Four questions can guide discussion to help leaders of a not-for-profit senior living organization decide whether to go through a sponsorship transition — an affiliation / merger, acquisition, disposition or closure — according to a recent white paper from Ziegler.
The specialty bank recommends conversations during regularly held board meetings, strategic planning retreats or within strategic planning committee meetings. The questions:
Why and how do we want to grow? “There are some organizations who are divided on this topic,” says Lisa McCracken, Ziegler’s director of senior living research and development. “In those instances, time needs to be spent working through the varying opinions and landing on a unified position within the organization. For those who have general agreement around the need to grow and evolve, having clarity around the reasons for growth is important.”
What is the organization’s readiness for growth? According to the white paper, three factors play into this decision: risk tolerance, resources and corporate structure.
Risk tolerance, McCracken says, “includes not only the obvious elements of financial risk associated with various growth strategies but also the pace at which the organization is comfortable moving forward.”
And if an organization doesn’t have the resources necessary to pursue a sponsorship transition, then “the organization needs to have the discipline to say no,” she adds.
Legal counsel should be included in discussion related to corporate structure, according to the white paper. “The right corporate structure not only aligns with growth objectives but is an effective tool in mitigating risk,” the paper notes.
Is the organization looking to be the “affiliator,” or is there willingness to be the “affiliatee”? This question relates to how much control the companies want to have.
“It is noteworthy to acknowledge that when you are in a position of financial and operational weakness you may not have a choice in this regard,” McCracken says. “For those who are approaching this topic strategically and from a position of strength, this question is a healthy one to discuss as a group.”
What is the organization’s criteria for a potential partner? When the leadership team has a clear picture of the expectations of a potential partner, members are more prepared for negotiations and opportunities, according to Ziegler.
“Spend time as a group discussing your organization’s criteria for partnership,” McCracken says. “It is recommended that you start by identifying the short list of non-negotiables and then back it up with ‘nice to have’ criteria.”
Additional information is available in Ziegler’s white paper.