or maybe
something is publicized about amerger and are bringing up in.
With my old experience, I wouldsay from about the year 2000 to
(10:00):
2020.
And 2020 is when I left themedia.
But over those 20 years therewas probably more media
consolidation in those twodecades than there had been in
the last 100.
And I can remember, you know,being at a particular station
and you would.
Something would go public, You'dhear something on a business
channel or something like that,that you know station XYZ is
(10:20):
being bought by AcmeBroadcasting and it could go one
of two ways and it did overthose years where, if Acme
Broadcasting is a really goodbroadcaster, then you know, then
you get excited and you're like, OK, this could be good.
You know, then you get excitedand you're like, OK, this could
be good.
But then if Smith BroadcastingCompany is not so great of an
owner, then, boy, you want totalk about morale tanking and
(10:45):
the deal is not even done Right,it's just what you're hearing,
and again something that may bepublicized.
So let me ask you that, whetherit's mergers or that pre-merger
talk, we'll say that'ssensitive stuff and staff can't
be brought in until the lastminute or even after the deal is
done.
So what are the pitfalls here?
I probably outlined a couple,but can we get into the pitfalls
(11:06):
of getting staff buy-in?
Karen, would you start us offon this one?
Speaker 2 (11:10):
Absolutely.
I've had the opportunity toobserve communication going both
ways, both too early and toolate in transactions, and what
happens when it happens tooearly is number one.
There's the risk of the dealnot happening at all, which has
a lot of implications aroundtrust and culture and then even
(11:30):
future deals and whether thosewill go well once you've had a
disappointment, and in onesituation I'm familiar with,
staff was brought in too earlyand that resulted in a lot of
unrest and an inadvertentimpression among staff that the
merger was going to be voted onor approved of by staff and,
(11:53):
needless to say, that made thetransaction that much harder.
The transition to integrationwere very difficult and then, in
the case of when thatcommunication comes too late,
that also can undermine thetrust of staff and make
integration harder.
You're not able to have thekind of communications you need
(12:13):
to have among some of theleaders until the 11th hour and
it just makes things so muchmore difficult.
I think there are a fewdifferent ideas for successfully
working with staff in apurposeful manner.
Number one Boundless does acultural assessment pre merger
which helps them plan messagingand foresee potential issues,
(12:36):
and I think that that is a verygood tactic for that situation,
and Boundless also often uses apre-announcement quiet period
where the deal is closed butbehind the scenes communication
can be going on and then thestage can be set for a positive
impression of the partnershipamong staff and leaders.
(12:57):
And I'm sure Stacey has evenbetter suggestions than I do
from her experience.
Speaker 3 (13:04):
No, I think that's spot on.
And for me, you know, look, thereality is, no matter how much
you trust people, no matter howmuch you trust your team, even
if you go from a place of bestintentions, you know Folks
always tell the person whoswears they'll never tell anyone
else and at some point itbecomes the world's worst kept
secret, and that's just how itgoes right.
So you can't always bring instaff right from the start, but
(13:26):
I think once the merger isunderway, the key absolutely is
that transparency, inclusion andthen empathy Based on the
stakeholder group you're talkingto.
You know people support whatthey helped to build and I think
you have to honor that process.
But also, on the flip side,even good changes bring some
kind of, you know, grief.
Folks have been here a long time.
(13:47):
They're attached to the name,their leaders, their logo, their
teams, whatever it may be.
So you know, I think once thatdecision is made to move forward
, really honoring how staffbecome involved is just as
important as the merger itself.
So, just like Karen, I've seensituations where the news was
held too close to the vest, toosoon, and I've also seen, you
(14:08):
know, where I think that waspremature, because then you have
things played out and, in theabsence of facts and information
, people build their own storyand that can be sometimes
detrimental to what you'retrying to build.
So you know, I thinkacknowledging that change is
hard, even when a merger ispositive, it can mean you know
the end of a familiar chapterand honoring that, but also
rallying folks around theexcitement of what you're
(14:30):
building together.
I think that's really key tosuccessful cultural integration.
Speaker 1 (14:34):
Let me follow up on Stacey, what you said.
It could, you know, end upbeing the worst kept secret or
again, if pre-merger talks are,you know, come out in the media,
right?
So at that point do you tell ordo you advise the CEO to get
the staff together and, justagain, be transparent.
Hey, there's some stuff outthere.
There have been some newsstories about us and you know
(14:55):
there's a lot of chatter.
Here's what we can tell you andwe'll be as transparent as
possible.
But just know there are somelegal things and other things
going on behind the scenes thatwe can't share.
But again, we'll be astransparent as we possibly can
be.
Speaker 3 (15:07):
Absolutely.
Look, there should be acommunication plan that exists
where 90% of it is never used.
So all of those types of pressreleases and emails to staff and
emails to funders or familymembers, all of those things
should be teed up, agreed uponby both parties and in this
communication plan that's heldtight for those kinds of
(15:29):
situations exactly.
So, like I said, you hopefullymay never need 90% of those, but
the time to develop thatlanguage and plan is not after
the news is out.
You know you have to thinkabout that as you're going
through the very early stages ofthis diligence process of if
this happens, here's what we'llsay and here's how we'll respond
, and so all of those thingshaving pre-discussion,
(15:50):
critically important as part ofthe diligence timeframe.
Speaker 1 (15:53):
Boy, that is a great tenet too of crisis
communications.
Right, you've got to have thatplan in place, even if you think
you're not going to use it.
But you know, it's usually nota matter of if, it's a matter of
when, and that's right and it'sa good conversation to have,
even if it's not shared broadly.
It is, it is.
I want to come back to thatnonprofit article, and there was
just a real blunt statement init and it said most successful
(16:15):
mergers rely on outside expertsas well.
We're talking attorneys,accountants and specialists.
Okay, so I've got bear with mehere.
I've got about a three-partquestion on this one, because we
can dive into this.
What kinds of outside expertsshould you engage?
When should they be engaged,and then how do you select them?
Speaker 3 (16:34):
Well, listen, I'm a little biased on this one
because I'm a consultant and ourfirm does a lot of M&A support.
So of course I believe youshould hire an outside expert
immediately, engage sooner.
But truly I think an outsideexpert can make or break a
merger process, and the mostvaluable ones really go beyond
the technical skills.
So, yes, you know you certainlyneed legal, financial, hr
(16:55):
expertise, things like that on ablock and tackle perspective.
But just as critical to me ishaving an advisor who can really
keep everyone focused on theend game when the tensions rise.
So I like to joke.
This is where mysolution-focused therapy
background comes in handy.
You know mergers can getemotional and there's legacy
fears, leadership dynamics,uncertainty you know all of
(17:22):
those moments.
So I think a steady outsidevoice that has navigated this
path before can really helpleaders stay grounded in the
mission and in the futurepotential.
So you know, I always recommendengaging a strategic advisor
early.
So when you're thinking aboutdoing a growth strategy, you
want to think this through withsomeone who has experience
leading organizations throughthat.
I also think someone whounderstands nonprofit culture
(17:43):
really can facilitate difficultconversations, isn't afraid to
name the harm things.
Nonprofit M&A has a twist to it.
That's different than afor-profit transaction, and so
for me it's someone whounderstands that nuance.
But the best advisor reallyserves as kind of the architect
and the confidant, kind ofhelping to map the process.
But, real importantly, havingsomeone who can sit with the CEO
(18:06):
or the board chair during atough meeting and ask afterward
kind of how are you doing?
You know how did we feel aboutthat, where are we aligned in
the process?
The CEO is lonely In thosetimes.
They can't turn to their teamor their board and express
frustration or fear.
So having that advisor that youalign with, I think that's
really critical and I'd love tohear Karen's experience on that.
(18:27):
I know you've gone through thaton both sides.
Speaker 2 (18:30):
Yeah, I certainly believe that that confidant
aspect is vital and I think thatin that role there can be some
support from consultants in somethings that you did not plan
for.
So one thing that comes to mindis we were having a moment
within my merger process wherepeople were getting increasingly
(18:53):
unsettled and I think the workwas getting burdensome and
worries were creeping in.
And because we did have anoutside consultant, we had
someone with that external focuswho could step way back and
come up with some tacticalstrategies.
That really got us over thehump is on a path where they
(19:14):
believe they're going to bedoing a number of mergers,
acquisitions, affiliations,partnerships.
It can be really helpful toform a small group of
consultants that you use a lot.
(19:34):
It creates a kind of shorthandwhen they already know you and
the organization really well.
If you are a CEO of a smallerorganization, I think an
underrepresented kind of outsidehelp comes in the form of
contract support, fractionalsupport for departments that
might be overburdened during themerger process.
(19:56):
I'm thinking of particularlyhuman resources, finance, it,
some people that can keepregular operations running so
that the leadership of thosedepartments can focus on the
merger.
And I'll throw in a quote froma board member and mentor of
mine.
He said you still have to runthe business while a merger is
(20:17):
taking place.
That's right, that's right.
Speaker 1 (20:20):
I've got another quote and when I was watching
this interview with thisparticular leader, I thought all
right, I'm definitely going topose this to Karen and Stacey,
so tell me what you guys thinkabout this one I was watching
this interview, and this C-suiteexecutive said this there are
people who are dishwashers andthere are those who let the
dishes soak overnight, andsometimes you need both
(20:44):
overnight and sometimes you needboth.
And you know I think he was kindof getting to that fact of you
know some deals out there dorequire that robust, that quick
action, and then others if Icould extend the metaphor take a
little time to scrub throughthe details here.
So let's go with that.
I'd love to hear your thoughtson that and then maybe again
permit me to layer onto it afinal thought or two that you'd
(21:04):
like to leave our listeners with.
Speaker 3 (21:06):
Well, both of those things get your hands dirty, so
let's start with that.
Speaker 1 (21:10):
Oh, that is just rim shot right there, stacey,
excellent.
Speaker 3 (21:14):
So I think you've got to be prepared, you know, to
roll up your sleeves and put thegloves on, whether you're doing
them that moment or afterwards.
So yeah, I think that's a greatanalogy.
I may steal that in some way,but yeah, I mean I think you do.
Regardless, the dishes have toget washed however.
You do it right.
So I think that goes along witha saying that I like to.
(21:36):
It's sort of a level set withboards and teams, and some folks
don't like it, just like wedon't like washing dishes, but
it has to be done.
But the reality is the saying Ilike is that you're either at
the table or you're on the menu.
So I guess we're still in thedishes and the table theme here,
love it, love it.
But the reality is, what thatmeans is that you are either
(21:58):
thinking about a growth strategyand looking about the industry,
on who your potential optionsor partners or acquisitions
target may be, or someone isdoing that for you, about you,
and so if you don't have agrowth strategy, that doesn't
mean a growth strategy will nothappen to you one way or another
.
And especially in 2025, right,the market disruption right now,
(22:20):
the political uncertainty, allthe financial pressures with
Medicaid.
It's incredible.
This is probably the mostchallenging time I've ever
experienced in my 30 years inhuman services, and with so many
small legacy providers that areunder $25 million in revenue,
the reality is you've got towash the dishes right.
Standing still isn't an option,and so when organizations align
(22:43):
around a shared mission and theyunderstand that a growth
strategy is critical, they canserve more people, they can
improve the quality, they canbuild something stronger
together than they could alone.
And a mission-driven merger isnot about giving up your
identity, right, so we oftenhear that it's about preserving
and expanding it throughthoughtful collaboration.
(23:04):
So to me, the best kind offinal thought is to not think
about M&A or acquisition as afailure or a rescue, but it is a
strategic evolution and whenthe leaders really take a seat
at that table and make choicesthat allow your organization's
good work to grow, that's awin-win and it's something that
lives on beyond your tenure as aleader, and that's really the
(23:26):
most important thing for me.
Speaker 1 (23:28):
Stacey, by the way.
You can take that quote and runwith it.
I always say as a comms guywhen it comes to ideas, amateurs
borrow them, professionalssteal them.
Speaker 3 (23:38):
It's considerate stolen.
Speaker 1 (23:41):
Karen jump in here.
Speaker 2 (23:42):
I think that Stacey really brought home the point
that it's vital for healthcarenonprofits to move in a broader
and more creative direction tomeet the demands that are placed
on them right now working, andthat's just where we are.
So, to get where they need togo, they really might need to
(24:04):
consider merger, affiliation,some type of formal partnership
to build the capacity to offerthe clinical quality to attract
and retain the workforce.
This is just where we are and Ican't imagine right now.
Ballas is going through astrategic planning process right
(24:25):
now and it gave me pause tothink that organizations who did
their strategic plan only ayear or two ago may as well put
it in the trash can at thispoint.
That's right.
I think that where we are as asector is we are going to need
to put our collective headstogether to think about how
we're going to survive and howwe're going to serve our
(24:47):
stakeholders, and that's whatBoundless is doing through this
podcast is letting other leaderscome in and put their
collective heads together alongwith Boundless.
Speaker 1 (25:00):
That is a great note to end on.
That is just fantastic, KarenStacey, thank you both for
joining us today.
Speaker 2 (25:06):
Thanks for having me.
Thank you.
Speaker 1 (25:08):
Again, thanks to our guests and thank you for joining
us today.
This is the Nonprofit Leader'sGuide podcast brought to you by
Boundless.
Thank you.
Welcome everyone to the Nonprofit Leader's Guide
podcast.
I'm your host, scott Light.
Our theme for this episode Inthese uncertain times, what can
organizations do to improvetheir chances of success in a
potential merger?
Now, to partly answer that, I'mgoing to tee up an article from
the Nonprofit Times and it'stitled 10 Keys to Success for
Nonprofit Mergers.
The keys range from trust,being mission-driven to paying
(00:27):
attention to culture and doingyour homework, so we've got a
lot to dive into.
I've got two terrific expertguests today joining me and
joining you.
Stacey DiStefano is the founderand CEO of Consulting for Human
Services.
That's a national advisory firmguiding providers and investors
through strategic growth,mergers, market intelligence and
(00:49):
modernization in the behavioral, health and IDD sectors.
A trusted thought partner toC-suite leaders across the
country, stacey brings deepexpertise in system
transformation, organizationalsustainability and values-driven
expansion.
Karen Carlone is the directorof Boundless Advantage.
Her former roles include chiefexecutive officer of Southern
(01:11):
Maryland Community Network,chief operating officer of
Cornerstone Montgomery and vicepresident of market intelligence
at Open Minds At BoundlessAdvantage.
She brings over 30 years ofdiverse experience in health and
human services.
Boundless Advantage.
She brings over 30 years ofdiverse experience in health and
human services and also in herrole here.
She ensures merger transitionsare smooth and mission centric,
(01:32):
so we're certainly going to talkabout that as we go.
First, welcome to you both.
It's good to have you here.
Speaker 2 (01:35):
Good to be here, thank you.
Thank you so much.
Speaker 1 (01:37):
Boundless has developed all kinds of
strategies and resources tosupport partnerships with
like-minded organizations.
So let's jump into this.
I'm going to come back to partsof that top 10 list that I
mentioned off the top here andwe're going to kind of thread
that through the conversation.
So I've got a quote that I lovefor both of you to kind of, you
(01:58):
know, touch on this right outof the gate, and it's this quote
the most successful mergers aremission driven.
That sounds simple, but we knowit is very complicated.
So in your expertise, stacey,why don't you start us off here?
In your experience, yourexpertise, what does that look
like?
What does a mission drivenmerger look like, and can you
(02:18):
provide some examples of mergersthat indeed improved mission?
Speaker 3 (02:26):
Yeah, certainly the most successful merger that I've
seen support organizations thatreally start from that place of
mission alignment, not fromfinancial desperation and not
from looking at a P&L.
So a mission-driven mergerreally just means that the
organizations involved, theysort of see a clear path to
doing more of what matters tothem and that could be serving
more people, could be improvingquality, expanding their reach
(02:46):
or innovating in ways that theycouldn't do alone.
And a great example, just apress release this week I'm
working with three small IDDproviders in Maine and they've
got long, proud histories intheir community but all of them
individually kind of strugglingwith that workforce shortage,
you know Medicaid issues thatwe're all dealing with now,
leadership transitions andrather trying to wade through
(03:09):
that crisis individually.
What they did was come together, you know, with our support, to
form a more unifiedorganization.
So they are going to be merginginto one which will create the
largest provider organization inMaine and by doing that they've
retained their local presence.
But they've upgraded thingslike technology and you know
(03:29):
different insurance benefits,things for the folks that they
hire and certainly the folksthey support.
And I think the most importantthing there is the quality of
life for the people they servereally improve because now they
can offer a more consistent,coordinated support and lower,
you know, administrativeoverhead.
So it really makes sense andit's an area where one plus one
(03:50):
makes three.
Speaker 2 (03:50):
Well, I certainly agree with Stacey's perspective
on how mergers can really growthe organization's capacities in
so many ways.
I think successful mergers arean opportunity for an
organization to deeply engagewith its mission and the value
that that organization brings tothe community, both now and in
(04:12):
the future.
Engaging with a larger or morestable organization can
sometimes offer the chance toachieve possibilities that a
smaller organization might notbe able to do on their own.
And for my part, I would givean example.
In my previous role as the CEOof a small semi-rural behavioral
(04:33):
health organization, we hadgrown in size, we had doubled
our revenue and tripled ourservice area, but we were not
able to achieve the goal ofdeveloping integrated services.
We had a number of differentcapacity and financial issues in
meeting that goal and we choseto merge with a certified
community behavioral healthclinic in another county and
(04:57):
that gave us the opportunity tooffer integrated services and
grow our scale.
And then, as a smallerorganization, we brought some
specific areas of expertise tothe joint organization, and that
organization is thriving tothis day.
Speaker 1 (05:13):
That is terrific perspective out of the gate.
Let's dive in a little deeperto that article I mentioned and
I'll come to this.
And it said said boards andboard chairs have to be
advocates in order for themerger to be successful.
So what are the best practiceshere?
What are the do's and don'tshere when it comes to boards and
(05:34):
board chairs?
Speaker 3 (05:35):
Well, I can jump into that.
I think the board is always thewild card.
You know, we we have abouteight transactions in play right
now here at CFHS and everysingle one of them has a
different board dynamic.
Some organizations you know thesmall legacy nonprofits who
have folks on there 30 years,family members in service, all
the way up to multi-state youknow very sophisticated, high
(05:58):
business acumen boards.
It changes the dynamic as youwalk forward.
It changes the dynamic as youwalk forward.
So during a merger, boards ofany size really need to evolve
from an oversight to more of astrategic leadership role.
And that's difficult for some,but I think the best ones are
the ones that can get educatedearly, that can stay mission
focused and don't negotiate froma place from fear, but really
(06:20):
stay focused on that place, fromvision.
And if they can do that, theboard really plays a critical
role in the success or thefailure, to be honest, of a
nonprofit merger.
So I would say, based on that,one of the best practices that I
can think is making sure theboard understands their role
during that merger process.
The CEO is taking them on ajourney, the CEO is leading and
(06:41):
the board is supporting there,so they move from that routine
governance you know, quarterly,monthly, whatever it is that
they're meeting to being morestrategic decision makers and
really I would say, culturestewards and ambassadors for
that change.
And in order to do that, itreally requires the education up
front.
So some boards just don't haveany experience with M&A and it's
(07:02):
a good CEO who gives them thatopportunity for education, to
learn about that M&A process,including the risks, but really
focus on the potential and whatsuccess looks like.
And I do have a couple of do'sand don'ts from experience.
Do you want me to outline them?
Speaker 1 (07:17):
Sure.
Speaker 3 (07:18):
I would say do create a clear board task force or
some kind of working group sothat decision-making is nimble.
You know you don't want 17board members having to find
consensus for every decision.
So some kind of a task force,you know, giving them the tools,
data, metrics, real-worldexamples, but having a focused
group of board members who arereally acting as champions of
(07:40):
the transaction and don't letboard members kind of negotiate
from their personal fear.
I've had lots of instanceswhere a board member had an
experience in their day job of amerger went bad and they carry
that into the transaction forthe organization.
So we've got to really carvethat out and give those some
boundaries so they keep thoseout of that experience.
(08:01):
I've also seen post-mergerproblems because board concerns
weren't voiced early enough.
So I'd say have those hardconversations first and boards
you know really need supportlike staff.
Do.
So if you bring in an outsideadvisor or somebody to guide
them through the process, givesome perspective, even a coach
sometimes can you know,individually help members get
there as far as being on boardwith the decision, that can
(08:24):
really help make all thedifference.
Speaker 1 (08:26):
Okay, karen, go ahead .
Speaker 2 (08:28):
I agree with everything that Stacey is saying
and I think that you have anopportunity to set the stage for
a successful process with yourboard by thinking about your
board recruitment, developmentand communication early on.
I would say the do's aroundrecruitment is recruiting a
board with a wide variety ofprofessional and lived
(08:50):
experience and being intentionalabout filling roles that will
support that strategic processlater.
And then, in the area of boarddevelopment, making sure that
you're regularly sharingbriefings with your board from
state associations and industryexperts to set them up for
strategic discussions when apartnership is on the table and
(09:14):
a little don't to throw in isdon't expect your regular
cadence of board communicationto be enough during merger
discussions.
Like Stacey's saying, I thinkyou need a task force and it's
an efficient way to keep theboard abreast of what's going on
throughout the process toanswer those questions, so that
(09:34):
you don't end up with some ofthose post-merger pains that
she's talking about.
Yeah, good advice there.
Speaker 1 (09:40):
Yeah, so a little bit for both of you and our
audience here has heard me talkabout my former media days.
So I was a journalist fornearly 30 years and my next
question is about when staffstarts to hear, or maybe
something is publicized about amerger and are bringing up in.
With my old experience, I wouldsay from about the year 2000 to
(10:00):
2020.
And 2020 is when I left themedia.
But over those 20 years therewas probably more media
consolidation in those twodecades than there had been in
the last 100.
And I can remember, you know,being at a particular station
and you would.
Something would go public, You'dhear something on a business
channel or something like that,that you know station XYZ is
(10:20):
being bought by AcmeBroadcasting and it could go one
of two ways and it did overthose years where, if Acme
Broadcasting is a really goodbroadcaster, then you know, then
you get excited and you're like, OK, this could be good.
You know, then you get excitedand you're like, OK, this could
be good.
But then if Smith BroadcastingCompany is not so great of an
owner, then, boy, you want totalk about morale tanking and
(10:45):
the deal is not even done Right,it's just what you're hearing,
and again something that may bepublicized.
So let me ask you that, whetherit's mergers or that pre-merger
talk, we'll say that'ssensitive stuff and staff can't
be brought in until the lastminute or even after the deal is
done.
So what are the pitfalls here?
I probably outlined a couple,but can we get into the pitfalls
(11:06):
of getting staff buy-in?
Karen, would you start us offon this one?
Speaker 2 (11:10):
Absolutely.
I've had the opportunity toobserve communication going both
ways, both too early and toolate in transactions, and what
happens when it happens tooearly is number one.
There's the risk of the dealnot happening at all, which has
a lot of implications aroundtrust and culture and then even
(11:30):
future deals and whether thosewill go well once you've had a
disappointment, and in onesituation I'm familiar with,
staff was brought in too earlyand that resulted in a lot of
unrest and an inadvertentimpression among staff that the
merger was going to be voted onor approved of by staff and,
(11:53):
needless to say, that made thetransaction that much harder.
The transition to integrationwere very difficult and then, in
the case of when thatcommunication comes too late,
that also can undermine thetrust of staff and make
integration harder.
You're not able to have thekind of communications you need
(12:13):
to have among some of theleaders until the 11th hour and
it just makes things so muchmore difficult.
I think there are a fewdifferent ideas for successfully
working with staff in apurposeful manner.
Number one Boundless does acultural assessment pre merger
which helps them plan messagingand foresee potential issues,
(12:36):
and I think that that is a verygood tactic for that situation,
and Boundless also often uses apre-announcement quiet period
where the deal is closed butbehind the scenes communication
can be going on and then thestage can be set for a positive
impression of the partnershipamong staff and leaders.
(12:57):
And I'm sure Stacey has evenbetter suggestions than I do
from her experience.
Speaker 3 (13:04):
No, I think that's spot on.
And for me, you know, look, thereality is, no matter how much
you trust people, no matter howmuch you trust your team, even
if you go from a place of bestintentions, you know Folks
always tell the person whoswears they'll never tell anyone
else and at some point itbecomes the world's worst kept
secret, and that's just how itgoes right.
So you can't always bring instaff right from the start, but
(13:26):
I think once the merger isunderway, the key absolutely is
that transparency, inclusion andthen empathy Based on the
stakeholder group you're talkingto.
You know people support whatthey helped to build and I think
you have to honor that process.
But also, on the flip side,even good changes bring some
kind of, you know, grief.
Folks have been here a long time.
(13:47):
They're attached to the name,their leaders, their logo, their
teams, whatever it may be.
So you know, I think once thatdecision is made to move forward
, really honoring how staffbecome involved is just as
important as the merger itself.
So, just like Karen, I've seensituations where the news was
held too close to the vest, toosoon, and I've also seen, you
(14:08):
know, where I think that waspremature, because then you have
things played out and, in theabsence of facts and information
, people build their own storyand that can be sometimes
detrimental to what you'retrying to build.
So you know, I thinkacknowledging that change is
hard, even when a merger ispositive, it can mean you know
the end of a familiar chapterand honoring that, but also
rallying folks around theexcitement of what you're
(14:30):
building together.
I think that's really key tosuccessful cultural integration.
Speaker 1 (14:34):
Let me follow up on Stacey, what you said.
It could, you know, end upbeing the worst kept secret or
again, if pre-merger talks are,you know, come out in the media,
right?
So at that point do you tell ordo you advise the CEO to get
the staff together and, justagain, be transparent.
Hey, there's some stuff outthere.
There have been some newsstories about us and you know
(14:55):
there's a lot of chatter.
Here's what we can tell you andwe'll be as transparent as
possible.
But just know there are somelegal things and other things
going on behind the scenes thatwe can't share.
But again, we'll be astransparent as we possibly can
be.
Speaker 3 (15:07):
Absolutely.
Look, there should be acommunication plan that exists
where 90% of it is never used.
So all of those types of pressreleases and emails to staff and
emails to funders or familymembers, all of those things
should be teed up, agreed uponby both parties and in this
communication plan that's heldtight for those kinds of
(15:29):
situations exactly.
So, like I said, you hopefullymay never need 90% of those, but
the time to develop thatlanguage and plan is not after
the news is out.
You know you have to thinkabout that as you're going
through the very early stages ofthis diligence process of if
this happens, here's what we'llsay and here's how we'll respond
, and so all of those thingshaving pre-discussion,
(15:50):
critically important as part ofthe diligence timeframe.
Speaker 1 (15:53):
Boy, that is a great tenet too of crisis
communications.
Right, you've got to have thatplan in place, even if you think
you're not going to use it.
But you know, it's usually nota matter of if, it's a matter of
when, and that's right and it'sa good conversation to have,
even if it's not shared broadly.
It is, it is.
I want to come back to thatnonprofit article, and there was
just a real blunt statement init and it said most successful
(16:15):
mergers rely on outside expertsas well.
We're talking attorneys,accountants and specialists.
Okay, so I've got bear with mehere.
I've got about a three-partquestion on this one, because we
can dive into this.
What kinds of outside expertsshould you engage?
When should they be engaged,and then how do you select them?
Speaker 3 (16:34):
Well, listen, I'm a little biased on this one
because I'm a consultant and ourfirm does a lot of M&A support.
So of course I believe youshould hire an outside expert
immediately, engage sooner.
But truly I think an outsideexpert can make or break a
merger process, and the mostvaluable ones really go beyond
the technical skills.
So, yes, you know you certainlyneed legal, financial, hr
(16:55):
expertise, things like that on ablock and tackle perspective.
But just as critical to me ishaving an advisor who can really
keep everyone focused on theend game when the tensions rise.
So I like to joke.
This is where mysolution-focused therapy
background comes in handy.
You know mergers can getemotional and there's legacy
fears, leadership dynamics,uncertainty you know all of
(17:22):
those moments.
So I think a steady outsidevoice that has navigated this
path before can really helpleaders stay grounded in the
mission and in the futurepotential.
So you know, I always recommendengaging a strategic advisor
early.
So when you're thinking aboutdoing a growth strategy, you
want to think this through withsomeone who has experience
leading organizations throughthat.
I also think someone whounderstands nonprofit culture
(17:43):
really can facilitate difficultconversations, isn't afraid to
name the harm things.
Nonprofit M&A has a twist to it.
That's different than afor-profit transaction, and so
for me it's someone whounderstands that nuance.
But the best advisor reallyserves as kind of the architect
and the confidant, kind ofhelping to map the process.
But, real importantly, havingsomeone who can sit with the CEO
(18:06):
or the board chair during atough meeting and ask afterward
kind of how are you doing?
You know how did we feel aboutthat, where are we aligned in
the process?
The CEO is lonely In thosetimes.
They can't turn to their teamor their board and express
frustration or fear.
So having that advisor that youalign with, I think that's
really critical and I'd love tohear Karen's experience on that.
(18:27):
I know you've gone through thaton both sides.
Speaker 2 (18:30):
Yeah, I certainly believe that that confidant
aspect is vital and I think thatin that role there can be some
support from consultants in somethings that you did not plan
for.
So one thing that comes to mindis we were having a moment
within my merger process wherepeople were getting increasingly
(18:53):
unsettled and I think the workwas getting burdensome and
worries were creeping in.
And because we did have anoutside consultant, we had
someone with that external focuswho could step way back and
come up with some tacticalstrategies.
That really got us over thehump is on a path where they
(19:14):
believe they're going to bedoing a number of mergers,
acquisitions, affiliations,partnerships.
It can be really helpful toform a small group of
consultants that you use a lot.
(19:34):
It creates a kind of shorthandwhen they already know you and
the organization really well.
If you are a CEO of a smallerorganization, I think an
underrepresented kind of outsidehelp comes in the form of
contract support, fractionalsupport for departments that
might be overburdened during themerger process.
(19:56):
I'm thinking of particularlyhuman resources, finance, it,
some people that can keepregular operations running so
that the leadership of thosedepartments can focus on the
merger.
And I'll throw in a quote froma board member and mentor of
mine.
He said you still have to runthe business while a merger is
(20:17):
taking place.
That's right, that's right.
Speaker 1 (20:20):
I've got another quote and when I was watching
this interview with thisparticular leader, I thought all
right, I'm definitely going topose this to Karen and Stacey,
so tell me what you guys thinkabout this one I was watching
this interview, and this C-suiteexecutive said this there are
people who are dishwashers andthere are those who let the
dishes soak overnight, andsometimes you need both
(20:44):
overnight and sometimes you needboth.
And you know I think he was kindof getting to that fact of you
know some deals out there dorequire that robust, that quick
action, and then others if Icould extend the metaphor take a
little time to scrub throughthe details here.
So let's go with that.
I'd love to hear your thoughtson that and then maybe again
permit me to layer onto it afinal thought or two that you'd
(21:04):
like to leave our listeners with.
Speaker 3 (21:06):
Well, both of those things get your hands dirty, so
let's start with that.
Speaker 1 (21:10):
Oh, that is just rim shot right there, stacey,
excellent.
Speaker 3 (21:14):
So I think you've got to be prepared, you know, to
roll up your sleeves and put thegloves on, whether you're doing
them that moment or afterwards.
So yeah, I think that's a greatanalogy.
I may steal that in some way,but yeah, I mean I think you do.
Regardless, the dishes have toget washed however.
You do it right.
So I think that goes along witha saying that I like to.
(21:36):
It's sort of a level set withboards and teams, and some folks
don't like it, just like wedon't like washing dishes, but
it has to be done.
But the reality is the saying Ilike is that you're either at
the table or you're on the menu.
So I guess we're still in thedishes and the table theme here,
love it, love it.
But the reality is, what thatmeans is that you are either
(21:58):
thinking about a growth strategyand looking about the industry,
on who your potential optionsor partners or acquisitions
target may be, or someone isdoing that for you, about you,
and so if you don't have agrowth strategy, that doesn't
mean a growth strategy will nothappen to you one way or another
.
And especially in 2025, right,the market disruption right now,
(22:20):
the political uncertainty, allthe financial pressures with
Medicaid.
It's incredible.
This is probably the mostchallenging time I've ever
experienced in my 30 years inhuman services, and with so many
small legacy providers that areunder $25 million in revenue,
the reality is you've got towash the dishes right.
Standing still isn't an option,and so when organizations align
(22:43):
around a shared mission and theyunderstand that a growth
strategy is critical, they canserve more people, they can
improve the quality, they canbuild something stronger
together than they could alone.
And a mission-driven merger isnot about giving up your
identity, right, so we oftenhear that it's about preserving
and expanding it throughthoughtful collaboration.
(23:04):
So to me, the best kind offinal thought is to not think
about M&A or acquisition as afailure or a rescue, but it is a
strategic evolution and whenthe leaders really take a seat
at that table and make choicesthat allow your organization's
good work to grow, that's awin-win and it's something that
lives on beyond your tenure as aleader, and that's really the
(23:26):
most important thing for me.
Speaker 1 (23:28):
Stacey, by the way.
You can take that quote and runwith it.
I always say as a comms guywhen it comes to ideas, amateurs
borrow them, professionalssteal them.
Speaker 3 (23:38):
It's considerate stolen.
Speaker 1 (23:41):
Karen jump in here.
Speaker 2 (23:42):
I think that Stacey really brought home the point
that it's vital for healthcarenonprofits to move in a broader
and more creative direction tomeet the demands that are placed
on them right now working, andthat's just where we are.
So, to get where they need togo, they really might need to
(24:04):
consider merger, affiliation,some type of formal partnership
to build the capacity to offerthe clinical quality to attract
and retain the workforce.
This is just where we are and Ican't imagine right now.
Ballas is going through astrategic planning process right
(24:25):
now and it gave me pause tothink that organizations who did
their strategic plan only ayear or two ago may as well put
it in the trash can at thispoint.
That's right.
I think that where we are as asector is we are going to need
to put our collective headstogether to think about how
we're going to survive and howwe're going to serve our
(24:47):
stakeholders, and that's whatBoundless is doing through this
podcast is letting other leaderscome in and put their
collective heads together alongwith Boundless.
Speaker 1 (25:00):
That is a great note to end on.
That is just fantastic, KarenStacey, thank you both for
joining us today.
Speaker 2 (25:06):
Thanks for having me.
Thank you.
Speaker 1 (25:08):
Again, thanks to our guests and thank you for joining
us today.
This is the Nonprofit Leader'sGuide podcast brought to you by
Boundless.
Thank you.
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