Closed Deals
Woodcraft Rangers
Nonprofit investment banking firm, Edward Charles Institute, unites Woodcraft Rangers and rock the classroom through mergers and acquisitions transaction.
Cathie Mostovoy, CEO of Woodcraft Rangers, announced that the agency has acquired the rights to rock the classroom, an innovative musical curriculum used to complement the literacy curriculum schools are required to each. Rock the classroom's interdisciplinary approach reinforces required lessons with hands-on musical experience to excite and engage elementary students.
ECI served as a boutique investment bank that conducted due diligence, research, and introduced Woodcraft Rangers to rock the classroom. The M&A process was hailed as a success by both parties. "Acquiring it was a real win-win for us, as we were eager to expand our own program offerings without having to expend huge sums in developing and testing a new curriculum," said Mostovoy. What was considered a friendly acquisition, Executive Director and Co-Founder Bradly Kesden, sees Woodcraft Rangers as the "white knight." Kesden was more than ecstatic about the acquisition, "At a time when most nonprofits are having to drastically downsize or close, our acquisition by Woodcraft Rangers really is a nonprofit match made in Heaven."
In making the introduction, Kent Seton, COO of ECI ensured that the visions and personalities of the two organizations were a match. Understanding the success of a M&A transaction is built upon trust and compatibility, ECI targets organizations that has the proper financial stability and established upper management, to ensure longevity post-M&A.
The term "riding the wave" never seems more appropriate in this financial storm. As expected, a majority of the nonprofit sector was hit by financial burdens in 2009, and nearly 90% expect 2010 to be as difficult or more difficult than 2009. It is ironic that as the demand for services provided by nonprofits increase, the ability to do so is seemingly less feasible. It is an important time for charities to examine their financial capacities and possibly looking into M&A as a way of restructuring their finances in order for their programs and services to continue. In the financial downturn, Edward Charles Institute will play a prominent figure in helping stabilize the nonprofit sector as it is the only investment banking firm operating in the nonprofit sector.
Jewish Family Services - Haven House
Edward Charles Institute helps close mergers and acquisition transaction between Jewish Family Service of Los Angeles and Haven House.
The first charity to be established in Los Angeles, Jewish Family Services offers 60 programs dedicated to resolving challenges with poverty, hunger, family violence, homelessness, substance abuse, families in crisis, and immigration within the community. In an effort to expand its families in crisis cause, JFS acquired Haven House, a nonprofit organization focused on helping abused women and their children towards freedom from domestic violence. Haven House has been facing financial difficulties, indicated by a trend of negative net income and cash flow since 2002. To compound matters worse, Haven House lost their Executive Director after over ten years of service. Without financial stability or strong leadership, it made sense for Haven House to seek other means of survival.
Edward Charles Institute served as liaison in the transaction. A complicated and delicate process, M&A can often lead to hostile takeovers when there is miscommunication and one party is indignant to the terms of acquisition. Kent Seton, COO of ECI, engaged in pre-integration due diligence and coordinated communication between the two parties to ensure compatibility and a friendly acquisition. Jewish Family Service Board of Directors was well received by the Haven House team, while HH was able to retain its branding as an entity under the Jewish Family Service umbrella.
It's no secret that the nonprofit sector was hit hard by the economic recession. As unemployment rate remains the highest in decades and rising cost of government funded programs like Medicaid, people are more in need of charities than ever. But irony lies in that while demand for services has skyrocketed, government and private funding have tanked and charities are left helpless. Michigan Nonprofit Association published a study, which found about half of surveyed organizations in Michigan less support in 2009 than previous years. And 2010 doesn't seem to be any better. Charities should not be afraid to seek assistance through an M&A process. It does not have to mean a loss of identity and vision. In the case of both Haven House and rock the classroom, a separate M&A transaction executed by ECI, the acquiree was able to retain its brand image and continue its mission under the leadership of a new board of directors.