Bank Mergers: How to have successful management meetings with a potential buyer (Part 2)

Have a preparatory meeting with your deal team prior to the management meeting with each potential buyer.

Emphasize to them that you do not have any insight into the buyer’s strategy, but that you have a few educated guesses as to what they think may make a powerful combination. Then go through your thoughts about what that might be and how you can achieve it.

Stress again before adjourning, this is not confirmed; it is for planning purposes only so they can be aware of where the questions may be heading.

Remind your team that this is not an interview—we’re not that far yet.

They will have more time for that down the road.

This is about the bank, what the team has built collectively.

The bank is bigger than any one individual in the room.

The conversations here are very similar to the conversations we have with examiners: truthful and direct, focused on answering the questions asked.

The buyers want to hear from the team you are bringing.

Let them.

Allow your team to answer the questions in more detail, if asked, and add your comments sparingly and when necessary.

Each buyer’s team may also want to meet with your deal team members individually, aligning their team members with your team members by areas of specialty.

There may be meetings taking place at the same time, so make sure your team feels confident in their ability to answer questions without you in the room.

If you are the one person that needs to answer all the questions, that will negatively affect how they see your team.

If you need time to change your organization so that is not the case, it may be in your best interests to do so.

That depends on your individual circumstances and should be well ahead, sometimes by several years, of going down the path of selling the bank.

Following the management meeting, it would be a good idea to consider pulling your deal team together for a debriefing.

I urge you to do this as soon as possible following the dismissal of the buyer’s team—ideally, on the same day.

You will want to compare notes as a team before each of the individual team members have one-on-one conversations about the meeting.

Those conversations can bias the information.

Hopefully your investment banker can, and wholeheartedly wants to, sit in.

They have had numerous conversations with the leadership of the potential buyer—not only in this transaction, but perhaps on other transactions as well—and could provide great insight…following the team debrief.

Just like avoiding one-on-one conversations, you don’t want the investment banker’s perspective to bias the team before they report.

Important Note:

Prior to each management meeting, you will have a meeting with perhaps the CEO of the potential buyer, or the CEO and their investment banker (there may be others, but regardless, this will be a very small group). That meeting may precede the management team meeting, or it may be a week or so in advance of the management meeting. It is often over lunch. Pleasantries, a general probing of how things are going, and the sharing of other thoughts will take place, but the real purpose of the meeting—aside from anything sensational—will be to talk about your team, individually. That may be directly stated from the outset, or it may be more indirect.

The potential buyers are trying to learn who the most critical employees are to the continued earnings of the bank. There will be a great deal of questions about the customer-facing employees, those who have direct interaction with the bank’s customers, because the buyer has the back-office functions, those employees who are very important to the ongoing operations of the bank, but don’t interact with customers directly, and the buyer will be primarily concerned with keeping customer relationships intact. They will be focusing on each of the employee’s backgrounds, their career desires, and your thoughts as to whether they will likely be leaning into the combination and excited about the future.

You have completed a management succession plan—you likely do so annually—and you know this conversation. You have almost certainly already had it in your own mind. Think about that conversation today—where are the weaknesses? What are the areas of most risk that keep you up at night? If it is customer-facing, they will likely arrive at the same conclusion. If it is operational, but with a heavy emphasis of support for your key lines of business, again, they will likely come to the same conclusion. If you have time to correct that prior to going down the sale path, you may want to consider doing so at your earliest convenience. It will come to the surface. It will likely impact value.

This is another point in which they will figure out if you work “on” the business or “in” the business as we discussed in Chapter 9 – Talent.

The management meetings will serve to confirm (or put into question) what you have shared with the members of the deal team. They will likely make judgements on your comments of others, based upon the affirmation they receive back from the conversations with your deal team members.

Rinse and repeat for each set of management meetings.

All of this is exhausting, but it is very necessary.

You’ve got this!

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.