a vision becomes the executive champion — the one who
pushes along the agenda and keeps morale high.
Board members. A unified board front is fundamental. Each merging corporation’s board has independent
authority to approve or reject the merger. The board
takes on a particularly active role by laying all of the
merger groundwork. If there are any rifts on the board
or disgruntled members, the process will hit logjams
each step of the way.
Clients, consumers, and funders. Early and frequent
communication with customers, clients, and funders
ensures that everyone is on board as the merger agreement and formal contracts take shape. Customers and
clients should feel comfortable with the surviving corporation and its ability to continue the services they
have come to expect. Each board should sit down with
major funders and get substantive buy in from each —
essentially pledges to financially support the new entity. Throughout this process of outreach, it is important
to think of those shadow stakeholders whose interests
will fundamentally affect the success of a merger, such
as well-connected community members, committed
volunteers, and government officials.
Staff members. Staff should be brought on board
early to give them a sense of ownership in the merger
process. “[I]nvolvement of non-administrative staff
prior to merger are all associated with a significant
number of positive outcomes following merger.
Specifically: financial stability, service quality and/
or expansion, organizational reputation, and the
alignment of staffing with client needs.” 5 The staff
members need to feel that their interests matter.
“Whether a merger results in re-assigning roles, cre-
ating graceful exits, or developing new leadership
positions in the merged entity, crafting a plan for
senior staff that the staff itself considers fair and in
the organization’s best interests is a critical step if
the parties are to actually tie the knot.” 6
Drafting the Merger Agreement:
Issues to Consider
Once all the right parties are invested in the merger, the
actual drafting of the merger agreement can happen. Here
is a list of considerations (beyond what is required by state
statutes) that should inform the drafting of the agreement.
Brand stewardship. Select the merged entity’s brand
based on the emotional and financial strength of each
merging company’s brand. This may involve dropping
one of the brands, creating a public brand partnership, or
creating a new amalgam brand.
Mission/vision. As discussed in earlier sections, the
parties need to have an honest conversation about
why the merger is taking place, who it serves, and
what the larger goals of the new organization should
be. Reaching a consensus on this will inform the rest
of the transaction.
Timeline. The parties need to be realistic about how
long negotiations may take, with the exact timeline that
reflects how much legwork the organizations have already done and the relative complexity of the parties. If
organizations are smaller and/or on tight budgets, the
merger could take place surprisingly quickly.
Board structure and executive leadership. Crucial
questions remain about board, leadership, and programming. A common approach is combining the boards and
allowing for attrition to eventually get the new board to
the right size over a few years.
Transfer of liabilities and contracts. It is crucial to
discuss which liabilities and contracts will transfer and
which will be closed out before the merger finalizes. Con-