Merger and acquisition activity between nonprofit social service organizations: A case study. Nonprofit and Voluntary Sector Quarterly

This article reports a case study of the process of mergering two nonprofit social service organizations. Although the event was de-picted as a merger by the majority of stakeholders, it was in fact an acquisition or buyout of one organization. Although the negotiation processes were described in the language of efficiency, power issues were their focus. Awareness of power differentials and insight into outcome expectations provided leverage to the acquired group. Judi-cious use of ambiguity aided participants in reaching accord in the negotiations. During the last two decades, the environment within which nonprofit social service organizations operate has become more fluid and unpre-dictable than ever before (Musselwhite and Salamon, 1986; Powell and Friedkin, 1987; Salamon, 1987; Milofsky, 1988a, 1988b). Fiscal resources for human service organizations have become scarce because of cutbacks in funding sources. Competition for these scarce resources has become fierce. Between 1981 and 1986, social services suffered a 23.1 percent reduction in federal support (Rosentraub, 1986; Musslewhite and Salamon, 1986). Human service organizations have implemented several strategies for coping with environmental uncertainty and resource scarcity (Net-ting and Kettner, 1986; Milofsky, 1988b). One is more formalized and centralized operation. Another is service diversification. Still another is service specialization. In all three strategies, the organization’s principa