The Million-Dollar Timing Secret: How Smart Bank CEOs Find Their Perfect Sale Window

If you could pinpoint the absolute best time to begin looking for a buyer for your bank, what factors would you consider?

In my experience, there's a specific alignment of events that creates what I call...

"The Golden Window of Opportunity."

This window opens when:

Your safety & soundness, BSA, and IT exams have just successfully completed
You have 18 months until your next exam cycle
Your core processing contract is 18-24 months from expiration

When these three conditions align, you have discovered your Golden Window.

Why This Timing Matters So Much

I call it the Golden Window for three critical reasons:

1) No Exam Distractions

You've just completed your major exams and won't have this distraction during the sale process.

Anyone who's been through a regulatory exam knows the focus and energy they require from your entire team.

2) Information Already Organized

You've recently gathered all the information regulators requested, so there won't be a suspicious new information-gathering exercise that might tip off employees about a potential sale.

The documentation is fresh and ready.

3) Core Contract Impact on Sale Price

Most importantly, your core processing contract will have the least negative impact on the price your shareholders would receive from the sale.

This third point is worth millions to your shareholders.

The Core Contract Money Trap

Your core processing contract impacts your sale price in two major ways.

First: The Early Termination Fee

This is the fee you must pay to end your contract before its expiration date. It's essentially a "make-whole" payment to your core provider for the remaining term.

Let me illustrate with two scenarios for a $200 million asset community bank:

Scenario #1: 54 months remaining on contract at closing

Item	Monthly Cost	Months Left	Percentage	Total Impact
Core Processing	$30,500	54	80%	$1,317,600
Monthly Credits	$2,870	54	100%	$154,980
TOTAL IMPACT				$1,472,580

Scenario #2: 12 months remaining on contract at closing

Item	Monthly Cost	Months Left	Percentage	Total Impact
Core Processing	$30,500	12	80%	$292,800
Monthly Credits	$2,870	12	100%	$34,440
TOTAL IMPACT				$327,240

The difference? Over $1.1 million directly subtracted from your shareholders' proceeds.

That's why I call it the "Golden" Window - because the timing is worth gold to your investors.

Second: The Deconversion Fee

This is the charge to move your data to the buyer's system.

This cost also directly impacts your sale price.

Deconversion fees can be substantial and often aren't clearly defined in contracts, giving core providers significant leverage to name their price when you're trying to exit.

Making Core Contracts a Board-Level Priority

I recommend bringing your core contract and all ancillary addendums to your board for review annually as part of your vendor management program.

This regular review process:

Makes the contract a standard agenda item, removing suspicion if you suddenly want to review it
Forces your team to identify the exact termination date
Creates awareness of how these costs impact bank value
Uncovers "hidden" contract extensions in addendums for services like mobile banking, treasury services, or imaging
Provides opportunities to negotiate better terms

During these reviews, your board should specifically ask management to confirm the exact termination date. This simple question focuses everyone on the importance of this date and creates leverage for future negotiations.

You can easily explain to your team that contracts carrying termination fees significantly impact the bank's future cash flow and therefore its value - all without revealing sale plans.

Extend This Strategy to All Key Contracts

Apply this same annual board review process to all contracts over a certain value (like $25,000).

This approach:

Creates regular documentation you'll need for due diligence
Establishes board oversight of key vendor relationships
Keeps contract information current (never more than 12 months old)
Maintains institutional knowledge about contract terms
Prevents "surprise" fees during a sale process

Finding Your Golden Window

Your Golden Window might be approaching soon, or it might align better in the future. Either way, understanding this timing concept gives you powerful leverage in planning your bank's strategic direction.

Your Action Plan

1) Map Your Exam Timeline

When were your last safety & soundness, BSA and IT exams?
When is the next cycle scheduled?

2) Identify Your Core Contract Expiration

What is the exact termination date?
Are there any addendum services that extend beyond this date?
What are the early termination and deconversion fees?

3) Analyze the Alignment

Do your exam cycle and core contract expiration create a Golden Window soon?
If not, when would they align in the future?

4) Strategic Contract Planning

How should the Golden Window concept influence your next core contract renewal?
Should you negotiate shorter terms to align with potential sale timing?
Can you negotiate lower (or eliminated) deconversion fees now?

5) Implement Board-Level Contract Reviews

Schedule annual reviews of all major contracts
Create a standard template showing termination dates and fees
Make this process routine so it doesn't signal sale intentions

Remember, timing isn't just about market conditions - it's about maximizing value through careful planning of your operational commitments.

Where is your Golden Window, and how will you use this knowledge to maximize your shareholders' value?

There are no shortcuts or hacks in building the confidence needed for major strategic decisions.

Just proven approaches centered around preparation:

This approach will:

- Inform your strategic planning

- Guide your resource allocation

- Clarify your priorities

- Define your value proposition

This is how savvy bank leaders operate.

They build valuable institutions through preparation, allowing them to choose the optimal path forward on their own timeline – whether that's continued independence or a strategic transaction.

I’ll see you next week.

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