Strategic Analysis Should Surpass Investment Banking Ties in Bank M&A, Expert Says

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.”

Editor’s Note: The Invictus M&A Advisory and Strategic Intelligence Group provides bank CEOs and Boards of Directors critical strategic information and tools to plan for and make successful M&A decisions. The group identifies, negotiates, and creates transactions that are designed for post-deal success by using industry-focused loan-level data to exploit hidden value. Contact George Dean Callas at gcallas@invictusgrp.com for more information.