CCG Catalyst helps banks improve their chances of successful M&A through an integrated, battle-tested approach that links acquisition strategy, diligence and merger integration.
Path to Acquisition
A merger or acquisition is tricky for banks. There are many questions that need to be satisfied before proceeding on the path. The first part of in the decision-making process is the strategy. The strategy lays the ground work and criteria for successful merger or acquisition.
Type of Mergers
CCG Catalyst defined three types of mergers.
Acquires Approach – Most or all branches are retained, the acquirer’s products, operations, technology, and staff retained and current technology & processes are baseline for the merged bank. We call this a “Forced March to common systems and practices”
Merger of Equals – Whether it be 50/50 or some other combination, both banks agree that joining together is in the best interest of both of their banks. Both banks are attempting to increases value as a combined entity. The issues are many, but the top would be determining a future state together, joint leadership, and the merging of people and cultures.
Holding Company – This approach is like an Acquires Approach, generally, you maintain local board and management, separate regulatory charters, but similar products and services. Successful entities implement or have a “Shared Services” infrastructure.
“The greatest impediments to our bank merger were cultural differences, IT and
operational integration. A solid plan for executing this integration was a best practice
much too important to ignore.”
Assessing the merger or acquisition of a bank contender begins with due diligence strategy. In this process, CCG Catalyst takes on the task of defining integrating strategy collaborating with the bank, this collaboration is necessary to sort through the myriad decisions that must be made.
Getting to the heart of the common issues that must be addressed when entering the planning phase of the integration. Many integration projects drag on because of poor planning, a lack of strategic objectives and a methodology tainted by politics. The pace of banking industry consolidation has slowed considerably in recent years but is expected to move to the forefront this year. A successful merger is one that delivers a higher rate of return to the acquirer’s shareholders within a reasonable period. Paying too high a takeover premium undertaking, haste frequently leads to costly mistakes.
To make a transaction pay off, you must nail a short list of critical actions. But merging two banks also requires rigorous follow-through on a long list of integration tasks, large and small and let’s not forget regulatory. Doing both is hard. Part of the answer lies in a few, powerful guiding principles: tailor the integration to the transaction, and act with deliberate speed.
The primary purpose of M&A is not to grow big fast, but for banks to do what they do better. We have worked on many M&A engagements across the country. We offer our clients an approach and bring our expertise to all elements of the transaction, including:
Acquisition strategy: The question behind every M&A should be: “How will buying this bank make my existing bank more valuable, and how will I bring value to the bank I am buying?” We help companies build their M&A programs as a part of an overall strategic plan.
Acquisition screening: We help clients develop an investment thesis that is aligned with strategy and growth opportunities. We work with you, your attorneys, brokers to enhance deal flow by screening targets based on criteria set in the M&A acquisition strategy process and develop a road map to approach targets.
Due diligence: We collaborate seamlessly with our client due diligence teams to help your bank make better investment decisions. Experience matters: we are all from the industry and have conducted hundreds of due diligence.
Merger integration: To make a deal pay off, you must nail a short list of critical actions. But merging two banks requires rigorous follow-through on a long list of integration tasks. Doing both is hard. Drawing on our accumulated experience, we also bring time-tested process management skills to assure the to-do list gets completed.
A collaborative perspective guides CCG Catalyst relationships both internally and with clients. We take a long-term view in our relationships. We strive to build bonds founded on respect, caring, honesty, mutual support, and investment. We work together in a manner that is team-oriented, constructive, and challenging.