Bank M&A: Choosing the right legal counsel for a successful sale

You may think it is your general counsel.

It may be.

But maybe not.

Consider this…

If your bank’s general counsel is actively involved in bank M&A transactions, particularly sell-side bank M&A transactions, they may be.

If they are less than actively involved in sell-side bank M&A transactions – you will benefit from the experience another firm can provide.

Having gone through the process of selling a bank, I can say with confidence you will want a law firm who has a significant amount of sell-side bank M&A experience.

This is a very complex process with many moving parts.

You have a bank to run.

If performance suffers while you’re knee-deep in the contract negotiations, it could end up costing you in deal value, or in having a deal at all.

On top of all of that, nobody besides the board knows you are even working on it.

A highly experienced bank M&A counsel will keep you focused on the key sections of the merger agreement that require your focus and attention.

Highly experienced bank M&A counsel have so much repetition with the process, they only pull you in on things that truly need your attention.

They handle boilerplate items.

They consolidate critical questions for you and efficiently cover them with you.

They have “deal knowledge” to keep the buyer’s counsel on track and in check.

They point out things like:

• Fees that are normally taken on by the buyer.
• Information requests that are well beyond the norm.
• Places where you can push back.

Their familiarity with the process is valuable.

Will it cost more?

The per hour rate might be higher, but it is more than made up for in efficiency.

The cost will end up being about the same.

The value will be much higher.

An experienced buyer, who was one of the potentially interested parties we had a one-on-one meeting with pulled me aside following our meeting and asked about who we were going to be using for deal counsel.

His advice was to get somebody with experience for the reasons I noted above.

And in hindsight, I can say he was correct.

Your defenses are up whenever somebody on the other side of a transaction is giving you advice. In this case, it was so early in the process, I didn’t feel like I was being “worked” for an advantage. The message, after some time for reflection, really seemed wise and having been through the process, was genuine advice.

You will want to consider using legal counsel with a great deal of sell-side bank M&A experience so it can allow you to focus on running the bank.

P.S. As a reminder, I am not a lawyer, an accountant, or an investment banker. Just a banker who has been in your shoes.

Action plan:

• Think about who you would use if you needed deal counsel.
• Is it somebody you know? Do they have significant sell-side bank M&A experience?
• Are you unfamiliar with who it might be? Study some of the recent transactions. Who did the seller use? Are there names that appear regularly on the sell-side?
• Develop a plan for finding and introducing yourself to begin building a relationship, even if you never need it. Dig your well before you’re thirsty.

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.