21 Jul Strategic Analysis Should Surpass Investment Banking Ties in Bank M&A, Expert Says
As community and regional bank mergers and acquisitions accelerate in the post-pandemic world, the advisory process “will require an altered approach,” argues bank consultant Joe Fenech in a blog post this week.
Understanding a bank’s strategic planning process, as well as its opportunities and challenges, will be far “more appealing than the services offered by the regional investment banker with strong relationships solely within the acquirer’s or target’s immediate market area,” Fenech writes.
Some of this is due to fintech, and some of it is because of post-COVID changes in how banks and their customers operate. Fenech argues that the banking industry is on the “cusp on an M&A wave that should rival any in the sector’s quite active history.”
He isn’t the first banking consultant to note that investment banking relationships don’t always favor banks. A June McKinsey & Company article concluded that 70 percent of bank acquisitions failed to create value for the buyer.
The McKinsey piece advises a bank contemplating M&A to make sure it can “objectively view its strengths and weaknesses, especially with regards to the key value drivers.” It notes that “the historical record of M&A is rife with last-minute decisions overriding careful early planning.”
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