News Partnerships, Mergers, and Acquisitions: The New Vocabulary for Social Service Agencies

If your organization is like many social service agencies, you are witnessing a transformation from pay-for-performance to value-based reimbursement. Shifts in reimbursement models are aligned with heightened funder expectations of robust customer service, high satisfaction rates, and active stakeholder engagement. How will this shift affect your operations, employees, and constituents—and are you prepared for such change?

In the following article, Alison Glastein Gray and Mary Devlin of Pear Associates, Associate Member of the Providers’ Council, explain different organizational structures and what to consider when preparing to make changes to your own.  

By Alison Glastein Gray and Mary Devlin, Pear Associates

Many organizations are exploring new organizational structures as a means to prepare for the changing landscape, including:

  • Partnerships, when one or more organization joins together with other complementary agencies on a limited scope of work or project, but do not change the legal structure of the partnering organizations;
  • Mergers, when two entities affiliate and a new entity is created, combining all obligations and assets;
  • Acquisitions, when a larger agency grows and assumes the functions, obligations, and assets of a smaller entity, incorporating them into their organizational structure and culture; and
  • Joint Ventures, where organizations jointly sponsor the creation of a third corporate entity while keeping their own identities.

Agencies ready to engage in a new organizational structure must be prepared for a timely and thoughtful process while they consider a range of financial, operational, technological, and cultural factors.

To start, the agency must honestly explore why they want to engage with another entity — do they want to expand their footprint in the current marketplace? Enhance or complement the services they currently provide? Fear that their size and scale is too small to survive within the new landscape?

An agency should then assess its mission, strengths, need areas, and financial capability, garnering input from stakeholders including board members, staff, service recipients, funders, and community members. An agency should explore their position in the marketplace, identify their competitors, and pinpoint current and anticipated community needs to be based on quantitative and qualitative data.

Once an agency decides to move forward in developing a relationship with another organization, it should clarify the expected outcomes from that relationship. Do they want to maintain their organizational culture, enhance services for clients and other stakeholders, stabilize or increase their financial footing, expand access to new technologies, or improve the quality of their services? These discussions will help determine the type of organizational structure that will best meet the desired outcomes and they can begin to approach other entities to begin discussions. During this phase of the process, agencies must commit to internal and external transparency by determining how they will communicate with potential partners and what information they will share. Further, agencies should create measures to determine whether a partner organization meets the criteria for success.

Finally, agencies will need to determine the framework for moving forward, including their decision-making processes. Organizations may benefit from strategic advisement from business development experts to help identify issues for consideration, as well as to provide neutral facilitation of critical discussions.

While the transformation from pay-for-performance to value-based reimbursement can seem daunting, if you conduct an honest assessment of your current status, have candid conversations with your stakeholders, and are open about what your organization needs going forward, you will be able to navigate your agency into a successful and fruitful future.

Would you like to learn more?  Join Pear Associates and the Providers’ Council on Thursday, Feb. 6 from 10–11 a.m. for a free, members only webinar  about organizational structures and what to consider when preparing to make changes to your own.  Details and registration here

 

Alison Glastein Gray, MEd, Founder and Principal of Pear Associates, is passionate about helping mission-driven organizations strengthen and expand their operations. With more than 25 years of demonstrated experience planning, implementing, and evaluating evidence-based programs, Alison has helped various nonprofits think like a business to become more fruitful.

Mary Devlin has 30 years’ experience in nonprofit work and has held executive and senior leadership roles in both small single-service and large multi-service social service agencies. She consults to nonprofit agencies on organizational change: assessment of operational systems; development of strategic plans; creation of policies and procedures; new program development; and cultural competence training.

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