3 Keys to Creating a Successful Acquisition Playbook

As smaller community-oriented financial institutions wrestle with future-proofing their businesses, having and executing against a well-defined acquisition strategy can be an effective way to remain relevant to their customers and community. It can be difficult to sustain organic growth, the cost of the regulatory environment is onerous, and in communities of a few thousand people, talent acquisition, retention and succession planning for an aging management team can also be very challenging. Acquiring or merging with another strong institution could be the perfect answer, but many may ask themselves if they can do it. They may be worried about having the resources, know-how and framework to complete such a large task, even if the long-term benefits look like a no-brainer.

In the article A Merger & Acquisition Leader’s Playbook for Success Where 83% Fail, Forbes noted that between 70 and 90 percent of acquisitions fail. A KPMG M&A study found that only 17 percent of deals added value, while 30 percent produced no discernible difference and 53 percent destroyed value.

Why? Generally, failure is an outcome of acquisition executions plagued by:

  • Poor strategic focus
  • Poor cultural integration and/or
  • Poor delivery of synergies

A well-designed acquisitions playbook can address each of these areas in enough detail to guide the process and greatly improve the chances of success.

“Be clear on what you want out of an acquisition or merger, how it would fit with what you’ve already got, and what you’re willing to give up to get it.” — Forbes

PRI consultant Eric Stables says an acquisition playbook also serves as a rationale and defense of decisions that will impact the institution for decades to come.  

“The goal of any merger or acquisition is to ensure that the new, larger entity is more successful than either company could have been when operating independently,” Stables said. “An acquisition playbook that outlines a solid framework for action can reassure the board of directors that management is fully equipped to tackle the typical challenges that arise during a merger and can promptly and effectively handle any unexpected situations.”

Three keys to creating a successful acquisition playbook are:

  1. The playbook is a flexible and “living” document. Preservation of options is critical in the early stages of a merger. Approaching M&A and integration plans with a fixed and rigid mentality, where creativity and flexibility are discouraged, should be avoided. Iterative ideation, where creativity and flexibility are rewarded, should be encouraged. 
  2. The playbook spells out how things will look on “Day One.” When the “two become one,” how will leadership look? Where can services be shared across the organization to maximize efficiency and profitability? Which core system will be used? Is there any opportunity to consolidate branches? Are there any vendor contract or other outstanding legal matters that need to be addressed? These, and others, are all questions that should be considered in the playbook. It must include robust sections covering the following topics:
    • Governance: Think through how the board and its committees will be set up in the new entity.
    • Communication: A good communication plan considers how the new institution will message their customers, employees, and other stakeholders.
    • Shared Services: Ensuring seamless coordination of operational and administrative services provided in a “shared” environment will be important. Identify synergies and redundancies.
    • Branding and Marketing: Will there be a rebranding effort? What is the marketing and messaging strategy of the new entity?
    • System Conversion: Consider vendor contracts, training requirements and the needs of the new institution when choosing which core system will be retained and plans to minimize customer impact.
    • Risk Management: Outline what new processes or procedures will be implemented to mitigate operational, financial, or legal risks associated with the acquisition.
  3. The playbook is high-level and easy to understand. Providing a high-level bird’s eye view of the bank’s acquisition framework makes it digestible for decisionmakers and prospective partners. It provides the basis for whether to move forward, and it later provides a solid foundation for integration activities.

For any bank considering a merger or acquisition, having a framework around the process is critical to its success. Smaller institutions may have unique needs and considerations as part of their role in the community. For instance, they may differentiate themselves from their competitors through a unique service model.

A comprehensive acquisition playbook can help them be nimbler throughout the entire process and ensure a smooth transition that preserves their competitive advantage. By putting their values and vision on paper and into action, a well-written acquisition playbook can help reassure a small bank that they can do this and do it well.


A Merger & Acquisition Leader’s Playbook for Success Where 83% Fail – Forbes

Why Culture Matters During a Merger & Acquisition Integration – PRI

M&A Integration: It’s More Than a System Conversion – PRI

5 Things Your FI Should Do to Prepare for a Merger or Acquisition – PRI

PRI specializes in identifying profitability improvement areas for financial institutions through revenue growth, cost control, streamlining processes, and effective use of technology. Contact us to learn more about our personalized approach to propel growth and improve profitability.

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