Successful Bank Sale: Are your people attracting buyers?

Your job as the CEO is to make yourself replaceable.

You do that by hiring the right people to keep the company going without you.

Don’t get me wrong, you have unique and specialized talents like being a visionary, being adaptable, being a motivator, and being receptive as a listener.

You have guided the bank toward success through skilled leadership and trusted decision-making.

No matter how high and far you look, you won’t find a leader who can do exactly what you do.

Prior to beginning the process of starting the bank, I was fortunate to have learned through my credit training and capital markets/corporate finance experience that if you’re going to sell the bank (or any other business) at some point, a potential acquirer will want to see that you have a management team that can keep the bank running smoothly while you’re gone.

The successful continuation of the profitable operation of the bank in your absence is critical to the overall value.

This is true whether you are selling or not.

Your purpose as a leader does not lie in the tasks you spend your time on.

Running a bank is full of strategic initiatives that can create long task lists that include everything from administrative duties to business development. As CEO with these tasks on your plate, it’s time to take a closer look at where you spend your time.

Your job as CEO is not to complete a to-do list—it’s to make yourself replaceable.

Work on the business, not in it.

Systems, processes, and leadership are the keys to long-term value.

Your people are the keys to systems, processes, and leadership.

Not a person in the singular sense but people as a group.

That’s where the hard part comes in—shared values, attitudes, and beliefs—that’s culture.

The CEO’s primary responsibility is “Keeper of the Culture.”

It isn’t because the CEO is special.

It is because the CEO’s values, attitudes, and beliefs are going to be the ultimate decision-making criteria when an opportunity, issue, problem or complaint makes it to the CEO.

So, to have a strong culture and for your people to have long-term career satisfaction there needs to be shared values, attitudes, and beliefs.

The strong culture creates consistency.

Consistency is what customers look for. Not randomness. Not chaos.

Consistency.

Consistency is why McDonald’s has sold billions of hamburgers despite never having won a cooking award. You know how that cheeseburger will taste in Washington DC, Topeka, Tucson, New Orleans, Seattle, Pittsburgh, Boise, Boston, or Fargo.

Consistency counts as to how accounts get opened, how customers are on-boarded, how they are welcomed by name, how customers are listened to, how attentive your employees are to your customers, how quickly the phone gets answered, and how accountable your people are to get the customer’s issues resolved. Consistency even comes down to how well your employees are dressed.

To continue…

It is the consistency in business bankers going out to see the customers instead of making them come into the bank.

It is consistency in everything.

Is the grass green? 

Is the landscaping manicured?

Is there trash blowing around in the parking lot?

Is the flag tattered?

Every detail communicates that consistency.

It all matters.

Accompanying the consistency in culture is the consistency in the systems, processes, and leadership.

When you have a culture of consistency, you’re going to see a rising benefit in your bank.

Customers are telling everybody about your bank and your employees are happy in their careers, looking forward to what they can do and become (common theme here).

Getting to this point is rarified air, but it should be the goal.

Achievement of the goal is extremely difficult.

If the CEO doesn’t diligently play the role of “Keeper of the Culture,” it can be gone overnight.

That’s the role the CEO needs to be playing.

In addition to this role, the CEO’s role is to look three to five years ahead to see where the company can build the most value.

If a CEO is actively involved in customer relationships on a day-to-day basis or is somehow involved in the day-to-day grind of the business, so much so that the CEO becomes a bottleneck for the business, talent will likely be a value detractor for an acquirer.

The interaction you will have with prospective buyers throughout the process of selling will provide the insight they are looking for.

How often during the time you spend with potential buyers do you have to take calls from the bank answering questions for your people?

How hard is it to get your time because you have things that must get done first?

When your people are being interviewed by potential buyers how much do they look to you to answer questions (we’ll cover that more in a future newsletter, if you don’t want to wait you can find it in Chapter 23 – Management Meetings)?

These are all indicators that you are the business.

That may be kind to your ego, but it will detract from the bank’s overall value.

You might still be able to sell, but your bargaining power will suffer and the number of potentially interested parties will get smaller.

If you’ve got a great culture and rock-solid systems, processes, and procedures already in place and you are not involved in the day-to-day function of the bank. Great job!

If you aren’t in a position where you are not involved in the day-to-day function of the bank, I get it.

I’ve been there.

It’s hard to let go and allow other people to take control.

But it doesn’t have to be that way.

Now having said all of that, I’m just going to lay it on the line for you.

Your buyer isn’t going to care about your culture.

And please understand what I am saying here.

Your culture is vital to your bank. It is vital to the success you have had and it’s why your customers love your bank.

But the buyer has their own CEO and therefore, they have their own culture.

Talking about your culture during your first meeting (we will be discussing further in an upcoming newsletter as well, if you want to get there sooner it’s in my book in Chapter 17 – One-On-One Meetings) with them will be entirely proper—they will need the context.

Beyond that, drop your expectation that your culture will survive.

It won’t.

Unless it is a unique circumstance, it shouldn’t.

It is possible that the values, attitudes, and beliefs of the two CEOs are a dead match – if that is the case, that’s awesome.

It’s just not very likely.

What they will be looking for is a bank that has rock-solid systems, processes, and procedures and the people in place to continue to drive the earnings.

Again, it’s steady, predictable, and consistent earnings that hold their interest.

Their future depends on those earnings.

They will be very interested in making certain that those key people will be coming along with a high level of interest in being a part of their bank and will want to be there for a long time.

Again, they are thinking “Do & Become.”

The more they can project that into the future of the bank, the more interested they are.

I won’t sugarcoat it.

The people they will be most interested in are those who are directly tied to customer relationships—calling officers, retail personnel, and customer service teams.

They are also interested in senior level team members who can help with the transition and make that go as smoothly as possible.

In today’s day and age, it should be that the buyer would want to keep everybody they possibly can because they likely have needs throughout their bank to be filled.

But pay scale differences of different markets and perhaps, just an embedded belief that they don’t need to do anything other than what they’ve historically done to fill those roles may have them viewing things differently.

A bank with a mostly rural presence entering a metropolitan market may be in for a shock when they compare the cost differences of people in the different markets.

Conversely, a major metro area bank may look to expand the team in a rural market to provide additional jobs for that market while taking advantage of a potentially lower cost of living in that market.

Enough said about that.

Let’s get back to you!

Culture is vitally important, and your people are critical to the successful delivery of that culture.

Your customers love your bank because of your culture and your people.

Your overall goal here is to provide value the shareholders will be pleased with.

You should be looking for ways to move to a bigger platform your employees can excel in so they can extend their careers.

And to add more borrowing capacity, products, and platforms for your customers to continue to succeed.

Achieving those goals will bring continued value to your community.

In Part 2 of this newsletter, we’ll be talking about finding the right people, developing them and protecting them.

Action plan:

• Audit your duties – what can be transitioned to others?
  • Who on your team needs further development to assume those duties?
  • Do you have plans currently in place for the development?
  • When is your “Golden Window”? (See The Savvy Banker Newsletter 019)
    • Can a development plan be built to accommodate your next “Golden Window”?
  • Audit your current talent – are you getting the results desired?
    • Are there changes you have been putting off that should be addressed?
    • Again, when is your next “Golden Window”?
      • Can changes be accomplished between now and then?

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.