Ten Tips to Win in a Competitive M&A Environment
Experts expect the bank mergers and acquisitions environment to remain highly competitive in 2019 due to continued strong earnings in acquiring banks, along with relatively good stock prices. Both acquiring banks and selling banks should go into the process armed with the best practices to ensure success. Bill Zumvorde, Director of Business Development for Profit Resources Inc., shared this impactful advice for acquiring and selling banks as they enter into mergers and acquisitions in 2019.
- Understand the other bank’s deposit mix.
If there is already deposit run-off, it will surely get worse after an acquisition.
- Consider the systems and initiatives the seller has put into place to grow and support deposits.
Will the bank continue these initiatives or strip them away as part of cost-cutting measures?
- Update the due diligence playbook.
Focus not only on the systems side of integration, but on the often-neglected cultural, or people, side of the equation.
- Set appropriate performance benchmarks.
Look at the potential cost savings that can be part of the transaction.
- Be open to adopting new practices.
Pay attention to the best practices the seller may already have in place.
- Don’t depend solely on the technology vendor to manage the integration.
They don’t have the same goals as the acquiring and selling banks. Avoid outsourcing the project lead role to the technology vendor.
- Develop an integration playbook.
Include subject matter experts from both sides. Consider including outside advisers who can focus solely on the integration.
- Appoint company culture coaches.
These coaches can assist with the people side of integration.
- Remember that integration is an ongoing process.
Conversion weekend is not the end, just the beginning of the end. Stay committed to the integration process for 30 days and continue to focus on the cultural side for six months after conversion.
- Selling banks should resolve any compliance issues.
Know how vendor contracts and buyout clauses will impact the deal price.
Both acquiring and selling banks should strengthen their bottom lines by effectively managing non-interest expense and increasing non-interest income. Contact us to review your existing plan or help you quickly assess your risks and develop a comprehensive plan for M&A integration that aligns with your strategic objectives.