PANEL DISCUSSIONMERGERS & ACQUISITIONS

INTRODUCTIONS

Stephen Christian-Michaels CEO, Family Services of Western PA CSO, Wesley Family Services

Doug Muetzel CEO, Wesley Spectrum Services

CEO, Wesley Family Services

Gary Bell Executive Director, Milestone Centers, Inc.

CFO, Milestone Centers, Inc.

Eric Lindey CEO, Partners for Quality

Ann Truxell Executive Director, Vintage

Fred Massey CEO, Familylinks

CONFLICTS OF INTEREST

The Panelist do not have any commercial relationships

There are no conflicts of interest with the material being presented

Earl

y Ph

ase Getting to

Know You

Mid

dle

Phas

e Up to the date of Merger

Late

r Ph

ase Blending of

Cultures/Making a New Culture

PHASES OF M&A PROCESS

TYPES OF STRATEGIC ALLIANCES

CoalitionGroup of agencies

with a common goal

ParentSubsidiary – both organizations are

maintained, but one controls the other

ConsortiumGroup of agencies

where resources are collectively used for a

common aim

NetworkAlliance for agencies

Joint VentureLegally formed alliance

where agencies maintain autonomy

MergerOne entity absorbed

by the other

ConsolidationNew entity formed

STEPS TO STRATEGIC RESTRUCTURING

WHY?Conduct

Environmental and

Organizational Assessment

Determine Criteria of Success

Determine Key Characteristics of

Compatible Partner

WHO?

Find the Partner

Analyze Compatibility of

Culture

Build Trust

Create a Shared Vision and Success

Metrics

Affirm Buy-In to Explore

WHAT?

Organize Exploration

Process

Learn, Confirm, Affirm

Determine Desired Structure

and Key Characteristics

Conduct Legal and Financial Due

Diligence

Finalize Details, Draft

Implementation Plan and Budget

GO/NO GO

HOW?

Sign and File Documents

Build Staff Buy-In

Implement Workplan

Approval

Celebrate, Communicate,

Implement

ARE WE READY TO COLLABORATE?

What do we hope to achieve?

Are the right people involved?

Do we all trust and respect each other?

What will each organization contribute? What will each receive?

Are external factors aligned in support of the effort?

QUESTION:

Where are you all by a show of hands?

Not interested in affiliations, merger or acquisition

Thinking about it

Starting the exploration of possible partners

In the process of an affiliation, merger or acquisition

Completed one or more affiliations, mergers or acquisitions

EARLY PHASE - PARTNERS FOR QUALITY MILESTONE CENTERS

Our StorySearching for a PartnerStrategic Plan Mission FitFinancial Strength

EARLY PHASE - PARTNERS FOR QUALITYMILESTONE CENTERS

What are the Business Models Utilized

Type of Culture

Communication

Board Involvement

How were Early Efforts of Affiliation Funded

QUESTION

What do you think some of the difficult vendor relationships might be or were?

MIDDLE PHASE –WESLEY FAMILY SERVICES

Our Story

Communication and Engagement of Leadership/Staff

Culture Assessment

MIDDLE PHASE –WESLEY FAMILY SERVICES

Board

Due Diligence begins

Planning

Merger Expertise

MIDDLE PHASE –WESLEY FAMILY SERVICES

Developed merger planning committee structure

Corporate Structure

Leadership structure developed

Decision Process

MIDDLE PHASE –WESLEY FAMILY SERVICES

Strategy of Growth

Funding

RIF of positions

MIDDLE PHASE –WESLEY FAMILY SERVICES

New Entity Board Created

Both agencies were voted to be entered into the new entity on 6/29

Merger official on 7/1

QUESTION

What do you think some of the difficult staff issues are going to be or were?

LATER PHASE – FAMILYLINKS/VINTAGE

DONE …

BUT NOT OVER

EXPECT CONTINUED CHALLENGES

EXPECT CONTINUED INVESTMENT

COMMUNICATIONS

STAFF SUPPORT

SYSTEMS

BOARD

MISSION & STRATEGY

POLICY & PRODEDURE

CULTURE

IT’S NOT QUITE TIME TO DO THIS

POTENTIAL PITFALLS OF MERGERS

Getting CEO’s to support the merger –what are their roles, someone leaving, new roles

Boards – fear of giving up tradition, - losing community reputation

Lawyers driving process

PAIN POINTS Selection of Electronic Systems

Selection of New Work Process

Changes to Benefits/Brokers

Administrative Staff Reduction

Changes in Administrative Position/New Structure

Moves of Staff

Not going to reduce significant costs right away,

but you need to improve margin within three years

LESSONS LEARNED –PARTNERS FOR QUALITY MILESTONE CENTERS

• Don’t let lawyers drive the due diligence process• Identify outside support (consultant) early• Take time to get comfort level, but keep pushing• CEO’s – identify key staff member to assist

LESSONS LEARNED – WESLEY FAMILY SERVICES

Assign Merger Specialist/Coordinator

Involve Leadership/Staff

Develop Implementation Teams

Virtual Document Room

Early Engagement of the Board

LESSONS LEARNED – FAMILYLINKS/VINTAGE

Manage the expectationsCommunicating internally and externallyThe process takes resourcesKeep your Mission at the forefrontWatch your assumptions. Purposely schedule a debrief post merger

SYNERGIES OF MERGER – PARTNERS FOR QUALITY VALUE TO THE COMMUNITY MILESTONE CENTERS

Development of Best Practices

Opportunities to cross refer to existing programs

Sharing of professional staff (psychiatrists, psychologists)

Opportunities for joint programming

Create economies of scale for back office functions

SYNERGIES OF MERGER – FAMILY SERVICESVALUE TO THE COMMUNITY WESLEY SPECTRUM

Improve functioning of Outpatient Expansion of Autism Services Consultation across Autism/Intellectual Disability Expand Transition age service specialty Growth/expansion into more counties

SYNERGIES OF MERGER – VINTAGEVALUE TO THE COMMUNITY FAMILYLINKS

New headquarters and a historical asset

Valuable infrastructure support for the subsidiary

Economy of scale savings

Positive messaging

QUESTIONS?

ORGANIZATION WEBSITES

Partners for Quality: www.pfq.org

Milestone Center, Inc.: https://www.milestonepa.org/

Vintage Senior Services: http://www.vintageseniorservices.org/

Familylinks: http://www.familylinks.org/

Family Services of Western PA: www.fswp.org

Wesley Spectrum: www.wesleyspectrum.org

Wesley Family Services: www.wfspa.org