They make the great but frequently-overlooked point that banks for sale are much more likely to be having organic growth problems already, and may be dressing the balance sheet. If as a buyer you are also having trouble growing organically (and why else pay a big premium for another institution?), you have a recipe for an underperforming combination.

If, as a potential buyer, your retail organic revenue growth has been consistently strong and has been underpinned by distinctive customer value, you have higher odds of success in the M&A game. However, even for such banks, it is important to think twice if your target is in a region where it faces particularly strong competition.

Conversely, if your performance and that of the target are sub par, and management has a “must-win-this-deal” mentality, then a plan for how the target will be managed so as to be competitive in the market becomes paramount.

(via BankStocks)