In the world of nonprofit organizations, a merger refers to the absorption of one entity by another. The absorbing corporation, known as the “survivor,” assumes the liabilities and assets of the corporation that has merged into it. Merging can be a difficult and time-consuming process in which the boards of both organizations may have to make painful decisions. Before entering into a merger, review what needs to be done, and if the merger should even be carried out.
Before the merger process begins, both organizations need to complete an honest assessment of their strengths and weaknesses. These include such aspects as debts and assets as well as organizational cultures and values. Both boards need to ask themselves whether they will benefit from the merger, or whether it will be better to dissolve the organization about to be absorbed.
Create a Merger Committee
Once both organizations have determined a merger will be the best option for them both, they need to appoint a committee to handle the process. The committee must consist of key leadership from both organizations, namely executive directors and board members. At the committee meetings, members must reach conclusions, such as which organization will survive, what it will be called, who will lead it, what will its mission be, and what new services will it offer?
Assigning and Delegating Duties
After both organizations have reached conclusions about the direction the new entity will take, members of the merger committee need to start delegating and assigning duties needed to complete the process. Such duties include the responsibility of filling out legal forms and submitting them to the correct government offices, moving offices if necessary, as well as announcing the merger.
Submitting New Legal Documents
The merger becomes official when the surviving organization submits new legal documents to the state’s legal authorities. An Agreement of Merger must be filed with the state’s attorney general's office, as well as all the board minutes and resolutions dealing with the merger and current financial statements of the new organization. The surviving organization submits new articles of incorporation with the state, which act as its constitution.
How to Create a Due Diligence Checklist
Mergers and acquisitions happen every day in business. Companies have entire departments dedicated to making sure a new sale goes off without...
How to Dissolve a Nonprofit Corporation
Within the life cycle of a nonprofit, it sometimes becomes necessary to dissolve it and/or effectively end its existence via a merger...
How to Conduct a Merger & Acquisition
Mergers and acquisitions are common practices in the business world. Two companies may decide to merge if it is mutually beneficial. Companies...
Mergers & Acquisition Risks
An acquisition occurs when one company buys another. When two companies agree to combine into one company, they merge. Reasons for these...
Mergers & Acquisitions Checklist
Merging two companies can be challenging. Each firm likely has different support systems, corporate cultures and overlapping, incompatible job positions. A checklist...
Checklist for Financial Due Diligence
Due diligence is the process where a buyer or investor evaluates the operations, assets and liabilities of a company for sale. Simply...
Acquisition Integration Checklist
Mergers and acquisitions are always a troubling subject for companies on either side of the merger. Employees in the company being acquired...
Not-For-Profit Organizations Audit Checklist
Scrutiny of non-profit organizations' (NPOs) business practices and financial information by United States monitoring organizations has increased since the early 2000s. An...
Human Resources Due Diligence Checklist for Acquisitions
The human resources role in mergers and acquisitions can be one of the most important, aside from the financial aspect for transferring...