A Guide to Buying and Selling Banks

A Guide to Buying and Selling Banks

October 5, 2021 Off By Glespynorson

In order to reach your goal – get the best price – you need to keep certain considerations in mind prior to buying or selling a bank. It is intended as guidance for both buyers and sellers seeking to avoid overpaying for a bank.

Negotiate The Best Price With Buyers

Get a team of professionals to review your offer before you make it. First-time buyers, especially those who are unfamiliar with the process of bank acquisitions, could benefit from accounting and legal counsel with experience in this process. You will have the assurance that you are getting the best deal on your investment if you hire a team that has extensive experience comparing prices and valuing assets. Regulatory teams know you and your team, so you can prepare and file regulatory applications quickly.

Take a strategic approach. Don’t wait until the last minute to find out whether a bank will be available. If profitability is your priority, what can you do to increase profitability? Do you need to change your location? What about a higher loan limit? Would you like to keep your competition at bay? Consider them all and decide what action to take.

Be the first to act. If you have an interest in a bank, don’t be afraid to contact it — your competitors may beat you to it. By being the first to act, you can potentially exclude potential competitors who would otherwise be invited to participate in a bidding process.

Don’t let yourself be fooled. Most buyers regret their purchase. It has never been regrettable to pay 1.7x book value instead of allowing the bank to take 1.6.

Purchasing a bank is like buying a home. Always be courteous and respectful. If you show some attitude of being at the mercy of the seller because you’re interested in buying, no one will help you. Your relationship with the seller and how they are treated can actually tip the balance in your favor.
Not only the price matters sometimes. In addition to the perceptions of the buyer, how your company treats employees and the community after the closing may matter as well. Additionally, you do not want to indicate your desire for the bank to the seller because it puts them in a position of power.

Advice For Sellers: Getting The Best Price

The importance of early and thorough preparation cannot be overstated. Ensure that the bank has a good understanding of its operations, compliance, and governance. Take the time to know your numbers so you can show what you have to offer a prospective buyer. Additionally, consider providing new-control incentives (e.g., pay to stay bonuses) to key personnel so that they are not tempted to seek out new employment during the sale process.

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Invest in professional help. Sellers should hire a team of accountants and lawyers, just as buyers do.

Make sure the timing is right before moving forward. Consult your experts and gauge the market’s interest before you put Banks for sale in USA. Taking this approach will help you begin with an unbiased, realistic assessment of your bank. Selling a bank can take a long time, so do it when you have time to find the best offer. Your negotiating power is greatly enhanced once you know you can reject a low offer.

Ensure yourself. After your bank’s sale is announced, rival banks will rush to attack your clients and employees. If you decide to sell, be sure you want to do it, and then ignore any fears that may arise.

Make the most of your opportunities. Research your competition and determine what your competitors need. Educate yourself about the opportunities available to you. Is liquidity needed by somebody? Don’t underestimate how low your loan-to-deposit ratio is. That’s how it works.

A synergistic effect. Does the combination of the banks result in cost savings? A few of the benefits the buyer will gain are erasing owner salaries, director fees, and maintaining benefit plans.


Anytime you are involved in a transaction, it is advantageous to build a strong team and to be prepared to the best of your ability. Prior to negotiating an offer, you should seek advice from an accountant and a lawyer to ensure you get the best deal possible.