Community Bank CEOs: What Happens at the Board Meeting That Approves Your Sale
You've made it through seven months of grinding work.
The definitive agreement is complete and ready for board approval.
Your bank continues to perform well.
The announcement is just days away.
But your mind won't stop racing:
What will shareholders think?
How will employees react?
What about customers?
Will regulators approve the deal?
What could still go wrong?
You haven't had time to think about your own future.
That will have to wait.
Right now, you need to focus on the next critical step: getting your board's approval to move forward.
Who Attends This Special Meeting
This board meeting will be different from all others.
Specifically, directors attend, along with your investment bankers and legal counsel.
No management team members beyond you.
No observers.
This is the board's decision to make.
In our case, this meeting happened exactly seven months after our first discussion about exploring a sale.
We hit almost the exact timeline the investment bankers had originally predicted.
The Legal Duties Reminder
Your legal counsel will start by reminding directors of their three main duties:
- Good faith
- Care
- Loyalty
This isn't just ceremony.
It's establishing the legal framework for the decision they're about to make.
Counsel will answer questions that came up during the review process:
- "Did you see anything that looked like self-interest in our choice of buyer?"
- "Given your experience, did this process achieve the best outcome for shareholders?"
These questions protect both the directors and the bank from future challenges.
The Fairness Opinion Walkthrough
If you’ve engaged investment bankers to provide a fairness opinion, they'll now walk the board through their analysis.
A fairness opinion documents the process the board followed to reduce the risk of shareholder lawsuits.
It shows the board did their homework and made an informed decision.
The investment bankers present a summary of their detailed financial analysis.
This includes:
- How they valued your bank
- How they evaluated the offers
- What comparable transactions they analyzed
- Why the chosen offer represents fair value
Then comes the key moment:
The investment bankers issue their opinion on whether the deal consideration is fair to shareholders from a financial point of view.
Directors can ask questions throughout this presentation.
The Definitive Agreement Review
Next, legal counsel walks through the definitive agreement, covering:
- Key terms and conditions
- Voting rights
- Restrictive covenants
- What the bank can and cannot do until closing
Even though this is a summary, it takes significant time.
The agreement is complex, with many important details.
Directors are encouraged to ask questions about anything unclear.
This is their last chance to understand the agreement fully before voting.
The Timeline Ahead
After reviewing the agreement, counsel outlines what happens next:
Immediate steps:
- Your board approves and signs signature pages (held by your counsel)
- Buyer's board approves and signs their pages (held by their counsel)
- Both sides announce the signed definitive agreement
Between announcement and closing:
- Both sides work on various closing matters
- Special shareholder meeting held to approve the transaction
- Regulatory approval process
- Final closing preparations
At closing:
- Deal closes
- Shares convert to merger consideration
- Your board ceases to exist as the bank dissolves into the buyer
What Happens to Your Board
At closing, your board ends.
The bank and holding company (if you have one) cease to exist as separate entities.
Some board members might continue with the merged bank if the deal included stock consideration.
In all-cash deals, board members typically don't continue.
This is the end of an era for your directors, many of whom may have served for years.
The Confidentiality Reminder
Even after board approval, the deal stays confidential until legal counsel confirms all documentation is complete.
Non-board shareholders still know nothing about the deal until the announcement.
One premature word could still derail everything.
Acknowledging the Milestone
This is a significant achievement worth recognizing, even if briefly.
Your relationships with customers, employees, and shareholders are about to enter a new chapter.
That's too significant not to acknowledge.
You've invested heavily in all these relationships.
Now you know how they'll be affected long-term:
Your key employees will benefit from change-in-control agreements and stay-put provisions (if you have them). They'll have a bigger platform for their careers.
Your customers will have more borrowing capacity, more products, and more locations available.
Your shareholders can monetize their investment and benefit from the value creation.
The buyer gets great employees and customers who will help build value for their shareholders.
Your community will be served by a larger bank with more resources.
The Transition Noise You Didn't Expect
There will be some rough spots along the way that test relationships.
The noise usually comes from unexpected places:
A key employee who views this emotionally and is upset it's happening, even though it benefits them financially.
Shareholders who didn't want to sell now because they hoped for a longer time horizon, or who are emotionally attached to their investment.
This isn't a huge amount of conflict, but something will probably surprise you.
Your Racing Thoughts Are Normal
Your mind jumping to all the "what ifs" is completely normal at this stage.
You're concerned about:
- Shareholder reaction
- Employee morale
- Customer retention
- Regulatory approval timing
- Things that could derail closing
- Your own uncertain future
All of these concerns are legitimate.
But right now, you can only control the next step: board approval.
The Emotional Weight
This moment carries emotional weight that's hard to describe to someone who hasn't been through it.
You're ending something you built or helped build. Relationships will change.
Your role will change.
The bank's identity will change.
Some directors might feel relief.
Others might feel loss.
Many will feel both.
Allow space for these emotions while staying focused on the fiduciary duty at hand.
Things Are About to Change
After this board meeting, everything accelerates.
The announcement goes out.
The secret you've been carrying for seven months becomes public.
Reactions start coming in.
The regulatory process begins.
The countdown to closing starts.
You'll shift from managing a confidential process to managing a very public transition.
Your Decision Framework
Before the vote, each director should ask themselves:
- Did we follow a thorough process?
- Did we consider all reasonable alternatives?
- Is this deal fair to shareholders?
- Have we met our fiduciary duties?
If the answer to all four is yes, the path forward is clear.
The Bottom Line
This board meeting represents the culmination of seven months of work and decades of building your bank.
The definitive agreement is complete.
The analysis is done.
The fairness opinion is delivered.
The decision is clear.
Now it's time for your board to formally approve moving forward—and for you to prepare for the very public phase that follows.
Your Action Plan
1) Review fiduciary duties - Make sure you understand your obligations as a director
2) Prepare for questions - Think through what board members might ask
3) Consider relationships - How will you address concerns from employees, customers, and shareholders?
4) Draft your message - What will you say when the announcement goes public?
5) Identify potential issues - What concerns you most about the announcement and how can you address them?
Remember: This is a milestone worth acknowledging, even as you prepare for the challenging transition ahead.
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 zero hacks or tricks in this newsletter. Just proven tactics that help you choose the right path for your bank.
Your path will:
- Inform your strategic plan.
- Guide your annual business plan and budget.
- Clarify priorities.
- Define your message so it can be communicated with confidence.
This is how savvy bankers navigate.
They build smart and valuable banks and choose the best time to sell on a timeline of their own choosing – serving the needs of the shareholders and the board.
I hope you found this short lesson helpful.
What are your thoughts?
I’ll see you next week.
If you would like access to all prior newsletters - click here.
Not a subscriber? The newsletter is free - click here to become one now!
