The Biggest Mistake Banks Make During a Merger

So I tell my clients, if you think you're communicating, you got to communicate 10 times more. And maybe we're communicating enough.

Mergers and acquisitions are all the rage. Banks, credit unions, it doesn’t matter. Credit unions buying banks, banks buying banks. So I’ve asked our expert on M&A, Mary Ay, to join us to talk a little bit about what’s going on in the space.

Love to be here.

What are some of the trends you’ve seen in the M&A space specifically?

We’re seeing a lot of mergers of equals, as well as, I think, the trend of credit unions buying banks. We’re seeing another uptick this year.

What do you think is driving a lot of the M&A? Is it economies of scale? Is it cost?

Those costs are not getting any cheaper. Cybersecurity, technology, compliance, those are not going away. So you need the economies of scale.

What do you think is the biggest sort of miss or gap most folks have when they go through M&A, other than maybe not planning for it as thoroughly as they could? What are some of the pitfalls?

Everyone thinks, “Oh gosh, it’s going to be the technology, right? The technology integration.” They forget about the change. The change to their customers and members, and most importantly, the change to their staff.

One of the biggest values is in the acquisition of the customers or members, and also the talent. So if you don’t do it well, you’ll have both leaving. That attrition can be significant if it’s not handled well.

Yeah.

There’s a lot about change that people think, “What’s the big deal?” It’s communication and being transparent all the way through the organization, as well as with people who aren’t even involved with the integration. They want to know what’s happening.

One thing that we do after every integration is a lessons-learned exercise, and every time, it’s communication. There wasn’t enough.

So I tell my clients, if you think you’re communicating, you got to communicate 10 times more. And maybe we’re communicating enough. And that’s not just internally, it’s externally, too.

Right. Absolutely.

Let us know in the comments what you’re doing in the merger space or any of the challenges or pitfalls you’ve run into. We can also help. We’ll talk to you next time.