In order to achieve your goal of getting the best price, there are some considerations to remember when you are dealing with a bank purchase or sale. Here is some advice for buyers hoping not to overpay for a bank, and for sellers hoping to put up banks for sale.
Buyers: Getting The Best Deal
Consider hiring a professional team before making an offer. Particularly if this is your first home purchase, accountants and attorneys who specialize in bank acquisitions can help you navigate any issues you may not anticipate. With the right team you can be sure you’re getting a fair deal on your investment because they have extensive experience in comparing prices and valuing assets. Taking advantage of your team of professionals, you will be able to get regulatory applications ready and filed quickly.
Take a strategic approach. Banks have a habit of popping up at the very last minute, so plan ahead. If you want your bank to be more profitable, what do you need to do? Do you need to change your geographic location? Do you need more liquidity, increased lending limits? Is your competition threatening your business? Take into account these factors when developing your business plan.
Don’t be afraid to lead. It’s not a bad idea to contact a bank you are interested in-your competition may beat you to it. It might be possible for you to exclude other potential buyers from participating in a bidding process if you are first to act.
Sellers: Tips For Getting The Best Price
Preparation should be done early and thoroughly. Examine what the bank’s loans, compliance, activities, and governance are like.
Learn what you can offer a buyer in terms of numbers and benefits. It may also be beneficial to consider employee retention incentives (e.g., pay-to-stay bonuses) in order to prevent key employees from seeking new employment during the process of selling the company and to ensure that they remain involved.
Get a team of professionals to help you. An accountant and a lawyer are essential for buyers, and sellers should do the same.
Make sure the timing is right testing the waters. Assess potential buyers’ interest, consult your experts, and gather market information before putting your bank on the market. In this way, you can begin valuing your bank in a realistic, unbiased manner. Sell the bank when you have a chance to wait for the best offer, and be realistic about the time it takes. Your negotiating power increases when you are aware that you can turn down a low offer.
Don’t doubt it. Customers and employees of your bank will be at risk once word spreads that your bank is for sale. You should be sure you want to sell, and once the trigger is pulled, you should not look back.
Don’t let anything hold you back. Understand your competitors’ goals and prepare your sales pitch accordingly. Promote your influence in the market if someone wants to gain market share. Are there any liquidity issues? Showcase the lower ratio of loans to deposits. The picture is clear.
Conclusions
In any type of transaction, it is wise to be as prepared as possible and to have an experienced team to guide you. Before negotiating an offer, you will benefit from the wisdom and experience of an accountant and a lawyer.