Psst….Did you hear? Stark communications differences between for-profit and nonprofit mergers.

Psst….Did you hear? Stark communications differences between for-profit and nonprofit mergers.

Posted on May 29, 2013 by Pam Truitt

I read an interesting article last week in the business section of our daily paper. Andrew Ross Sorkin, New York Times reporter and expert on private sector mergers & acquisitions, highlighted findings in a new study by the Cass Business School in London. The study examined the effects of news leaks on private sector mergers and acquisitions. Depending on whether you are the buyer or seller, the effects are different. Experts are divided on whether the leaks are accidents (as Sorkin believes) or part of a strategy.

What struck me right between the eyeballs was the striking dissimilarity in communications approach between private deals and nonprofit mergers. Wise practitioners in the nonprofit partnership field subscribe to ‘early and often’ communications, and that’s the approach The Patterson Foundation uses as well.

So, let’s touch on a couple of areas to highlight why communications strategies are 180 degrees different between for-profit and non-profit mergers.

Actually, there isn’t a communications strategy when a merger is in-the-works in the business world. The concept is for everyone to keep a tight lip. As Sorkin points out, that rarely happens because there are so many folks involved. Investor equity is at stake and a lot of money is on the table. Why would leaks to the media occur? Depending on whether you are the buyer or seller, there are two different angles: If you are the seller, leaks are viewed from the point of improving bargaining power. If leaks come from a buyer’s camp, it might be a sign that the deal isn’t going their way. The capitalist system is at work here and there is no place for communications.

Just think of the recent merger news that you’ve read about—which Sorkin reports all were leaked, in advance, to the media: Warren Buffet’s acquisition of Heinz, Michael Dell’s buyout of computer company he founded, and the deal between American Airlines and US Airways. We all learned about it late into the process and negotiations.

Let’s turn our attention to a merger between two nonprofits. Nonprofits are not owned by anyone, and are guided by missions. The community investment produces a social good. Equity is shared by staff, board members, donors, funders and clients. Exploring—or negotiating—a nonprofit merger requires a communications strategy to ensure that you keep folks abreast of conversations throughout the process. A Google search identified a couple of helpful resources, plus I will add what The Patterson Foundation (TPF) has learned.

• TPF has learned the importance for the organizations—and the facilitators—to understand how internal communications within an organization works and to share this knowledge. Understanding the ‘how’ assists in developing strategy and alignment. And it is critical that the organizations communicate with all of their stakeholders.

• The links to the and Support Center articles are consistent in that communications must be open throughout the process. Understandably, folks will be nervous. Organizations that are exploring merger should align their messaging and timing so that everyone gets the information at the same time.

• Rumor mills fill the gap when there is no information and can sink the best laid plans. One effective system was developed during the American Cancer Society’s merger. They formed an employee committee called the Grapeviners to serve as liaisons between employees and the administration to address the rumor mill.

I’m just scratching the surface on resources and strategies. What communications strategies have you used?

  • Learn about these and other concepts used in TPF's approach to philanthropy.


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