How Trust is Both the Driver and Inhibitor in Not-for-profit Sector Growth Strategies of: Merger, Acquisition, or Takeover

Lisa Barnes


This case study research is based on two not-for-profit (NFP) organizations wanting to create synergies and efficiencies in back office operations and to increase the offerings of services to existing clients by joining together as one business unit. This study has followed the different stages of the proposed merger or acquisition from the initial signing of the memorandum of agreement, to the strategic planning for the new entity including the potential organizational structure, board structure, and executive team recruitment. The method used in this research is the “lived experience,” as the researcher is a member of the board of one of the organizations considering a merger. The negotiations have varied from the rejection of a takeover, to the proposal of a merger, to the consideration of the larger organization acquiring the smaller organization. These decisions were deliberated at great length by both organizations, but the clear driver in all negotiations was trust. However, this trust also became an inhibitor at times, where trust was used as an excuse to not carry out all due diligence governance processes (DDGP). This lived experience has shown that trust is indeed an important factor in any proposed merger or acquisition but will never replace DDGPs. In fact DDGPs enhanced trust, and enabled for more transparent decisions to be reached by both parties at the negotiation table. The NFP sector can learn a great deal from this case study and it should be used by other NFP organizations to put into practice strategic merger and acquisition processes to create an organization that is run efficiently and for the benefit of their clients, with a combination of trust, and good governance practices.

Aus. Aca. Acc & Fin. Rev Vol 5(1), Jan 2019, P 13-24


Strategic Merger; Acquisition; Trust; Due Diligence; Governance, Lived Experience

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