What’s next in AED asset sale: A conversation with Misha Galley

Last week, AED announced plans to sell its assets and transfer its programs to another organization. This week, it clarified that although a “significant number” of organizations have expressed interest in acquiring its assets, AED’s goal is to find a “single acquirer” that believes in the not-for-profit’s mission, shares its values, and is capable of acquiring all or most of its assets. The whirlwind of activities at AED will likely continue through May, when President and CEO Gregory Niblett expects a sale and transition to take place, as Devex reported. Over the last 50 years, AED has secured a reputation as one of the leading U.S. non-governmental organizations working to boost development worldwide. In 2009, the organization reported $119 million in total assets and $440 million in revenues. In December, however, AED’s revenue stream narrowed significantly when the U.S. Agency for International Development, one of the company’s main donors, temporarily suspended new funding to AED due to irregularities uncovered in its work in Pakistan and Afghanistan. AED officials stress that the organization’s greatest asset lies in its technical expertise, provided by nearly 3,000 aid workers around the globe, not including consultants. To keep these talented professionals informed about the impending sale and transfer of programs to another aid organization, Niblett and senior management have been hosting conference calls and webinars over the past week. The goal, says Misha Galley, AED’s acting director of communications, is to move as many of its staff to a new home. In an e-mail interview, Galley shared AED’s next steps, specified the assets being sold, and clarified how AED is safeguarding its projects and staff in the transfer process. Can you clarify what “programs, projects and assets” will be sold, if not all? AED will pursue a process to transfer all of its programs and assets to a single acquirer. AED’s primary assets are: its projects, which are funded through contracts, and cooperative agreements and grants; the staff experts who work on these projects; and the staff experts who operationally support these projects. Other assets include furniture, equipment, etc., which are used to support the projects. AED has spoken of “safeguarding programs and staff” through this transition. Does that mean all current staff – full-time or temporary consultants – will be retained on current projects, or even not-yet-begun projects? With regard to current projects, yes: We hope all current staff will be retained until the acquisition and after. It would also mean that staff would remain on any new non-U.S. government-funded projects that would begin between now and the acquisition, since we will not be starting any new federally funded programs between now and the acquisition. What will be the next steps, and when will more details be announced on the transfer procedures? The next steps will be to identify potential acquirers and support the bidders’ due diligence process. The acquisition process is highly confidential, so details about a potential acquirer will not be announced until after a purchase agreement is completed. Was USAID’s decision to freeze new business with AED the only reason for these new steps you’re taking, or was there any other factor? AED’s board, senior management and staff have been implementing organizational and operational improvements over the past few months. At the same time, the board and senior management have been scrutinizing our financial situation and confronting hard financial realities. It is clear that our revenue stream has been severely restricted and significant demands have been placed on our financial reserves. The board of directors weighed options about the best way to move forward in a way that is consistent with our mission and has the future of AED’s many programs and talented staff as its highest priority. Did AED receive positive signals in recent weeks from USAID about anti-fraud steps taken after the temporary suspension, or was the prospect that it would take years to lift the suspension? We do not believe it would have taken years to lift the suspension. While we cannot speak for USAID, we believe that many compliance and internal controls were already in place at AED when the suspension was imposed. Working with USAID, we have identified internal controls that could be strengthened, and AED has been in the process of doing this. We believe these actions would have warranted a lifting of the suspension in weeks or months, not years. With additional reporting by Eliza Villarino. Read more: - AED Hopes to Transfer Programs to ‘Single Acquirer’ - AED to Seek Orderly Acquisition and Transfer of Programs and Assets - AED Barred From Receiving New USAID Funding Pending Investigation into Consultancy’s Af-Pak Work - No Plans at USAID to Release AED Investigation Findings Read more international development business news.