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Who really benefits? Neighborhood credit union’s merger decision

Gina Grandy (Hill and Levene School of Business, University of Regina, Regina, Canada)
Daphne Rixon (Department of Accounting, Saint Mary’s University, Halifax, Canada)

Publication date: 12 November 2018

Abstract

Synopsis

Ben Chang, the CEO of a small credit union, Neighbourhood Credit Union (Neighbourhood), located in Atlantic Canada was evaluating a possible merger with another larger credit union, Pleasantview Credit Union (Pleasantview). Chang and Neighbourhood’s Board of Directors (Board) were interested in a merger that would enhance member benefits via improved technology, innovative delivery channels and a more robust financial planning and wealth management capability. Chang, along with a team of experts, was methodical in seeking out interested credit unions. Pleasantview emerged as a strong candidate from the expression of interest stage. The initial due diligence review was complete, the memorandum of understanding signed and a working group comprised of members from both credit unions formed. Chang, however, was becoming increasingly concerned about the lack of strategic fit between Neighbourhood and Pleasantview. In conversation with the consultant hired to assist with the merger process, Chang was considering recommending to the Board that the merger process with Pleasantview be halted. It was January 2015 and Chang was set to retire in May. Before he retired he wanted a plan in place that ensured increased member benefits, as well one that balanced growth and sustainability for Neighbourhood. Chang was scheduled to meet with the Board in four days. He needed a recommendation that would address the current merger situation, as well as provide other options for Neighbourhood.

Research methodology

This case is based upon primary and secondary data collection. Formal and follow-up informal interviews were conducted in 2015 with the CEO and “merger” consultant at Neighbourhood Credit Union. Organisational documents and publicly available documents were also consulted. To ensure the confidentiality terms of the merger discussions, the case is disguised with respect to the name and location of the credit unions, the names of the CEO and consultant, as well as the financials. The timeline, process followed, key decision and opinions of the CEO and merger consultant as presented in the case are real.

Relevant courses and levels

This case is formulated for university undergraduate students in their third or fourth years of study and graduate students. It is appropriate for strategic management and co-operative/not-for-profit management classes intended for a 60–75 min class session.

Keywords

Acknowledgements

Review copy submitted to NACRA 2015, Orlando, FL. Not for reproduction or distribution. The authors wrote this case to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. This case details the organisational challenge of a real organisation. The authors have, however, disguised names and other identifying information to protect confidentiality.

Disclaimer. This case is written solely for educational purposes and is not intended to represent successful or unsuccessful managerial decision making. The authors may have disguised names; financial, and other recognizable information to protect confidentiality.

Citation

Grandy, G. and Rixon, D. (2018), "Who really benefits? Neighborhood credit union’s merger decision", , Vol. 14 No. 6, pp. 736-752. https://doi.org/10.1108/TCJ-08-2018-0093

Publisher

:

Emerald Publishing Limited

Copyright © 2018, Emerald Publishing Limited

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