On Nonprofit Mergers and Consolidations

August 4, 2010 at 8:28 am Leave a comment

Some more food for thought as Project Concentrus moves ahead. This advice comes from Curtis Thaxter LLP.

Merger or Consolidation. Merger or consolidation are the ultimate in integration. In a merger, one or more corporations are subsumed into another, with the other continuing as the surviving corporation. In a consolidation, two or more corporations are combined into a new corporation. In the case of a merger, the survivor ends up with all assets of the participating corporations and is responsible for all liabilities, whereas in a consolidation, the new corporation receives all the assets of the participants and becomes responsible for all their liabilities.

Advantages:

  • Assuming the corporate and exempt purposes of the participants are consistent, mergers or consolidations allow seamless integration of operations and mission fulfillment.
  • Mergers and consolidations allow for reduction of duplicative services and redundant locations.
  • They permit the weaker organization’s mission to continue to be fulfilled, instead of closing it down, and allow both organizations to pool their resources.

Disadvantages:

  • Mergers and consolidations can be expensive because most organizations will need professional assistance to do it right.
  • Numerous issues must be analyzed, such as tax exemption and UBIT issues, third party consents, harmonizing corporate and exempt purposes of both organizations, staff utilization and space requirements.
  • Merger or consolidation can cause significant friction if it is determined afterwards that the participants are incompatible.
Advertisements

Entry filed under: chamber and economic development merger, Chamber Consolidation, Chamber Merger, Nonprofit Mergers. Tags: , , .

Role of Place in Attracting People and Businesses One Theory Underlying Economic Vitality Dashboards

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Trackback this post  |  Subscribe to the comments via RSS Feed


Archives

Calendar

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 16 other followers


%d bloggers like this: