Is there a protocol surrounding a credit union approaching a mutual s&l regarding an acquisition. We’ve not done a merger previously, not even with...

From Mike Bell, attorney, Howard & Howard, Royal Oak, Mich.

First and foremost, congratulations on thinking about a key non-organic growth strategy!  Personally, I feel it is the strongest growth strategy for credit unions today.  There are forces inside and outside our industry that have aligned to make this very advantageous.

While there is not a set protocol, there are a number of best practices to keep in mind.  It is important to manage your time and costs when looking at M&A.  People often think about costs relating to outside vendors and service providers but overlook the “cost” of time spent internally. Always be mindful of the great amount of time consumed by M&A transactions when evaluating such opportunities.  The best way to control this is to engage in a step-by-step process.

Best practices to employ include controlling the amount of information available to target institutions and being efficient.  This is done through various written agreements and by following steps appropriate for each stage of the process. In the majority of cases, I recommend having an outside party contact prospective targets to gauge interest prior to revealing your identity.  If there is interest, then identity should be revealed in conjunction with the execution of a confidentiality agreement. 

Once that is established, a discussion of monetary and overall culture matters should follow.  If there is still interest, then you should enter into a letter of intent (LOI).  After the LOI you should complete full and final due diligence.  The final step entails entering into a definitive agreement.  

Is there a protocol surrounding a credit union approaching a mutual s&l regarding an acquisition. We’ve not done a merger previously, not even with...
No