Mergers & Alliances: Mergers in the Time of COVID

The COVID-19 crisis has created many challenges for chambers of commerce. With so much disruption, chambers continue to adapt and evolve to serve their member businesses and help their communities recover.

The pandemic has also provided chamber leaders an opportunity to reconsider their business model, launch innovative programs and services and review the competitive landscape in search of partnership opportunities. Some are reconsidering alliances and mergers as a way to increase value and position the chamber for future growth and success.

Desperation or Aspiration

“When I think of mergers, I think you do them for one of two reasons. Mo Merhoff (long-time leader of OneZone in Carmel, Indiana) used to tell me you do things out of aspiration or desperation,” said Jeff Rea, CCE, president & CEO of the South Bend Regional Chamber. “I hope as you’re having these conversations it’s because you’re aspirational, that you want to better serve your community and better use business resources.”

The desperation side of the equation is easier to see in the midst of a global pandemic. Many chambers have seen a significant drop in revenue. The pandemic’s impact on revenue from in-person events has been devastating. Many member companies have been hard hit, and hundreds of thousands of businesses in the U.S. have closed permanently. Sponsors and investors have grown more cautious and tightened their purse strings as they navigate their own fiscal challenges.

But through it all, chambers of commerce have shown impressive resilience and the ability to adapt to support their communities. They’ve showcased their value during the crisis, and as they continue efforts to support economic recovery, the forces driving merger considerations could turn more aspirational. Some of these might include:

• Unifying multiple voices, boosting credibility and impacting policy outcomes.
• Creating, combining and innovating on complimentary program and service offerings.
• Sharing operating costs to free up more resources to focus on mission-based outcomes. 

Look for a Window of Opportunity

In Minneapolis, the Minneapolis Regional Chamber and TwinWest Chamber were exploring a merger prior to the pandemic. Given their shared goals and complementary initiatives, COVID-19 increased the urgency for innovation and partnership that could be achieved through consolidation. 

“By leveraging collective resources and relationships, together we can bring forward innovative programs for our members and solution-based strategies for the region,” said Shannon Full, president & CEO of the TwinWest Chamber. “We are excited to increase the value that we bring to members and stakeholders at a time when it is most needed.”

The Clearwater Regional Chamber and Clearwater Beach Chamber merged to become Amplify Clearwater just months before the pandemic. President and CEO Amanda Payne was planning for the organizational shifts to take years, but the crisis provided the opportunity to address challenges around legacy events, committees and programs that people were reluctant to give up.

“Nothing is the same and nothing will return to the same,” Payne said. “The silver lining to this pandemic is that everyone now knows that there’s disruption, and disruption creates the opportunity for change. We were able to grow and evolve in just a few months in a way that I thought was going to take the organization years.”

Tips From Those Who Have Done It

Emphasize Impacts Over Efficiencies

Let’s be honest, sometimes stakeholders instigate mergers so they can write fewer checks. There is an inherent expectation that efficiencies achieved through a merger will result in cost savings. Instead, focus your stakeholder communication on the greater impact the merged entity will have on economic and community outcomes.

“Our emphasis was always going to be on impacts over efficiencies,” said Rick Kidder, co-CEO of the One SouthCoast Chamber in Massachusetts. “We were emphasizing the positive impacts that could come together, not working on how do we trim budgets in order to make this thing work.”

Be Deliberate About Merging Cultures

Chamber CEOs who have led through mergers stressed the importance of being intentional about creating focused, cross-functional opportunities to bring the teams together. Many expected it to happen organically, but they found that you have to take purposeful action. It is critical that you understand the cultural differences and take action to drive behavioral change and team cohesion. Commerce Lexington President and CEO Bob Quick referred to it as playing the role of a blender. Recommended tactics include creating cross-functional project teams, rearranging the office layout and creating blended shared services teams. Also, don’t overlook the need for creating social opportunities for team members to get to know one another outside of the office.

Consider Third-Party Validation

When mergers fail, we hear horror stories about egos, hidden agendas and sacred cows. Sometimes it can be important for the CEO to step back and invite a third-party in to help guide the discussion and engage stakeholders. Leveraging a third party for research, analysis and benchmarking can also be an effective tool for creating a vision and driving the merger discussion forward. 

Examine Different Models and Start Small

Mergers and consolidation aren’t the only routes to boosting effectiveness. Research different approaches to regional collaboration, whether through alliances, partnerships, federations, shared services agreements, joint memberships, shared events or programs, co-locating your teams, joint project teams, etc. These are effective steps for building trust and gaining a greater understanding of what’s possible. Start small and build partnerships over time.

Address Challenges and Evolve Over Time

“When we created the structure, I approached it from a mindset that, whatever obstacle there was, we’d find a way to address it. I was going to make sure that this worked and that we built a model that was sustainable and where other organizations could come in,” said Capital Region Chamber President & CEO Mark Eagan, CCE.

Typical challenges include governance issues, stakeholder buy-in, board size, staff stress, managing multiple facilities and more. In the sort-term, CEOs who have managed through mergers stress the importance of being flexible in the early years. Typical strategies include:

• Establishing a larger board than desired in the short-term to maintain buy-in from volunteer leaders at the various organizations. Decrease board size over time as you refresh your governance procedures.
• Committing to maintain all staff with the understanding that duties may change.
• Engaging investors to maintain investment levels until the organization has the opportunity to achieve the desired operational efficiencies.
• Maintaining a physical presence in both communities during the short-term as a way to showcase the merged organization’s commitment to both communities.