Alliance-Based Growth Strategies:
Appropriate Choices on the
Collaboration-Merger Continuum
ASTC 2006
Louisville, Kentucky
Session Presenters
David Heil
President,
David Heil & Associates, Inc.
Portland, OR
Linda Silver
President & Executive Director,
Great Lakes Science Center,
Cleveland, OH
Chris Cable
Executive Director,
The Imaginarium Science Discovery Center
Anchorage, AK
Alliance-Based Growth Strategies
ASTC 2006
The Strategic Alliance Continuum
Co-Sponsorships
Federations
Joint Ventures
Mergers
Collaborations
Coalitions
Networks
Consolidations
Partnerships
Consortia
Parent-Subsidiaries
Business
Combinations
Low
High
Amount of Autonomy Relinquished/Level of Risk
Adapted from: John A. Yankey, et al.
"Merging Nonprofit Organizations: The Art and Science of the Deal"
Alliance-Based Growth Strategies
ASTC 2006
Driving Forces Behind Strategic Alliances
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Environmental
Increased competition
Community desire for consolidation
Physical proximity
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Programmatic
Diversification and/or expansion
Gain of market share
Improved quality

Managerial
Strengthen staff and/or leadership
Increased capacity
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Financial
Access to funding
Improved profit margin
Economies of scale
Optimization of resources
Alliance-Based Growth Strategies
ASTC 2006
Steps In The Merger Process
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Feasibility Exploration
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Side-by-Side Analysis
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Strategic Communications
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Due Diligence
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Transactional Agreements
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Merger Integration & Transition
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Evaluation
Alliance-Based Growth Strategies
ASTC 2006
Great Lakes Science Center
&
Harbor Heritage Society
(William G. Mather Museum)
Strategic Partnership
Great Lakes Science Center
Alliance-Based Growth Strategies
ASTC 2006
Mather Museum
Alliance-Based Growth Strategies
ASTC 2006
North Coast Harbor, Cleveland
Alliance-Based Growth Strategies
ASTC 2006
The Opportunity

In 1994 and 1996, GLSC leadership writes strong letters of support to the City of Cleveland for a
long-term lease for the SS William G. Mather at North Coast Harbor.

Harbor Heritage Society and GLSC jointly undertake a preliminary marketing and financial study
of the Mather Museum with Coopers & Lybrand (1997-98). As a result, each Board
independently approve resolutions to pursue a partnership once the Society receives a longterm lease for its Steamship William G. Mather Museum.

Harbor Heritage Society’s Strategic Plan (adopted Jan. 2005) suggests potential programmatic
and operational synergies between its SS Mather Museum and Great Lakes Science Center,
and identifies Dock 32 as preferable permanent Museum location.

GLSC Strategic Plan (adopted Aug. 2005) identifies the Great Lakes/environmental sciences as
a top content theme, and further identifies strategic alliances as a broad goal within the
Business Plan.

Mather Museum relocates to Dock 32 (Sep. 2005)

Joint ticketing and programming attempts prove successful in 2005
with Huntington Cleveland Harborfest Tall Ships Challenge, camp-in and long-term exhibits
upgrade collaboration in process (2006)
Alliance-Based Growth Strategies
ASTC 2006
Key Task Force Observations & Issues

Both GLSC and HHS Trustees Task Force members were excited by
potential to enhance each individual entity and to create a “critical
mass” on the North Coast.
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Task Force members felt that each entity was ideally positioned for
greater collaboration and that the possibility of consolidation would
resonate well with the funding community.

GLSC Trustees were concerned about liabilities, operational
expenses and potential capital expenditures related to the Mather
facility (ship).

Harbor Heritage Trustees wanted to ensure that the Mather’s unique
identity, historic preservation efforts, and strong volunteer cadres
were continued and developed more fully.
Alliance-Based Growth Strategies
ASTC 2006
Task Force Process
December 2005
GLSC and Mather Museum sign MOU to agree to investigate potential for more formal joint
venture, shared services or a merger.
 Joint Task Force formed.

January 2006
First Task Force meeting
 Comparison of: Key Metrics; Mission, Vision and Guiding Principles; Recent Strategic Plans,
Goals, Changes and New Directions; Historical, Current and Future Relationship and Programmatic
Successes and Opportunities between GLSC and Mather Museum.
 SWOT Analysis of Strategic Alliance options.
 Task Force observes many parallels and great synergy between the entities.

February 2006
Second Task Force meeting
 Preliminary Analysis of Full Merger vs. Joint Venture and Preliminary Financial Analysis.
 Preliminary data indicate full merger may yield greatest benefit to both entities.
 Decision made that “business combination” best describes desired outcome.

Alliance-Based Growth Strategies
ASTC 2006
Task Force Process, cont.
March 2006
Third Task Force meeting
 Detailed financial due diligence
 Task Force formally recommends presenting a GLSC/Mather Museum “business combination” to the respective
Boards.

April 2006
Fourth Task Force meeting
 Task Force reaffirms “business combination,” along with recommendations on combining personnel, programs and
operations
 Timeline, process and documents for combination established and identified

May 2006
Task Force findings finalized.
 MOU drafted for June 2006 GLSC and HHS Boards consideration.

June 2006

Task Force findings, recommendations presented to GLSC, HHS Boards.
Alliance-Based Growth Strategies
ASTC 2006
Joint Task Force Findings
Summary of Financial Analysis
•
Acquiring the Mather and its collections does not adversely impact
GLSC’s financials.
•
As the combination matures, the value to GLSC is expected to
increase, as facility rentals, educational programs, special events,
marketing, general admissions, and other GLSC cost centers take
advantage of revenue-enhancing opportunities offered by the Mather
reputation and facility.
•
Expenses associated with the Mather facility and operation are offset
by revenue from:
 Strong history of contributed revenue that is expected to continue
and not be adversely impacted by combination
 Admission fees and greater potential for visitorship
•
Initially, there will be no reduction in the combined payroll. Long-term,
economies may be realized. Some redundant business expenses will
be reduced immediately.
Alliance-Based Growth Strategies
ASTC 2006
Summary of MOU
for Business Combination
1.
GLSC assumes responsibility for Mather operations, assets, and
liabilities
2.
GLSC acquires substantially all of HHS assets and liabilities, including
sole ownership of Mather and museum collections and archives
3.
GLSC Board Governance Committee will nominate 2 current HHS
directors to become directors of GLSC
4.
HHS would continue to exist as separate nonprofit corporate entity.
With written approval, HHS may fund-raise for Mather on behalf of
GLSC. HHS agrees not to compete with GLSC in conducting maritimerelated activities and for grants or other funding to support Matherfocused activities.
5.
GLSC would contract with HHS for one year following Combination
Date to assist with the transition and plan future joint museum
activities. Services would be provided by HHS Executive Director who
will remain as the sole employee of HHS
Alliance-Based Growth Strategies
ASTC 2006
Joint Task Force
Final Recommendation
The joint Task Force recommends to
their respective Boards that the HHS
and GLSC move forward with a
business combination whereby the
W.G. Mather Museum and all assets
would be transferred to the GLSC
March 29, 2006
Joint Trustee Task Force Meeting
Alliance-Based Growth Strategies
ASTC 2006
Sequencing the Combination
2006
Timeline
June 1
GLSC Exec Com is asked to approve combination and
recommend for Full Board approval at June 2006
meeting
APPROVED 06.01.06
June 20 Mather/HHS Board asked to approve combination
APPROVED 06.20.06
June 29 GLSC Board asked to approve combination
APPROVED 06.29.06
July 1 Sept 30
Phase-in of combined operations: employee transfers;
ticketing; marketing; operations; finances
Sept 30
Completion and execution of transactional documents
COMPLETED 09.30.06
Oct 1
Effective date: Begin operations with fully combined
financials (beginning of GLSC Q2); all Mather
employee transfers completed
Alliance-Based Growth Strategies
COMPLETED 09.30.06
ASTC 2006
Media Announcement
Alliance-Based Growth Strategies
ASTC 2006
Board Leader Perspective
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Board members play an essential role in bringing civic and
philanthropic community leaders along
Identify one Board member for each organization who has merger
experience and can help coach executive leadership through
process
Trust is key to success on multiple levels
Volunteers and donors are key stakeholders in the deal
Takes minimum of 6-9 months for merger exploration, analysis and
due diligence
Neutral third party facilitator is important to the process
James D. Ireland III
Past Chair, GLSC Board,
Current Chair, W.G. Mather Board
Alliance-Based Growth Strategies
ASTC 2006
Anchorage Museum Alaska Gallery
Alliance-Based Growth Strategies
ASTC 2006
Imaginarium
Bubble Lab
Alliance-Based Growth Strategies
ASTC 2006
Anchorage Museum Art Gallery
Alliance-Based Growth Strategies
ASTC 2006
Imaginarium
Teen Volunteer
Alliance-Based Growth Strategies
ASTC 2006
Anchorage Museum Atrium
Alliance-Based Growth Strategies
ASTC 2006
Imaginarium
Workshop
Alliance-Based Growth Strategies
ASTC 2006
Imaginarium
Touch Tanks
Alliance-Based Growth Strategies
ASTC 2006
Experiential, Exploratory, Fun!
Alliance-Based Growth Strategies
ASTC 2006
Lessons Learned
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Start from positions of strength
Actively and strategically engage key stakeholders
Choose your partners carefully!
Be prepared to invest both time and money in the process
Clearly define the process and timeline
Honor each other’s vision, mission and values
Build trust as the first and largest pillar of the foundation
Execute a strategic communication plan throughout the process
Engage a neutral third party facilitator to guide the process
Easier for larger organization to view merger as a “business deal”
Smaller organization will view merger in more “personal” terms
Larger organizations will be concerned about taking on liabilities
Smaller organization will be concerned about loss of identity
Alliance-Based Growth Strategies
ASTC 2006
Alliance-Based Growth Strategies:
Appropriate Choices on the
Collaboration-Merger Continuum
ASTC 2006
Louisville, Kentucky
www.davidheil.com