Community Bank CEOs: How to Build a Bigger Buyer Pool for Maximum Value
Here's a fundamental truth about selling:
The more qualified prospects at the top of your funnel, the better your chances of maximum value.
It sounds obvious.
But I've seen too many CEOs sabotage their process before it starts.
Check Your Competitive Bias
First, address that voice in your head saying, "We would never sell to them."
Stop.
Right now.
It's too early to let competitive instincts eliminate potential buyers.
Those instincts serve you well in daily operations.
They work against you during a sale.
What Investment Bankers Listen For
Your investment bankers will bring you a list of potential buyers.
When reviewing it, understand what they're really listening for:
True Deal-Killers:
- Regulatory obstacles
- Insurmountable board objections
- Fundamental shareholder concerns
Time-Wasters:
- Investment bankers get paid on success
- They want to focus on viable prospects
- They're identifying genuine non-starters
They're not asking you to eliminate competitors you don't like.
They're identifying actual obstacles to a deal.
The Credit Union Question
Here's the controversial topic: credit unions as potential buyers.
You've probably spent years competing against them.
Fighting their expansion.
Pointing out their unfair advantages.
But your role changes during a sale.
Your fiduciary duty to maximize shareholder value trumps competitive history.
Unless you have a concrete reason that stands up to fiduciary scrutiny—duty, loyalty, and care—you need to keep credit unions in the mix at this stage.
The "Perfect Fit" Trap
On the flip side, you might have a dream buyer in mind.
But your investment bankers might tell you they're not likely to be interested.
Listen to them.
Why:
- Sell-side bankers talk to buyers constantly
- They know buyers' current appetite for deals
- They understand buyers' strategic priorities
- They're aware of buyers' operational constraints
That said, don't permanently strike anyone.
Circumstances change.
Keep dream buyers in mind for later if you have specific reasons why they fit.
Do Your Own Homework
Want to get ahead?
Start your research now.
Build Your Initial List:
- Pull FDIC data on insured institutions
- Focus on banks 5-7x your size
- Don't limit by geography yet
- Create a broad universe
Study Their Moves:
- Recent acquisitions
- Stated growth strategies
- Geographic expansion plans
- New business initiatives
Research Leadership:
- Executive backgrounds
- Public statements
- Strategic vision
- Integration track record
Look for Patterns:
- Preferred deal sizes
- Market entry strategies
- Post-merger integration approach
- Treatment of acquired teams
Smart Questions to Ask
When evaluating potential buyers:
- What's their stated growth strategy?
- How do they handle post-merger integration?
- What's their track record with acquisitions?
- How do they typically structure deals?
- What's their approach to retaining talent?
The Mindset You Need
At this stage, your job isn't to eliminate options.
It's to expand them
The time for narrowing comes later—hopefully when you have multiple interested parties creating competitive tension.
Think like a shareholder, not a competitor.
Consider all viable options.
Document your findings and questions.
Your Next Steps
Start Your Research:
- Pull that FDIC list
- Create a tracking system
- Gather articles and information
Stay Open-Minded:
- Park competitive instincts
- Think about shareholder value
- Consider all viable options
Prepare for Discussions:
- Document findings
- Note specific strategic fits
- Track your questions
Why This Matters
Every buyer you eliminate prematurely is one less source of competitive tension.
One less potential premium offer.
One less backup option if your first choice falls through.
You don't know yet:
- Who will be most interested
- Who will pay the highest price
- Who will offer the best structure
- Who will be easiest to work with
Keep your options open until you have real data.
The Bottom Line
At this early stage, expand your buyer pool rather than limiting it. Check competitive bias at the door—fiduciary duty to shareholders trumps competitive history. Listen to investment bankers about genuine deal-killers but don't eliminate buyers just because you've competed against them. Do your homework using FDIC data to identify banks 5-7x your size. The time for narrowing comes later when you have competitive tension.
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.
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Additional resources, including the Community Bank Value™ Playbook, are available at kurtknutson.com.
