Bank Mergers: How to have successful management meetings with a potential buyer

You now have two offers who are very close to one another, and we’re trying to get some distance between them.

You have asked each suitor to go to the next step in dialing in their offers a bit more.

To do so, they are going to want more information to be able to see if they have any additional value they can draw from.

They are also going to need extra time to gather that information and make their assessments.

So, they have been requested to send a revised offer within 30 days.

Knowing time is never our friend, we have added risk in doing so.

The added time gives the potential buyers a chance to revise their offer (or not), on the other hand, it also gives them a chance to change their mind and back out.

They are likely going to need much more information at this point about your most valuable asset, your people.

The potential buyers will also be exposing this transaction to more people on their side of the table. They’ll want to collaborate on the opportunities the combination will present for the bank to “Do & Become.” (Where have we heard that before?)

There likely will be a meeting set up for each potential buyer team to meet your team.

Each meeting will be held off-site, likely in a neutral setting for confidentiality, perhaps in your legal counsel’s conference room.

It’s likely that each meeting will take up most of the day.

The potential buyer will likely include their financial leader (CFO), their senior commercial leader, their senior retail leader, their chief credit officer, their chief operations officer, their human resources director, and their investment bankers.

Additional information to be uploaded to the virtual data room will now get much more granular.

Top customer relationships, top borrowers, top depositors, concentrations, benefit plans, are items likely to be on their list.

They will be asking for deeper details.

For each of the people they are bringing to the meeting, there are going to be deeper dive questions for each of their respective areas.

That will require you to be represented by the people on your own team who can field those questions.

Your inclination should still be to limit the number of people on your end to keep all this confidential.

You still do not have a deal.

Time is not your friend.

If word gets out, your customers instantly move to the top of your competitors’ calling lists and your employees will instantly start fielding calls about new opportunities, all of which would be damaging to the value of your bank.

So, you must add your people sparingly.

Hopefully, additions will be somebody who has a CIC in place to understand they are in alignment with the project, however, that may not always be the case.

Additionally, you will want to consider using an Insider Agreement, and it’s a must-have if you have been using them up to this point.

Each management meeting is going to be unique to the buyer’s strategies, the team they bring to the meeting, and their unique considerations, which could include concerns like this:

• They have a very small market presence and are looking for your bank to essentially carry on as-is, just eliminating or downsizing the back-office duplication (such as accounting, human resources, IT, facilities management, etc.). This would go in tandem with their desire to rely more heavily on the home office for the bulk of the work.
• They may have a market presence already and are primarily interested in the business and market share gains they will have along with the opportunity for growth within that existing customer base. In this case, they would be interested in discerning whether there is (or could be) cannibalization of their existing customer base.
• They may have a line of business that you currently don’t have, such as residential construction lending. You could, in this case, bring a new market opportunity for them that works with their residential construction loan operations team, bringing more efficiencies and fee income opportunities to the table. Or, they could add residential mortgages, if you haven’t had those capabilities internally before—again, adding market share or additional fee income and consumer deposit accounts.
• It may be that your niche helps them dial in the focus across their organization, such as treasury services, adding more fee income opportunities and market share on the deposit side.
• It could be that your management team aids in their succession planning, which would save them time and possibly money that would otherwise be reserved for finding, recruiting, hiring, and developing leadership.
• It could just be a pure mass play. They get larger, allowing them to continue to make larger and larger acquisitions to fit their strategy.
• Any other considerations related to wealth management, insurance, trust services, added fee income, new lines of business to spread across their footprint, and so forth.

The reasons are limited only by your imagination.

The key is to continue doing as much research on the potential buyers as you can.

I know that can be difficult— you are focused on your side of the equation and running the bank, I get that.

It is important for you to look at the opportunity through their eyes, even though they have likely not shared any strategy with you.

They may not win, and don’t want that information out there.

Even if they do win, they still may not want you to know their strategy, especially if you aren’t a part of their longer-term plans because they already have the person who does what you do in place.

Anticipate what the meeting could be like.

Listen to their questions to hypothesize where they may be going with things, then highlight those areas going forward.

In essence, figure out what you can do to help add to the picture of what they want to Do—and who they can Become—when the combination takes place.

We’re going to go deeper into what your people will need to be prepared for and what the buyer is trying to discover in the next newsletter 039 of the Savvy Banker. If you want to get ahead, you can find it in my book The Art of Selling Your Bank: A Bank CEO’s Step-By-Step Guide to Selling Your Bank in Chapter 23 – Management Meetings.

Action plan:

• Think through who you would include in these meetings.
• Can each of the people you would include in the meeting have conversations with a buyer without you in the meeting?
  • If not, do you have time to build a program to develop them so they could?
• Are they protected by CIC and Stay-Put agreements?
  • Do you have time to put those in place, or to put them in place proactively even if there are no current plans for a sale? We put our agreements in place three years prior to our sale.

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.