Insights H&H - Flipbook - Page 2
CLOSING THE DEAL
INSIGHTS
K EY ME TR ICS
35%
35% of bank leaders said their
organization would be likely to
acquire another bank by the end
of 2024
41%
Navigating a deal to a successful conclusion is a critical component of bank M&A,
but deals have taken longer to close in recent years — with some taking a year or
more. By understanding the more common obstacles, would-be merger partners
can close the deal faster and move forward with their strategic plan.
41% said valuation differences
due to a seller’s unrealized losses
could be an obstacle to M&A
Source: Bank Director’s 2024 Bank
M&A Survey
Few things can kill the momentum of a deal like a prolonged time to clos-
KEY TAKEAWAYS
ing, but by better understanding some of the common reasons for a delayed
closing, would-be dealmakers can iron out potential wrinkles and move
• Bank deals have been taking longer to
close in recent years. In the first half of
2024, bank deals averaged 207 days to
closing, compared to 150 days in 2021.
• Regulatory approvals can prolong that
time. Antitrust or regulatory compliance
concerns are often highly scrutinized,
especially compliance with the Community
Reinvestment Act and Bank Secrecy Act.
• Regulators are also carefully monitoring
potential liquidity issues following deposit
runs in 2023.
• Bank leaders interested in acquiring should
communicate with their examiners early
— before finding a merger partner — in
order to get a sense for any issues that
might raise flags in the regulatory approval
process.
• Bank executives should also prepare to
integrate the two organizations well ahead
of actually closing the deal.
2
forward in a timely fashion.
“If you don’t close the deal and move forward, you’re in this weird gray area,”
says Dennis Merkley, an attorney and counselor with Howard & Howard. “The
banks are competing against each other. They’re competing for the same loans,
but they’re in negotiations to try to become one. To get it done quickly is more
beneficial.”
Deals are taking longer to cross the finish line. According to data from the
investment bank Janney Montgomery Scott, deals took an average 207 days
to close in the first half of 2024, up from 186 days in 2023, 189 in 2022 and 150
days in 2021. A decade ago, bank deals averaged 136 days to closing.
Ideally, a bank merger would close about six months after it’s announced,
Merkley says. But when a deal takes longer to close — a year or more isn’t
unheard of — investors and other stakeholders may start to question whether
regulators uncovered something serious. And they may even lose faith in the
combined entity.
With a little planning and communication, prospective merger partners can
mitigate some common hurdles to a timely closing.
Common Hurdles
When interest rates rose in 2022-23, low-yielding bonds and Treasurys
purchased by banks in a low interest rate environment lost value. The calculation of accumulated other comprehensive income (AOCI), or unrealized gains
