Financial services was one of the most active industry sectors.  Although megadeals—J.P. Morgan Chase and Bank One—get most of the attention, 90 percent of the past decade’s bank mergers have involved targets with assets of under $1 billion and 75 percent have involved institutions with assets of under $250 million.  This consolidation of community banks is driven by geographic imperatives and/or the search for critical mass and efficiency in the face of heightened competition.

The Ayers Group has become actively engaged in supporting community banks—in the under $1 billion to $20 billion range—throughout the M&A process.  There are a number of issues in the initial phase of a merger or acquisition common to these institutions and the broader corporate community.  But community banks evidence a number of characteristics that affect planning, execution, and success.  

• They generally have been established to meet the needs of a specific community or population and branded accordingly. 
• Most have grown organically rather than by acquisition.
• Often not large enough to be on common, industry-defined platforms, they tend to have unique systems and processes.
• Their HR staffs are usually lean and focused, of necessity, on tactical support.

• Creating a detailed project plan
• Identifying and working with all key stakeholders 
• Structuring and executing a communications plan
• Creating and executing policy and practice in WARN notifications, skills-gap analysis—tied to business plans—compensation and benefits analyses, severance, and retention

These all are critically important in the pre-integration phase of a merger or acquisition.  Also important, and too often overlooked, is the need to plan as early as possible for what will happen after the legal act of integration has been accomplished.

How will the cultures be blended?  How will the skills of each institution’s role incumbents be assessed in light of new business objectives?  Will the identities of the institutions be retained or merged?  How will product conflicts be resolved?  How will the new value proposition be presented to employees, customers, shareholders, and other stakeholders?  How does all this support the new institution’s expected revenue pipeline?

The success of a merger or acquisition depends on how effectively the transition is managed—especially in the earliest stages.  That requires planning.  The Ayers Group has extensive banking-industry M&A experience, in both premerger integration planning and execution and post-merger integration and implementation.  We work with company leaders and HR, providing strategy and operational support, insight into best M&A practices, tactical implementation, and advice and counsel.   

The Ayers Group/CPI white paper on M&A is available online at www.ayers.com