Presenting a live 110 ‐ minute teleconference with interactive Q&A Non ‐ Profit M&A: Benefits and Pitfalls Analyzing Tax, Accounting and Business Aspects of Partnerships With Other NPOs and For ‐ Profit Entities WEDNESDAY, MARCH 14, 2012 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: W. Marshall Sanders, Counsel, Alston & Bird , Atlanta , , , Dan McCormick, CEO, McCormick Group , Fripp Island, S.C. Lee Klumpp, National Non-Profit Group Audit and Accounting Technical Leader, BDO USA , Bethesda, Md. For this program, attendees must listen to the audio over the telephone. Please refer to the instructions emailed to the registrant for the dial-in information. Attendees can still view the presentation slides online. If you have any questions, please contact Customer Service at1-800-926-7926 ext. 10 .
Conference Materials If you have not printed the conference materials for this program, please complete the following steps: Click on the + sign next to “Conference Materials” in the middle of the left- • hand column on your screen hand column on your screen. Click on the tab labeled “Handouts” that appears, and there you will see a • PDF of the slides for today's program. Double click on the PDF and a separate page will open. Double click on the PDF and a separate page will open. • Print the slides by clicking on the printer icon. •
Continuing Education Credits FOR LIVE EVENT ONLY Attendees must listen to the audio over the telephone . Attendees can still view the presentation slides online but there is no online audio for this program. Attendees must stay on the line for at least 100 minutes in order to qualify for a full 2 credits of CPE. Attendance is monitored as required by NASBA. Please refer to the instructions emailed to the registrant for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 . at 1 800 926 7926 ext. 10 .
Tips for Optimal Quality S S ound Qualit y d Q lit For this program, you must listen via the telephone by dialing 1-866-873-1442 and entering your PIN when prompted. There will be no sound over the web co connection. ect o . If you dialed in and have any difficulties during the call, press *0 for assistance. You may also send us a chat or e-mail sound@straffordpub.com immediately so we can address the problem. Viewing Qualit y To maximize your screen, press the F11 key on your keyboard. To exit full screen, press the F11 key again press the F11 key again.
N Non ‐ Profit M&A: Benefits and Pitfalls P fit M&A B fit d Pitf ll Seminar March 14, 2011 W. Marshall Sanders, Alston & Bird Lee Klumpp, BDO USA marshall.sanders@astc.com lklumpp@bdo.com Dan McCormick, McCormick Group danh@mcc-group.com
Today’s Program Related Legal Issues Slide 7 – Slide 12 [W. Marshall S anders] Types Of Business Relationships To Consider Slide 13 – Slide 17 [Dan McCormick and Lee Klumpp] Reasons To Pursue Or Avoid Such A Relationship Slide 18 – Slide 25 [Lee Klumpp and Dan McCormick] A Applicable Rules, Standards And Guidance li bl R l St d d A d G id Slid 26 Slid 51 Slide 26 – Slide 51 [Lee Klumpp] Potential Risks To A Non-Profit’s Tax Exemption Slide 52 – Slide 53 [Lee Klumpp] [Lee Klumpp] Leading An Organization Into Merger Consideration Slide 54 – Slide 59 [Dan McCormick] Commentary On Employee Benefits, HR Issues Slide 60 [All speakers]
W. Marshall Sanders, Alston & Bird RELATED LEGAL ISSUES RELATED LEGAL ISSUES
Forms Of Corporate Reorganization Forms Of Corporate Reorganization A A. Contractual arrangements Contractual arrangements B. Dissolution C. Consolidation D. Merger 8
Merger: Basic Legal Attributes A. Automatic assumption of liabilities by survivor B. Automatic assignment of assets to survivor C. C. Surviving corporation “stands in shoes” of non-surviving Su v v g co po a o s a ds s oes o o su v v g corporation 9
Pre Merger Steps Pre-Merger Steps A A. M Memorandum of understanding/term sheet d f d di / h B. Due diligence 10
Merger Plan And Articles I. Plan Of merger A A. S Statutory requirements i B. Board of Directors approval C. Membership approval II. Articles (or certificate) of merger 11
State And Federal Oversight Of Mergers State And Federal Oversight Of Mergers A A. Attorney general Attorney general 1. Sect. 501(c)(3) mergers 2. Non-charitable or for-profit mergers B. Internal Revenue Service 1 1. Final tax information return Final tax information return 2. Public charity status of surviving corporation 3. Private foundations 12
D Dan McCormick, McCormick Group M C i k M C i k G Lee Klumpp, BDO USA TYPES OF BUSINESS TYPES OF BUSINESS RELATIONSHIPS TO CONSIDER
Th C ll b The Collaboration Continuum i C i THE COLLABORATIVE CONTINUUM THE COLLABORATIVE CONTINUUM INITIATIVES Service Service Joint Joint Shared Shared Communicate Merger Sharing Ventures Governance POTENTIAL BENEFITS COMPLEXITY Legal MOU/LOA* Contracts Filings Filings INSTRUMENTS * Memo of understanding/letter of agreement 14
Formal Collaborations Short Of Merger I.Joint venture A. Two or more parties form an alliance to create or operate a new venture together. Each entity bring specialized skills and resources to the table. II.Shared services A. Two or more parties agree to meld specific activities or programs into a single delivery or service system (e.g., accounts receivables and payables are handled by a centralized center). payables are handled by a centralized center) III.Shared governance A. Two or more parties agree to establish an enterprise by melding resources and more importantly equally sharing governance and resources and, more importantly, equally sharing governance and strategic decisions. “More than 100,000 nonprofit groups nationwide will fail within the next two years, including a few "big brand-name nonprofits” - Paul C. Light, professor of public service at New York University 15
Collaboration Continuum (Cont.) C ll b i C i (C ) As the opportunity for potential gain increases, so does the complexity of the relationship. A collaboration does not have to progress; it can start at any point collabo at o does ot ave to p og ess; t ca sta t at a y po t across the continuum. A contract for outsourcing, or melding specific budget line items under a single management system is a less complex option under a single management system, is a less complex option. Sharing cost, oversight, operations management and governance produces the best long-term relationships and builds trust. 16
Alternate Forms For Merger And Acquisition • Merger (A>B=B) or consolidation (A+B=C) • Merger (A>B=B) or consolidation (A+B=C) • Consolidation favored; neither has advantage; but exemption consequences • Acquisition of assets/dissolution • Acquisition of assets/dissolution • “Alliance,” contract, joint venture, LLC, etc. • Umbrella entity with subsidiaries 17
Lee Klumpp, BDO USA Lee Klumpp, BDO USA Dan McCormick, McCormick Group REASONS TO PURSUE OR AVOID SUCH A RELATIONSHIP
Why Consider Merger Or Acquisition? Wh C id M O A i i i ? Build lobbying and advocacy clout Build lobbying and advocacy clout • Complementary, not competing • Re-positioning for new demographics • Increase audience/market share • Cutting costs, dues, fees • Increase awareness and raise importance in industry/field • Eliminate competition and build synergies • Reduce members’ multiple dues • Increase efficiency, avoid duplication, cut down on back office support and costs Increase efficiency avoid duplication cut down on back office support and costs • • A merger or consolidation only makes sense if there is consensus among both organizations’ leaderships that balances the interest of each organization, and those g i ti ’ l d hi th t b l th i t t f h g i ti d th interests over the long term favor combining. 19
Factors That Might Prohibit A Merger Or Acquisition M O A i i i Mission-focused vs profit-focused personalities Mission-focused vs. profit-focused personalities • • Culture • History History • Mistrust • Inability to secure balance of interests • Leases • Employee obligations • 20
Wh C Why Consider Collaboration? id C ll b i ? • Can you make these statements? ― We are financially stable and have the ability to plan and grow and affect our mission better than any other grow and affect our mission better than any other organization in our field. ― Our income trends are rising, and we have the capacity to invest in growth. ― Our numbers of donors and volunteers are stable and/or growing, and we have all the resources we need to affect growing, and we have all the resources we need to affect our mission and take advantage of coming trends in social giving and constituency support. 21
Recommend
More recommend
