For M&A plans and activities, we will pick you up exactly where you stand. We provide the team of specialists tailored to your needs, comprehensive industry expertise or up-to-date market studies. We are also happy to assist you in parts of a Due Diligence. We accompany you beyond the actual transaction up to the integration and the final realization of synergies – as your personal point of contact exclusively concerned with your success – discreet, competent, reliable, and holistic.
- Strategy
- Due Diligence
- Integration
Strategy
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.
Acquisition strategy
A successful merger or acquisition requires a well-defined strategy and experience. The question behind every deal 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?” The answers are rooted in strategy— we work with you on your strategy. M&A as an extension of their bank’s growth strategy where the primary purpose of M&A is not to grow big fast, but to do what you do better.
Type 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 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 cultural.
- Holding Company – This approach is similar to 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 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 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 diligences.
- Merger Integration: To make a deal pay off, you have 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.
Due Diligence
We focus our clients on asking and answering the big questions. Sellers have a reason for selling. You need to know what you are buying and how you will make your bank more valuable. In good times and in bad, mergers and acquisitions can lead to increased shareholder value. While we may all agree with this premise, care must be taken to analyze your strategic objectives and find transaction candidates that are a good fit for your long-term organizational goals.
If your bank is contemplating a merger, acquisition, or portfolio/department purchase, the first place to begin is by defining your overall strategic objectives and tolerance for risk. Key members of senior management and members of the board of directors should be gathered to discuss financial, geographic and cultural attributes of a transaction candidate that when added to your organization will create additional shareholder value. This process goes beyond basic financial analysis and allows your organization to narrow the field of candidates to those best suited to your long-term goals and objectives.
Do not go it alone. While your internal management team may be very good at performing their current duties, they may not have the time or experience necessary to execute on all aspects of a due diligence project. CCG Catalyst professionals have unique specialization including accounting, risk management, internal audit, and credit reviews. Proper leverage with CCG Catalyst professionals can allow your management team to focus on the big picture strategic issues associated with the transaction and allow outside specialists to perform the heavy lifting.
Merger Integration
When a bank takes on the task of integrating another entity due to merger or acquisitions, there are myriad decisions that must be made. How many employees do we need, or operational sites should the bank keep? Which bank’s loan processing or teller platform system is superior? Which institution has the best staffing model? Who has the best technology platform? Should the acquiring bank attempt to accommodate the functionality of the acquired bank’s technology platform—saving, for example, a unique feature that its own system lacks? Or should the acquirer simply move all the acquired bank’s customers to its various banking systems to rationalize the combined technology infrastructure as quickly as possible and cut costs?
These are some 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.
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 usually forces the acquirer to rush the integration process to quickly eliminate excess costs, thereby avoiding any negative impact on its own shareholders. And in this undertaking, haste frequently leads to costly mistakes.
But the integration challenge remains; there is a myriad of decisions that must be made during a post-merger integration project. How many call centers or data-processing sites should the new bank keep? Which bank’s loan processing or teller platform system is superior? In most cases, the acquirer has a strong preference for its own technology infrastructure, because that is what it knows best. Should it try to accommodate the functionality of the acquired bank’s technology platform—saving, for example, a unique Internet Banking feature that its own system lacks? Or should the acquirer simply move all the acquired bank’s customers to its various banking systems to rationalize the combined technology infrastructure as quickly as possible and cut costs?
Planning and forethought is the single most important ingredients in a successful post-merger integration. The planning process must start during the due-diligence phase, which is when the acquirer needs to take a close look at the target’s entire technological architecture, products, services, locations and decide how the combined bank will operate.
At CCG Catalyst we state the most difficult aspect of post-merger integration is not the technical requirements of migrating Bank A’s branch customers to Bank B’s retail deposit system—it’s project management. Creating and executing a highly detailed plan to combine the technology infrastructures of two banks is an exercise in process management. It’s the complexity of the undertaking itself—with thousands of separate tasks that must be performed by people working under pressure to meet tight deadlines—rather than the underlying technology that makes post-merger integration so challenging.
Post Acquisition Services
A conversion program is a group of related projects managed in a coordinated manner to obtain benefits not available from managing them individually. Program management is the application of knowledge, skills, tools, and techniques to meet program requirements.
A program manager is first and foremost a leader. People need clear direction and circumstances that allow them to be successful. The program manager must establish such direction both within and outside the bank or credit union.
The primary difference between a program manager and a project manager can be summed up in the words create and comply. The program manager is responsible for creating the business environment culture the project manager complies with to execute. The degree of the program manager’s direct control of that culture can vary, but through direct authority or organizational influence he or she is responsible for establishing the framework in which the project manager operates.
The project manager is judged on the triple constraint of time, cost, and scope of the project. The program manager also is judged on these three elements but at a level that is cumulative for all the projects and operations within the program. This aggregation of responsibilities for a variety of projects and operations means the program manager must make frequent trade-offs between business targets and project/operational performance.
Program management decisions are both tactical and strategic in nature. The strategy aspects of these decisions must consider multidimensional impacts beyond the near-term delivery dates of the project. Conversely, the project manager is challenged to deliver projects within the boundaries and framework established by the program manager. Typically, the project manager is and should be more delivery and execution focused whereas the program manager must also be concerned with the overall health and effectiveness of the program over the long term.
Merger Planning
Planning and forethought is the single most important ingredients in a successful post-merger integration. The planning process must start during the due-diligence phase, which is when the acquirer needs to take a close look at the target’s entire technological architecture, products, services, locations and decide how the combined bank will operate. We have outlined a few of the plans we utilize in merger integration engagement:
Road Map Document
Documenting and communicating new strategies and business objectives based on the original rationale for the transaction is the key first step towards developing an effective integration plan. We prepare detailed integration workplans and performance milestones that will track integration progress. We focus attention exclusively on what is best for the financial institution, rather than on issues surrounding hierarchy and turf battles.
Communications Plan
When a merger transaction fails to achieve desired results, poor communication, more than any other factor, is often to blame. We assist with the structuring of the communications plan that will announce the transaction and, over time, its transition details to key stakeholders, including investors, customers, suppliers, employees, the media and industry analysts. We utilize a proven and effective communications methodology that can be tailored based on the specifics of the transaction.
Human Resources Plan
We assist with planning for the retention and integration of human resources after a merger or acquisition, including the board, senior management, middle management, technical, clerical and front line employees spanning all functional areas. We work closely with management to define the optimal organizational design based on revised business objectives. We help to create new organization charts and rationalize disparate titles, benefits plans, and compensation schemes. When appropriate, we assist with “reduction in force” initiatives to achieve cost savings driven by post-transaction redundancies in human resources.
Management Information Systems Integration Plan
Integrating two different technological systems, while continuing to run each institution can be a massive challenge. It requires proper planning for phased transitions, extensive preparation, intensive testing and training and more training. We work with other members of the integration team to define workable implementation plans as to what needs to be integrated, when it should happen, and how it can be done successfully.
Product and Service Integration Plan
We work to define the go-forward product and service mix and ensure that product teams understand and support the new plan. We help set priorities for new product development and we define feedback mechanism to track progress and obstacles. We identify and pursue product synergies.
Operations Integration Plan
We prepare a detailed integration plan for operations, including all functional areas, such as accounting, loan servicing, item processing, day 2 operations, marketing, purchasing, and branches. We establish a detailed vision of how things are going to work in the future and what steps need to be taken to get there. We create a forum for issue identification and resolution (e.g. a customer say it will stop doing business with us unless we commit to continued support for an old product line).
Consolidated Vendor Contract Negotiations
Merger synergies yield significant savings – when Two banks conduct a merger, the synergy is an important aspect of the transaction. To make the transaction attractive they needed to reduce the combined expense. CCG Catalyst has designed and implemented an approach to consolidation that will fit within the overall corporate vision. We advise our clients develop ways to simplify core processes, close facilities, and reduced headcount.
