Collaboration Case Study – Failed Merger

Sometimes no good deed goes unpunished. In this case, the board and staff of both nonprofits did a great job of putting their mission and beneficiaries first, only to be ambushed by their lack of stakeholder communication and buy-in.


  1. Both Boards had their own strong reasons to merge.
  2. Benefit to clients and the community at the forefront of merger discussions.
  3. Early mutual agreement on staff and board structure.
  4. Merger discussions were solution-focused.
  5. A consultant served as a third party and helped staff think of questions and processes they might not have considered.


  1. Initially, one lawyer providing advice to both entities to save costs. Arrangement protected interests of neither.
  2. Independent lawyer for acquired entity brought into the discussion very very late.
  3. Inappropriate level of disclosures made early on (i.e., donor lists disclosed at beginning of process).
  4. Focus was on communications and selling merger plan. Meanwhile, key due diligence had not been occurring.
  5. Vocal minority on board challenged board’s every decision.
  6. Inadequate stakeholder communication resulted in serious backlash from key stakeholders.

Lessons Learned.

  1. Even when process between the boards and staff are generally running smoothly, failure to identify powerful and sometimes non-obvious stakeholders can threaten merger’s success.
  2. Board’s interest in merging quickly backfired.

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