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Alliance-Based Growth Strategies: Appropriate Choices on the Collaboration-Merger Continuum

Alliance-Based Growth Strategies: Appropriate Choices on the Collaboration-Merger Continuum. ASTC 2006 Louisville, Kentucky. Session Presenters. The Strategic Alliance Continuum. Adapted from: John A. Yankey, et al. "Merging Nonprofit Organizations: The Art and Science of the Deal".

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Alliance-Based Growth Strategies: Appropriate Choices on the Collaboration-Merger Continuum

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  1. Alliance-Based Growth Strategies:Appropriate Choices on the Collaboration-Merger Continuum ASTC 2006 Louisville, Kentucky

  2. Session Presenters

  3. The Strategic Alliance Continuum Adapted from: John A. Yankey, et al. "Merging Nonprofit Organizations: The Art and Science of the Deal"

  4. Driving Forces Behind Strategic Alliances • Environmental Increased competition Community desire for consolidation Physical proximity • Programmatic Diversification and/or expansion Gain of market share Improved quality • Managerial Strengthen staff and/or leadership Increased capacity • Financial Access to funding Improved profit margin Economies of scale Optimization of resources

  5. Steps In The Merger Process • Feasibility Exploration • Side-by-Side Analysis • Strategic Communications • Due Diligence • Transactional Agreements • Merger Integration & Transition • Evaluation

  6. Great Lakes Science Center&Harbor Heritage Society (William G. Mather Museum)Strategic Partnership

  7. Great Lakes Science Center

  8. Mather Museum

  9. North Coast Harbor, Cleveland

  10. The Opportunity • In 1994 and 1996, GLSC leadership writes strong letters of support to the City of Cleveland for a long-term lease for the SS William G. Mather at North Coast Harbor. • Harbor Heritage Society and GLSC jointly undertake a preliminary marketing and financial study of the Mather Museum with Coopers & Lybrand (1997-98). As a result, each Board independently approve resolutions to pursue a partnership once the Society receives a long-term lease for its Steamship William G. Mather Museum. • Harbor Heritage Society’s Strategic Plan (adopted Jan. 2005) suggests potential programmatic and operational synergies between its SS Mather Museum and Great Lakes Science Center, and identifies Dock 32 as preferable permanent Museum location. • GLSC Strategic Plan (adopted Aug. 2005) identifies the Great Lakes/environmental sciences as a top content theme, and further identifies strategic alliances as a broad goal within the Business Plan. • Mather Museum relocates to Dock 32 (Sep. 2005) • Joint ticketing and programming attempts prove successful in 2005 with Huntington Cleveland Harborfest Tall Ships Challenge, camp-in and long-term exhibits upgrade collaboration in process (2006)

  11. Key Task Force Observations & Issues • Both GLSC and HHS Trustees Task Force members were excited by potential to enhance each individual entity and to create a “critical mass” on the North Coast. • Task Force members felt that each entity was ideally positioned for greater collaboration and that the possibility of consolidation would resonate well with the funding community. • GLSC Trustees were concerned about liabilities, operational expenses and potential capital expenditures related to the Mather facility (ship). • Harbor Heritage Trustees wanted to ensure that the Mather’s unique identity, historic preservation efforts, and strong volunteer cadres were continued and developed more fully.

  12. Task Force Process

  13. Task Force Process, cont.

  14. Joint Task Force FindingsSummary of Financial Analysis • Acquiring the Mather and its collections does not adversely impact GLSC’s financials. • As the combination matures, the value to GLSC is expected to increase, as facility rentals, educational programs, special events, marketing, general admissions, and other GLSC cost centers take advantage of revenue-enhancing opportunities offered by the Mather reputation and facility. • Expenses associated with the Mather facility and operation are offset by revenue from:  Strong history of contributed revenue that is expected to continue and not be adversely impacted by combination  Admission fees and greater potential for visitorship • Initially, there will be no reduction in the combined payroll. Long-term, economies may be realized. Some redundant business expenses will be reduced immediately.

  15. Summary of MOU for Business Combination • GLSC assumes responsibility for Mather operations, assets, and liabilities • GLSC acquires substantially all of HHS assets and liabilities, including sole ownership of Mather and museum collections and archives • GLSC Board Governance Committee will nominate 2 current HHS directors to become directors of GLSC • HHS would continue to exist as separate nonprofit corporate entity. With written approval, HHS may fund-raise for Mather on behalf of GLSC. HHS agrees not to compete with GLSC in conducting maritime-related activities and for grants or other funding to support Mather-focused activities. • GLSC would contract with HHS for one year following Combination Date to assist with the transition and plan future joint museum activities. Services would be provided by HHS Executive Director who will remain as the sole employee of HHS

  16. Joint Task Force Final Recommendation The joint Task Force recommends to their respective Boards that the HHS and GLSC move forward with a business combination whereby the W.G. Mather Museum and all assets would be transferred to the GLSC March 29, 2006 Joint Trustee Task Force Meeting

  17. Sequencing the Combination

  18. Media Announcement

  19. Board Leader Perspective • Board members play an essential role in bringing civic and philanthropic community leaders along • Identify one Board member for each organization who has merger experience and can help coach executive leadership through process • Trust is key to success on multiple levels • Volunteers and donors are key stakeholders in the deal • Takes minimum of 6-9 months for merger exploration, analysis and due diligence • Neutral third party facilitator is important to the process James D. Ireland III Past Chair, GLSC Board, Current Chair, W.G. Mather Board

  20. Anchorage Museum Alaska Gallery

  21. Imaginarium Bubble Lab

  22. Anchorage Museum Art Gallery

  23. Imaginarium Teen Volunteer

  24. Anchorage Museum Atrium

  25. Imaginarium Workshop

  26. Imaginarium Touch Tanks

  27. Experiential, Exploratory, Fun!

  28. Lessons Learned • Start from positions of strength • Actively and strategically engage key stakeholders • Choose your partners carefully! • Be prepared to invest both time and money in the process • Clearly define the process and timeline • Honor each other’s vision, mission and values • Build trust as the first and largest pillar of the foundation • Execute a strategic communication plan throughout the process • Engage a neutral third party facilitator to guide the process • Easier for larger organization to view merger as a “business deal” • Smaller organization will view merger in more “personal” terms • Larger organizations will be concerned about taking on liabilities • Smaller organization will be concerned about loss of identity

  29. Alliance-Based Growth Strategies:Appropriate Choices on the Collaboration-Merger Continuum ASTC 2006 Louisville, Kentucky www.davidheil.com

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