Six Priorities for Successful Post-Merger Integration

Is your bank properly resourced for an efficient and effective post-merger integration?

Most banks head into post-merger integration with long to-do lists but find they are not equipped with the people, processes and technology integral to achieving valuable post-close results. Managing data, applications, and infrastructure to integrate the target company to drive the return your institution is expecting is critical to the merger’s success.

Depending on the scope and scale of each transaction, the first 120 days can vary greatly. Boards and executives should keep these six priorities in mind when planning the days following the merger for a smoother transition to full integration. A well-executed and communicated plan avoids delays, unnecessary costs and long-term unfavorable consequences.

Document everything, assume nothing. Memorialize the value creation strategy. What is the integration approach? Where is the value? And what’s the time frame to realize this value? When a bank defines these goals, it allows the integration team to set the right priorities. Communicate it and then communicate it again, and again.

Prioritize consistent communication between key players. The right hand needs to know what the left hand is doing. That does not mean constant meetings between every member of the integration team, but the moving pieces – for example, the merger and acquisition leaders, operations and the finance team – must regularly sync. Boards need to set an expectation for communication cadence early.

Agree on the integration approach. Is this acquisition an absorption, holding, value creation or integration? Agreeing on what the end game looks like creates a solid, common vision and strategy, quiets the noise around non-priorities for the near term and universally defines what success looks like in zero to 90 days, 90 to 120 days and beyond.

Realistically assess team skills and what’s missing. In most banks, everyone on the integration team has a day job and few have the experience or bandwidth to handle onetime tasks and niche elements of M&A, including core system conversions. For most banks, this may be the first time they’ve been through the process, or the last deal was years ago. If your institution doesn’t have time for training, consider contracting outside talent that regularly performs these types of transactions to handle your institution’s integration efficiently.

Core system conversion planning. Core system conversion readiness and availability of vendors is a key part of the post-integration plan. This component alone could demand a separate team of bank personnel from both organizations. Use this time to review your technology vendor contracts.

Understand (and respect) the culture. Every transaction will affect people: employees, customers, shareholders, and vendors. Recognize the impact, plan for it and communicate what you know when you know it. Focus on the value creation for each audience.

As early as possible, rightsize the project team with a trusted advisor that understands the nuances of the banking industry, has nimble processes, a broad range of knowledge and expertise, and most importantly – the ability to execute.

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting, investment, or tax advice or opinion provided by CliftonLarsonAllen LLP (CliftonLarsonAllen) to the reader. CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLAglobal.com/disclaimer. Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor.