Bank leaders focused on mergers & acquisitions (M&A) know there are many components to consider when planning or executing M&A transactions. Technology, human resources, public relations and operations must all work in concert for a merger or acquisition to be considered successful. Additionally, driving and maintaining culture is critical during an acquisition to ensure brand continuity for customers and stakeholders.
Hartman Executive Advisors works alongside bank leadership to ensure transactions are efficient and thorough. Bank leaders can benefit from Hartman’s vast experience in community banking strategy and operations, as well as their independent, unbiased advisory and leadership services. With so many steps to navigate during a transaction, Hartman’s M&A advisory team can guide banks through tested project plans and provide experience with data mapping and validation, leading to a cleaner conversion and ultimately, less stress for employees and less impact to customers.
Types of Mergers and Acquisitions
When deciding on a merger or acquisition, it is critical to ensure the right M&A process will be executed. There are two types of bank M&A transactions that Hartman can assist with, including:
Open Market M&A
These purchase transactions can either be competitive, where decisions are driven by the acquiring organization, or more strategic, where the combined organization is a blend of both companies and decisions are collaborative. Nurturing culture is critical, so a focus on change management is a must.
FDIC Assisted Transactions
Opportunistic and fast-paced transactions driven by failed bank status. They require advanced planning and coordination with the FDIC to be on the list.
M&A Transaction Services
Hartman Executive Advisors offers several bank M&A transaction services for financial leaders that are merging with or acquiring another bank. Mergers and acquisitions can be an extensive and sometimes difficult process to navigate — thus, it is critical to ensure you work with the right M&A advisory firm. Here are the services Hartman provides for bank leaders during M&A transactions:
M&A Planning and Due Diligence
Hartman can help banks with the following:
- Determine if a strategic merger or acquisition is a good fit, as well as the right targets to support growth
- Perform operating and technology diligence
- Review contracts and understand which vendors will best meet the new needs of the business
- Understand contract terms and exit penalties
- Evaluate security systems and infrastructure health, avoiding unforeseen delays and expenses
- Consider operational staffing to best resource the combined entity
There are many decisions to be made when combining staff as part of a merger or acquisition, and staffing can be very personal and charged with emotion. Choosing the best candidates requires evaluating whether the incumbents of the acquiring bank maintain their standing by default, or if the combined entity will choose the best candidates from each bank. In either situation, Hartman can help leadership:
- Identify necessary staffing for the larger organization to scale and grow
- Determine which employees are the permanent selections
- Explore retention and stay bonuses to keep employees motivated and focused on the necessary tasks
Like staff selection, leadership at the combined entity must evaluate what vendors will make up the ultimate support mix. Hartman can help determine whether vendors have the scale to support the larger organization, work on any geographical issues for serving a larger footprint, and ensure pricing is scalable for the larger entity.
There are important considerations when determining which systems the combined entity will use in daily operations. Questions for bank leaders to answer include:
- Which system is best for the combined organization?
- Who is impacted by migrating systems, and is the decision right for the strategic vision of the combined entity?
- What is the cost to exit various relationships?
- What are the system integration points necessary to consider?
Often, network integration becomes an afterthought as the team is focused on staff, brand and core systems conversions. However, delays in combining networks drive additional expenses and create inefficiencies. Delays can also open the organization to security risks and compliance issues. Hartman can help leaders determine:
- If the infrastructure of the acquiring entity is sufficient to scale and support the larger organization
- A design plan for telecommunications networks
- A plan for network consolidation
- How to migrate servers and data
- How to decommission the old environment
Hartman’s bank M&A advisory staff can play a critical role in the all-important contract negotiation stage of a merger, including identifying all contracts in the due diligence phase with corresponding termination and notification dates. Hartman can help banks identify vendors early and begin negotiations quickly, which is crucial to a smooth merger.
When it comes to cybersecurity, moving quickly to connect networks and applications is important to mitigate risk. Hartman can help a bank address the following related to cybersecurity:
- Ensure proper security and compliance controls (anti-virus, patching, firewall rules) are in place prior to connecting networks
- Evaluate policy rules between the organizations and work on a master policy
- Evaluate security posture of employees and perform any necessary security training
While many banks offer similar products and services, there are always differences that need to be addressed after a merger. Hartman can address these differences and work with leaders to evaluate which products should be maintained, ultimately driving decisions around data mapping and systems configuration. An M&A advisory firm should assist your organization with answering the following questions:
- What products will survive?
- Are the surviving systems configured to support the products?
- What is the impact to customers, and how will they be communicated with about any changes?
- What training is necessary for employees?
It is no small feat to combine systems between two organizations. It requires a great deal of planning and testing to ensure data migrates as expected with minimal impact to customers and employees. The Hartman team has vast experience creating conversion and migration plans, including:
- Data mapping
- Mock conversion
- Data validation and testing
Effective communications around a merger or acquisition can make all the difference with staff and customers. A strong communications strategy will build internal morale and provide a warm welcome for new customers. Hartman can work with leaders to develop a communications plan that encompasses the following:
- Letter of Intent acceptance (Merger announcement)
- Staff selection
- Regulatory and shareholder approvals
- Legal Day 1 (merger close date)
- Conversion planning and regulatory required notices
- Conversion weekend – stakeholder management
- Post conversion – customer relationship management
There are many moving pieces in a merger, and coordination of all activities requires specific focus and attention. Hartman’s project managers can navigate all interdependencies and help bring everything together in one comprehensive, well-managed plan. The following activities are recommended:
- Creation of a comprehensive, global project plan
- Coordination with vendors for systems integration
- Coordination of internal teams to align interdependent decisions and activities
- Coordination of process with key stakeholders (i.e. executives of both banks, legal, regulatory, vendors and employees)