Community Bank CEOs: The 4 Types of Buyers (And Which One Actually Pays)
The investment banker calls with exciting news:
"We have eight banks interested in buying you."
Your heart races.
Eight serious buyers means competition.
Competition means better terms and higher prices.
But here's what no one tells you:
Not all interested buyers are actually interested.
Some are just curious.
Others are practicing for future deals.
And some are wasting your time entirely.
Here's how to separate the serious buyers from the time wasters—and why knowing the difference can save your deal.
The Four Types of Buyers You'll Meet
After going through our own sale and watching the market for years, buyers fall into four clear categories:
Serial Acquirers: These banks make acquisitions as part of their main growth strategy.
They're efficient, experienced, and have dedicated people and processes for buying banks.
They know what they want and move quickly.
Occasional Acquirers: These banks make strategic deals every few years.
They have some experience and frameworks they adapt for each situation.
They're serious but less efficient than serial acquirers.
Future Acquirers: These banks haven't bought anyone yet, but they're thinking about it.
They're "practicing" for the real thing by going through your process.
They might even submit a low offer hoping they don't win yet.
They're sticking their toes in the water.
Lurkers: These banks have no real acquisition plans.
They're just curious about what's happening in the market.
They waste everyone's time.
Why This Matters More Than You Think
Understanding these types isn't just academic.
It affects everything about your sale process.
Serial acquirers will move fast, ask smart questions, and submit competitive offers.
Lurkers will ask basic questions, take forever to respond, and probably drop out before making an offer.
If you're working with investment bankers, they're very good at identifying the different types.
If you're going alone, you need to figure this out yourself.
The Dinner Bill Test
Remember when you were raising money to start your bank?
All "yeses" weren't the same then either.
It's like when the dinner bill comes and some people's arms get shorter.
Or when it's time to write a check and suddenly they can't find their checkbook.
The same thing happens with bank buyers.
There are "confirmation yeses" and "commitment yeses."
Confirmation yeses are polite responses with no real promise of action.
They're just being nice.
Commitment yeses mean they're ready to take real steps forward.
Your job is figuring out which type of yes you're hearing.
The Test That Reveals Everything
The best way to separate serious buyers from time wasters is simple:
Ask for written offers.
This request usually comes after you've gathered interested parties and shared basic information.
The timing matters, you don't want too much time between interest and action.
Time kills deals.
Here's what happens next:
Interested parties sign non-disclosure agreements and get access to your Confidential Information Memorandum (CIM).
This document includes a roadmap of next steps and higher-level information about your bank.
They also get access to your virtual data room with detailed information: strategic plans, financial data, loan portfolio details, deposit information, management compensation, contracts, and facility information.
Then you set a quick deadline, usually one to two weeks—for written offers.
What This Process Reveals
This is where you learn who's serious and who's not.
Serial acquirers will quickly review your information, ask smart questions, and submit competitive offers on time.
Occasional acquirers will take longer but usually come through with reasonable offers.
Future acquirers might submit low-ball offers or ask for extensions. They're still learning.
Lurkers will either drop out quietly or submit offers so low they're insulting.
The Information Flow That Protects You
If you're using an investment banker, they manage all communication.
Buyers can't contact you, your directors, or employees directly.
All questions go through the investment banker.
This creates a single point of contact for what's essentially multiple bank exams happening at the same time.
Your investment banker fields questions, answers what they can, and passes along more complex questions to your deal team. Only questions that stump everyone come to you.
Without an investment banker, you're fielding all these calls yourself.
It's exhausting and risky.
Why Competition Changes Everything
You're hoping for more than one serious offer.
Multiple serious buyers create competition, and competition drives up value.
But fake competition from lurkers and future acquirers doesn't help.
You need real buyers with real money and real intentions.
That's why identifying buyer types early matters so much.
The Uncomfortable Truth
Here's what no one warns you about:
This process means giving up some control.
You're sharing sensitive information with strangers.
You don't know what offers will come in.
You don't know if they'll be clustered together or scattered wildly.
You don't know if your shareholders will like any of them.
You have to get comfortable being uncomfortable.
What This Teaches You
Going through this process—even just imagining it—reveals a lot about your bank's readiness.
Ask yourself:
- How would our bank look to serious buyers?
- What weaknesses would they spot immediately?
- Do we have the information organized that they'd want to see?
- Are we proud of what we've built?
These questions matter whether you're selling tomorrow or just considering your options.
The Real Value of Preparation
The reason to think about this process long before you need it is simple:
What you've built up to this point determines what offers you'll receive.
You can't fix years of poor decisions during a two-week offer process.
But you can build a bank that attracts serious buyers and commands premium prices.
Your Strategic Advantage
Understanding buyer types gives you power during negotiations.
When you know a serial acquirer is genuinely interested, you can push harder on terms.
When you spot a lurker, you can minimize time spent on them.
This knowledge helps you focus energy on buyers who can actually close deals.
The Bottom Line
Not all interested buyers are equally interested.
Learning to spot the difference between serious acquirers and time wasters can make or break your sale process.
Focus your energy on serial and occasional acquirers.
Be polite to future acquirers but don't count on them.
Ignore lurkers completely.
The goal is to find buyers who can and will close, not just buyers who say they're interested.
Your Action Plan
1) Assess your readiness - How would serious buyers view your bank today?
2) Build relationships - Get to know serial acquirers in your market
3) Prepare your information - Organize what buyers will want to see
4) Practice the process - Walk through how you'd handle multiple interested parties
Remember:
Serious buyers want serious sellers.
Make sure you're ready for both sides of that equation.
P.S. I'm not a lawyer, an accountant, or an investment banker. Just a former bank CEO who has been in your shoes.
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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