M&A Not Just for Profit

When considering social ventures, the primary organizational focus is impact rather than profits, according to “It’s Not All About Growth for Social Enterprises.”[1] This is in strong contrast to business ventures where the focus is on growth. In industry concerns include growing sales, growing margins, growing revenue, growing market share—the list goes on. How that growth takes place is just as important as whether or not it takes place at all. I am curious about when organizations start to think about growth, or in the case of social ventures, when they consider scaling their impact. New businesses think about growth before the business is launched—business plans require this step. Existing business think about this formally in annual plans and less formally daily. Often whole departments exist—Mergers & Acquisitions—to consider growth by acquiring another company. Do non-profits have M&A departments? Do social ventures?

            Interestingly the article on growth for social enterprises described a dilemma faced by leaders—grow organically or grow through other organizations. However, what struck me was not the dilemma itself, but when the leaders often faced this dilemma, “when an organization has evidence that its innovation and model produce substantial social impact.” So does an organization have to wait to make an impact before it considers making a greater impact?

            The article, “Nonprofit Mergers and Acquisitions: More Than a Tool for Tough Times” confirms my suspicion: non-profits and social ventures need M&A departments.[2] As articulated in this article, a M&A competency is not only useful in reacting to change—economic downturn or a succession vacuum—but it is useful in proactively driving growth and greater impact. New social ventures should not only consider their competition and/or substitutes but also consider who might they merge with to expand their impact in the future or what organizations with which to partner at various milestones.

            This proposal of an M&A competency in non-profit and social venture organizations is aligned with “How to Take a Social Venture to Scale’s” third (of seven) organizational capability to help take an innovation to the next level: Alliance-Building.[3] The focus here is identifying key partnerships.  With partnerships it is important to not only think with whom to partner but for what purpose, period, and potential that partnership has for future endeavors. I love the example of One Degree Solar partnering with Coca-Cola to deliver solar power kits to kiosk owners in Kenya.[4] The mutually beneficial aspect was key to this partnership. Most beneficial to One Degree Solar (more than Coke’s brand) was Coke’s unparalleled supply chain network.

Mergers and acquisitions are not just for the for-profit community. Taking a social venture to scale involves competencies in strategic planning, alliance building, and considering who will be your next partner or next acquisition.

[1] It’s Not All About Growth For Social Enterprises (Harvard Business Review Blog Network, January 21, 2013); http://blogs.hbr.org/cs/2013/01/its_not_all_about_growth_for_s.html

[2] Nonprofit Mergers and Acquisitions: More Than a Tool for Tough Times (The Bridgespan Group, February 25, 2009); http://www.bridgespan.org/Publications-and-Tools/Funding-Strategy/Nonprofit-Mergers-and-Acquisitions-More-Than-a-Too.aspx#.VgF37s7wNe8

[3] How To Take A Social Venture To Scale (Harvard Business Review Blog Network, June 18, 2012); http://blogs.hbr.org/cs/2012/06/how_to_take_a_social_venture_t.html

[4] Why Coke Is Bringing Solar Power To Rural Kenya (Fast Company, June 14, 2013); www.fastcoexist.com/1682126/why-coke-is-bringing-solar-power-to-rural-kenya