After several quiet years, bank mergers are heating up again. Fifth Third’s recent $11 billion deal for Comerica has analysts predicting “a unique window of opportunity” for regional and community banks to pursue acquisitions in a friendlier regulatory environment. Wells Fargo Head of U.S. Large-Cap Bank Research Mike Mayo calls it “the period of the greatest deregulation in three decades.”
With scale once again the prize, it’s a good time to call on ProSight’s M&A Playbook. Its guidance—drawn from decades of post-merger lessons—is spot-on for today’s market.
Start With ‘Why?’
The Playbook calls the pre-deal phase “the most critical phase in the merger process.” Boards and management teams should agree on the business case and risks before any talks begin. Every merger, it says, should “clearly satisfy one paramount goal: shareholder value creation.” The document urges acquirers to define expected synergies, develop ways to monitor them, and build controls to mitigate “synergy risk.”
Right-Size the Deal
Acquisitions can strengthen a bank’s franchise—but only if the target fits its “DNA.” The Playbook warns that risk rises sharply when the acquired bank exceeds 50% of the acquirer’s asset size, operates out of market, or follows a very different business model. The lowest-risk mergers, by contrast, involve smaller, in-market institutions with aligned strategies.
Prepare Before You Engage Regulators
According to the Playbook, “Regulators measure and track a bank’s quantity of strategic risk and are ultimately the judges and jury of whether the merger is approved.” The authors advise cleaning up BSA/AML issues before announcing any transaction and clearly assigning who will communicate with the lead supervisor.
Build Your A-Teams Early
Integration shouldn’t be improvised. The Playbook says “integration team members should be identified prior to integration activities so that there is no delay once integration kicks off.” The same goes for due-diligence teams, which should include deep subject-matter experts across credit, finance, IT, and compliance, supported by outside advisors. A respected, high-potential executive should lead both efforts.
Guard Against Disruption
The section on “Synergy Failure/Business Disruption Risk” is blunt: mergers often “entail a significant disruption to the servicing of clients and customers.” The Playbook notes that boards and executives should treat synergy risk as a board-level discussion, not just a management exercise. Acquirers that focus solely on expense cuts risk losing revenue and key employees. The remedy is constant monitoring—by line of business—of customer retention, deposit runoff, and employee turnover, with early-warning indicators built into reporting.
Keep Culture in Focus
Employee retention is “nearly always the highest priority of an acquirer,” the Playbook notes. Retention contracts and communication plans must be ready before the deal announcement: “Once a deal is announced, the top employees of the acquired bank immediately begin fielding calls from prospective employers.”
Whether the next wave of consolidation brings “mergers of equals” or opportunistic acquisitions, the Playbook’s bottom line still applies: success depends less on timing the market than on discipline, preparation, and knowing exactly why you’re doing the deal.
