"Acquiring" a nonprofit

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February 15, 2022

by a searcher from Columbia University in New York, NY, USA

I'm helping a firm evaluate the take over of a nonprofit entity, and am looking for guidance on deal structures. The acquirer is for-profit, and the target has a channel that is a high-value marketing function, effectively. Maintaining 5013c status is important to the ongoing function of the non-profit, so converting the whole thing is not viable. I do not believe that the outcomes of the 5013c are directly applicable to the company, and so self-dealing considerations should not apply.

1. Has anyone here done something like this?
2. What's the right way to think about valuation/multiple?
3. How is consideration allocated at close, given that non profits don't have shares?

I'm hoping there is a straightforward way to approach this, as the nonprofit really is a great thing for its communities, and the channel for leads for the acquirer would be very hard to replicate.

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Reply by a searcher
from Babson College in Northborough, MA 01532, USA
Hi Brian, Vik - any insights that you could share from this question? I'd interested to understand how to value non-profits ...
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Reply by a searcher
from University of Pennsylvania in Wrentham, MA, USA
Following. Vik--have you gotten any answers to your questions in the meantime? If so I'd love to chat quickly.
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