Case Studies
Mergers

Merger Case Study: Bloomington Chamber of Commerce and Greater Minneapolis Chamber of Commerce

Excerpted from Mergers of Nonprofits, a manuscript by Louise Dickmeyer (currently under publisher’s review)

Mergers of Nonprofits by Louise Dickmeyer is a handbook intended for use by membership associations and other nonprofit organizations interested in merging operations. It presents the various aspects related to the merger process, as well as the special considerations to be taken into account when merging membership associations.

The handbook also addresses the need for mergers in the nonprofit sector, why they should be considered as an option to strengthen an organization, the motivations that may lead to a merger, and the existing market forces that make that need more compelling.

Case Study

Throughout the text of the book, a case study is presented covering the merger between the Bloomington (MN) Chamber of Commerce and the Greater Minneapolis (MN) Chamber of Commerce. Louise Dickmeyer’s involvement in this merger began with discussions in the first joint meeting of the staffs and executive committees, through each aspect of the merger, and continued to the tally of the vote. Her responsibilities included initially “selling” the concept, responding to the problems and issues, and smoothing the bumps along the way.

This overview of the case study presented here examines many sides of the merger challenge. It also encompasses the unique challenge presented when members are involved in the decision to merge or not. This is a candid discussion of the political and staff member challenges as the organizations moved through the process.

Further coverage of the case, including Ms. Dickmeyer’s personal observations and comments, appear throughout the complete book text as various aspects are presented. Related documents are also included in the book’s Appendices.

Membership Associations – Special Considerations

Endeavors to merge membership associations are open to additional political considerations: the members. While bylaws are often written to vest the authority for such matters with the board of directors, not all organizations have this provision and therefore the bylaws of the organization call for a vote of the members to dissolve, or amend the legal structure of the organization. Member’s loyalty, their support and understanding of the need for a proposed merger, and ultimately their vote are of critical importance.

This case study presented herein accounts for two organizations whose bylaws did indeed call for a vote of the members. Even that process itself had several alternatives and various considerations. Ultimately, though, the most serious aspect was that the decision was left to hundreds of individual business representatives. It is one thing to have two well-informed boards of directors vote on the matter — it is quite another when you have a set of two or more diverse membership bases, at varying degrees of appreciation and understanding of the matter at hand or the issues and solutions being presented. Selling a merger to the membership base creates the challenge. This aspect will be addressed in addition to the aspects related to the merger process on a whole.

Background

The Chambers of Commerce of Bloomington and Minneapolis, Minnesota, represent the largest and third-largest cities in the state. The Bloomington chamber had been losing members and was unable to sustain its operations, staffing, programming, and communications given its level of membership support. It was in a crisis mode. Leaders of the Bloomington Chamber approached their counterparts in Minneapolis and so began the merger discussions.

The organizations chose to take a soft approach to a merger and created what was referred to as an alliance. The intent was to “date” for a period of nine months during which time the two organizations were to explore the issues of a merger.

Organizational Histories

Bloomington Chamber of Commerce (BCC): The community of Bloomington, Minnesota, had accomplished more than most other high growth areas in the United States in 45 years leading up to 2001. Highlights of that period included the development of a burgeoning international airport (the world’s 9th largest), and the Mall Of America (a world-destination retail and entertainment complex). In addition, two major interstate highways run through Bloomington, Interstate 494 and Interstate 35W. Throughout the region’s growth, the BCC had been at the forefront of providing leadership, resources and programs necessary for business success.

The BCC boasted a membership base in 1998 of 900 members. In the three next years, member numbers dropped substantially, weakening the organization’s financial base. The BCC recognized that it needed to strengthen the organization in order to best serve its remaining membership and was therefore motivated to discuss a merger.

Greater Minneapolis Chamber of Commerce (GMC): The GMCC had been in existence since 1881. The GMCC members reside in all suburbs in the region and both cities. The majority of memberships in the GMCC were held by small businesses. The GMCC also had large members such as Wells Fargo, USBancorp, Target Corporation, 3M, Cargill, American Express Financial, all of which have their corporate headquarters in Minneapolis.

There are two major cities in the region, Minneapolis and St. Paul. The cities lie in two separate counties – all with separate governments. St. Paul is the state’s capital.

In recent years, the GMCC board had adopted an aggressive strategy to regain a community leadership position in public policy. Advocacy, and a strong voice at the capitol was the central purpose for large businesses to belong to a chamber organization. In order to be truly successful in creating a strong position for advocacy, the board resolved that it must continue to regionalize its efforts to assemble a broad membership base that consisted of thousands of members across the Twin Cities region.

In August of 2000, the GMCC Board approved a goal of “initiating formal discussions with local chambers specifically for the purpose of exploring areas where joint operations can either reduce cost or increase member value.”

The Alliance

On December 20, 2000, the first meeting was held between the executive committees of the GMCC and BCC organizations. At their respective board meetings held the following month, an alliance was approved which created a trial period in which to create the structure for the merged operations.

The Reality of the Situation

The good news was that the executive committees of each chamber were committed to their goal. The boards had approved the alliance and understood that the ultimate goal was an intended merger. The chief paid executives were anxious to begin work.

In hindsight, though, the staffs of both organizations were only remotely aware of the development and most importantly the ramifications of a successful merger. The two organizations were marching forward with a plan to completely integrate operations with a respectful assumption that since they were both chambers of long standing they were truly alike. In truth, however, the two were quite different. As work progressed, each one of these differences surfaced and in some cases caused problems large and small.

The Comparison

There are two aspects that in hindsight were the greatest areas of concern and required better handling. The first was determination of the succeeding chief paid executive. In the case of the Alliance, there were two individuals who were presidents of their respective chambers. The Bloomington position had been filled only one-year prior on an interim basis. The organization recognized it was challenged, and brought a president in temporarily until permanent solutions could be implemented. In my opinion, having been one of the presidents, it would have been better had the matter as to who would succeed as the lone chief executive been resolved earlier in the process so as to avoid a fair amount of consternation and doubt which surfaced causing some jeopardy to the entire process.

The second aspect of concern was the acknowledgement, or lack thereof, of the costs of the merger. The staffs delved in to the work of aligning and merging these organizations. No upfront consideration was given to the costs of the merger either in hard costs or in the opportunity cost of staff’s time. The costs mounted, and the organization’s bottom line went further and further in the red through the year. Consequently, the challenges inherent to all mergers were exacerbated by financial worries. This aspect may have been either eliminated or at least relieved, had adequate funding been secured up front, prior to the onset of the real merger work.

The overall comment on what was learned from this case is prepare, prepare, prepare.

Epilogue

The merger became official on November 30, 2001. The vote was unanimous by the Minneapolis membership and was approved by a large margin by the Bloomington membership.

About the Author

Louise Dickmeyer is the Founder and CEO of Nonprofit Innovations, which specializes in serving nonprofits and implements strategies to increase their efficiency and ability to fulfill their missions. Direct assistance and counsel is offered in all components of capacity building. NPI also works to educate nonprofits on the market factors influencing their ability to compete.

Louise C. Dickmeyer, CEO/Owner
Nonprofit Innovations, LLC
1704 North Riverfront, Mankato, MN 56001
225 S. 6th Street, Suite 5350; Minneapolis, MN 55402
Phone: 507-388-9170 / 612-756-4675
Email: lcdickmeyer@charter.net