Selling your community bank? The way successful sellers attract buyers.

I believe it is human nature for any business owner – it doesn’t have to be a bank owner – to think, “Okay, here’s what we have, what will you give me for it?”

Or, simply put, here’s what I have, what do I get?

There’s a natural tendency to flip a switch in your mind that you no longer have to think about the future, that will be the buyer’s concern.

And, also by human nature, and while you may not think about it – that assumption is because in your mind, you receive cash at closing.

Paid in full.

Done.

Gone fishin’.

But that may not be the case.

And, at this stage of the process, you don’t know if the best deal for your shareholders is to get paid in cash, or take stock in the buyer, or maybe a combination of the two.

Your fiduciary responsibility to the shareholders is to maximize shareholder value.

At the start of the process of finding potential buyers for your bank – you have no idea how this will all turn out.

Will you have multiple parties interested in buying the bank and lots of options to choose from?

Will you have one party that’s interested in buying so you feel you have to take what you can get?

Or will you perhaps not have any potential buyers at this time?

At this point, you don’t know.

Now comes the hardest part.

Thinking about the future, the buyer’s future, with your bank as a part of it.

Buyers are interested in what they can do with this newly acquired asset and what they can become.

And who knows your bank better than you?

Nobody.

So, it is going to be very important that you think a great deal about what your bank brings to the table – and you don’t even know whose table it is, if there are multiple tables, or maybe even no tables.

It can feel demoralizing.

Your last chapter.

I get it.

But it doesn’t have to be that way.

If you can refocus your perspective, you will be up for the challenge.

And it’s never your last chapter until you say it’s your last chapter.

You’re still in control of you.

The buyer is looking through the windshield, down the road to see where it takes them.

Join them on that journey.

Don’t get stuck looking in your rearview mirror saying, “Look where we’ve been.”

The buyer doesn’t care.

Not trying to be cold here, just keeping it real.

You are the seller, and now’s the time to sell.

Do not misunderstand me.

You are not gaslighting.

You are not misleading anybody.

But it’s going to take some effort to get out of the natural mindset, “I may not be even going on the trip, why do I need to participate in the mapping of the route?”

You must fully engage if you want this to be as successful as possible.

As bankers, we have spent our whole career judging businesses by looking in the rearview mirror.

We look at steady, predictable, repeatable cash flow.

Cash is the only thing that repays loans.

Sure, we want projections so we can understand what a borrower is trying to do in the future, but we don’t get paid for the risk of betting on untested cash flow.

Equity investors are the ones looking out the front window of the car, taking the risk on future projected cash flow.

They get paid for taking the risk.

The buyer is making an equity investment here.

It is up to you to point out the consistent core earnings, the consistent core growth, the talent you have developed, the fact they can run the bank without you, and also what your unique value proposition(s) are that causes your customers to choose your bank.

It is up to you to paint a picture of where the bright future lies for the bank if it were to continue down the path it is on.

It is up to you to research any potential buyer you are about to meet, understand their core earnings, their core growth, their talent and what their value propositions are.

Learn as much as you can about their leadership, their mindset, their stated goals, and objectives.

It is up to you to paint a picture for the buyers of a bright future.

Make it clear they can achieve their goals by combining the two banks.

Again, you must do that knowing:

• They may not be interested
• They may not make it through the process
• You may not be included in the future plans
• You may wince at the thought of working for them
• You may wince at what your employees or customers would think of being a part of them

But it’s too early to make those judgements.

Put your best foot forward.

Refocus perspective.

Think Do and Become.

With good effort and good fortune, you will hopefully have options to choose from further along in the process.

Then, you will have an opportunity to weigh-in on those thoughts.

You may also learn some things along the way that change your perspective.

Oh, it is also important to mention, once the sale is finalized – it is up to the buyer to execute.

Keep that in mind.

At that point it is in their hands.

Master the process.

There are zero hacks or tricks in this newsletter. Just proven tactics that help you choose the right path for your bank.

Your path will:

• Inform your strategic plan.
• Guide your annual business plan and budget.
• Clarify priorities.
• Define your message so it can be communicated with confidence.

This is how savvy bankers navigate.

They build smart and valuable banks and choose the best time to sell – serving the needs of the shareholders and the board.

I hope you found this short lesson helpful.

What are your thoughts?

I’ll see you next week.