1+1=3? What makes for successful mergers in the international development sector?

Early this year, the international development NGO Integrity Action merged with Crown Agents. While not unprecedented, this is certainly a unique occurrence.

The merger brings together two organisations with a shared vision of empowering citizens and promoting transparency and will have a dynamic and lasting impact on the delivery and reception of international development programmes. The scope for positive change is significant as these organisations combine forces to co-create more comprehensive solutions for effective system strengthening and service delivery, enabling them to propose innovative ideas to both new and existing clients.

Speaking to Integrity Action’s CEO, Jasmina Haynes and Crown Agents’ Chief Strategy Officer, Paul Wafer, we delved into the realities behind mergers in the international development sector and what exactly made it a success.

The truth is there is no magic crystal ball that can foresee all the challenges that may arise during a merger. However, there are specific ingredients that can help prevent disaster. “Throughout our 9-month journey”, Jasmina explains, “we identified three elements that proved invaluable: amplifying impact, increasing reach, and enhancing operational effectiveness.” The success of the merger hinged on the ability for both organisations to create new added value, trust each other, be open, and transparent.

A clear understanding of what our unique added value is together

“Transformative mergers don’t just generate synergies, they create new added value,” Jasmina says. She goes on to clarify that the new added value (1+1=3) between both Crown Agents and Integrity Action came from defining a clear and unified purpose that served as a guiding North Star. Their ‘three’ is their ability to now offer end-to-end possibilities for clients, donors, and citizens alike in the form of a feedback loop, improving citizen satisfaction and service delivery.

Trust, openness, and good listening

“One grounding element we had from the word go was absolute trust in each other and I can confidently say that, without it, we would not have been able to openly express any points of tension or get through any protocols like completing our due diligences.” Paul builds on this and doubles down that “prioritising trust is something any two entities should do, they should make it a core value of their partnership as it will carry you forward through challenging procedures, be they legal, financial or cultural.” Of course, you must take the time and make the effort to build trust throughout the process, you cannot just assume it will be there and be robust from the outset.

“Our shared commitment to improving government systems meant that our values were already aligned, so the obstacles we would have to get past were around decision-making and governance.”

Value and operational alignment

In retrospect, Paul and Jasmina accept that a combination of value and operational alignment made the journey that bit smoother. While Crown Agents clearly operates in a more commercial way, its ultimate not-for-profit status allows the organisation to take a mission-orientated approach underpinned by its values of authenticity and courage. Couple that with Integrity Action’s strongly entrepreneurial mindset and creativity, and the two organisations find themselves quite naturally aligned in how they operate and succeed within the wider international development sector.

When asked what advice they would give to others exploring similar options, Paul emphasised the importance of getting “clarity in the language you use, as it ensures that those involved understand the rules of the road and how to navigate the sort of ‘separate but within’ model we’ve adopted.”

Getting the right governance arrangements in place played a vital role in this merger process, as Integrity Action retains its independent charity status while operating as part of a larger development organisation. This allows the NGO to draw on Crown Agents’ larger back-office capabilities and its network of long-established international offices, enabling both parties to achieve their shared goal of delivering better outcomes for their clients and the communities they serve.

Between 70-90% of mergers fail according to Harvard Business Review and the underlying commonality is retention of staff or a poor cultural fit. So, what are Integrity Action and Crown Agents doing (post-merger) to overcome this statistic?

Conducting a pre-mortem for the execution of the vision to overcome challenges

One of the immediate challenges they say they faced was “balancing the excitement of the merger with due process.” It is crucial to manage the energy across both organisations to mitigate against fatigue later when targets must be met. “We didn’t want to hit the ground running and impulsively embark on undefined ventures together that prove unbeneficial later down the line,” Jasmina says.

Paul shares the same sentiment, adding that “establishing an integration working group, with clearly defined roles across both organisations, allowed us to carefully conduct a pre-mortem for the execution of our shared vision – avoiding cultural/strategic ‘mesh and mess’.” Having a working group that encompasses both soft (cultural) and hard (financial, legal and I.T) aspects of a merger laid the groundwork for the success of the merger and will help us tackle what may be thrown our way afterwards.

The merger of Crown Agents and Integrity Action represents a paradigm shift towards citizen-centric development, empowering citizens to actively participate in shaping development initiatives and making them key stakeholders in decision-making. The approach will lead to more inclusive and sustainable development outcomes.