Community Bank CEOs: Your People are the Secret to a Successful Bank Sale
You've spent years building the perfect team.
Late nights, tough decisions, and yes—probably hiring a few people who didn't work out.
But now you have them: the stars who make your bank run like clockwork.
Here's the question that keeps successful bank CEOs awake at night:
What happens to these key people when buyers come knocking?
Your Team Is Your Bank's Most Valuable Asset
Think about it.
You've poured everything into finding, training, and developing your leadership team.
They know your customers.
They understand your culture.
Most importantly, they can run the bank without you looking over their shoulders every day.
That's exactly what makes your bank attractive to buyers.
But here's the problem:
The moment word gets out about a potential sale; your competitors will be circling like sharks.
They'll wave big paychecks at your best people, trying to poach them right when you need them most.
The Smart Way to Protect Your Investment
The solution?
Change-in-Control agreements (CICs) with Stay-Put features.
Think of them as insurance policies for your most important people, including yourself.
Here's how they work:
Change-in-Control Payment:
When the bank's ownership changes hands, key employees get a lump sum payment.
This removes the worry and distraction that comes with uncertainty.
Instead of wondering "What's going to happen to me?" they can focus on doing their jobs.
Stay-Put Agreement:
This will guarantee your key people will have jobs for a set period (usually 12 months) after the sale.
If the new owner decides they don't need someone, they pay another lump sum when that person leaves.
"But Won't This Cost Too Much?"
I hear this objection all the time.
Board members worry about the expense.
They ask, "Who's going to pay for all this?"
Here's the truth:
You're already paying for it, one way or another.
What happens if your head of lending walks out the door three months before you're ready to sell?
Or if your operations manager gets recruited away during due diligence?
Your bank's value drops fast.
These agreements actually protect shareholder value.
Yes, the cost is factored into the sale price.
But the protection they provide creates more value than what they cost.
What Buyers Really Want
Buyers aren't looking to clean house.
They want the people who know how to make money at your bank to stick around and keep making money.
When you have CICs and Stay-Put agreements already in place, you're solving a major concern for buyers before they even ask.
You're showing them that the critical people will be there after closing.
This eliminates the awkward negotiations that happen when buyers demand these protections as conditions of the sale.
By then, your employees have all the leverage, and it can derail the entire deal.
Who Should Get Protection?
Be selective.
These agreements aren't signing bonuses for everyone.
They're for the standouts who truly run your bank day-to-day.
Ask yourself:
Could this person walk away and take critical knowledge with them?
Do they understand and live your bank's values?
Are they someone you'd trust to run things while you're on vacation?
If the answer is yes to all three, they should probably be protected.
And yes, this includes you as CEO.
You've built this bank.
You deserve protection too, even if you're ultimately working yourself out of a job.
The Legal Details (Get Professional Help)
I'm not a lawyer, so work with yours on the specifics.
But here are the basics:
- CIC payments are typically 1-3 times annual salary
- Stay-Put payments are usually another 1-2 times salary
- Total payments generally can't exceed 2-3 times total compensation (IRS 280-G rules)
- Employees agree to confidentiality and non-compete terms
- Everything needs board approval and regulatory review
Your Competition Is Already Planning
While you're reading this, your competitors are making lists of your best people.
They're planning their recruiting pitches for the day your sale gets announced.
Don't let them catch you unprepared.
Your Action Plan
- Take inventory: Who on your team would hurt the most to lose?
- Get strategic: Which people truly need protection versus nice-to-have protection?
- Build your case: How will you explain to the board that this protects shareholder value?
- Plan ahead: When is your next opportunity to sell? Get these agreements in place before then.
- Get legal help: Work with attorneys who understand banking and executive compensation.
The Bottom Line
You've worked too hard building your team to lose them at the worst possible moment.
Protecting your key people isn't just good business—it's essential for maximizing your bank's value.
The buyers who want to pay top dollar for your bank are the same ones who understand that great people create great results.
Show them you've thought ahead by protecting the people who matter most.
Your shareholders will thank you.
Your employees will thank you.
And you'll sleep better knowing your years of hard work building the right team won't walk out the door just when it matters most.
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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