Confirm non-negotiables

It is okay to say “no” to a merger. In fact, in some circumstances it may be only wise and prudent thing to do. However, when you do say no, try to do so in a way that maintains, or strengthens your relationship with potential merger partners. You are likely to have to maintain an ongoing relationship, whether or not the merger proceeds.

To say no tactfully, it is important to agree internally on what the “non-negotiables” are. Non-negotiables are the ‘things’ on which you are unwilling to compromise, and are decided together with your board. Settling on these before making initial approaches to merger partners, or before considering a merger proposal, helps set the parameters for future discussions. Mergers create value where the core competencies of each organisation are complementary and will be strengthened through partnership. However, particularly if your organisation is the smaller partner, the need to clearly articulate what you are and are not prepared to change is critical. For example, your organisation may decide that as part of the merger process, your partner must agree to:

  • œ  Retain your brand, or name
  • œ  Retain programs or service-user-groups
  • œ  Retain service-user databases
  • œ  Implement an approach to merging the executive (e.g. spill and fill, or half stay and half leave)
  • œ  The geographic footprint
  • œ  Target service-user group
  • œ  Big ticket strategies – growth or consolidation
  • œ  Any other condition you determine before commencing negotiations.

Remember that the more limits you place on negotiation, the more difficult it is to adapt to the conditions and requests of your prospective partner. Too many non-negotiables raises the risk is that if each party compiles separate, and incompatible lists of ‘must-haves’, the negotiation is set up to fail. And usually parties are most sensitive to the demands of their potential merger partner at the beginning of negotiations. Too few non-negotiables raises the risk that the negotiation loses purpose and can be the underlying reason the merger is lost.

Broaching these issues early in the process is likely to lead to a more open and productive ongoing negotiation discussions. Understanding which issues to share, and how to share them is the skill of negotiation. 

Please feel free to leave questions or comments on this part of the merger toolkit.