We are a proudly independent, $90-million Midwest CU that has been approached in the past by larger CUs seeking to merge us in, and we have rejecte...

From Jim This, President, The Paragon Group, Olympia, Wash.

A few years ago there was a credit union CEO who came up to all his peers at league meetings and other gatherings and started the conversation with the question, “Are you ready to merge yet?”  While he may have believed he was self-assured or clever, most of his peers thought he was a pain.  In fact, many would duck around the corner when they saw him coming.

Since most CEOs are aware that merger conversations are part of doing business today, what’s the best way to initiate a conversation without looking like Pac Man?  Here are five best practices that work.

First: asking about a possible merger should not be the first topic of conversation between two CEOs.  One of the cornerstones of a good merger is trust between the parties.  If a CEO appears predatory it can set a bad tone.

Second: the CEO of a credit union making the approach for a merger discussion needs to do her/his homework.  There are a number of things to research:

* The financial condition of the credit unions

* Whether the two cultures would blend easily

* What services are currently offered

* The anticipated tenure of the current CEO

* What will happen to the staff of the merging credit union

Third: develop your case.  Think about why the other credit union might want to merge with you.  Be ready to explain why you want to merge and why you chose them. Create a value proposition that will make sense for the merging credit union, not just yours.

Fourth: be honest and personal.  Call the CEO of the potential merger credit union and ask if he/she would like to have a conversation about merger.  Assure the CEO that you won’t apply a hard sell.  Couch it as an exploratory conversation.  Don’t come in with all the details laid out – a merger works better as a joint venture, not a take-over.  Be prepared for the person to say no, but try not to close the door forever.

And finally: remember the sensitivities of the merging CEO (and the board).  In most cases this has been their passion for many years.  Merger can often feel like failure.  Approaching it as a logical, prudent next step for the members and staff will help make the transition.

Oh and by the way, the CEO pest – his credit union was merged into another several years ago.

We are a proudly independent, $90-million Midwest CU that has been approached in the past by larger CUs seeking to merge us in, and we have rejecte...
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