As forward-thinking credit unions seek new ways to become stronger and enhance member value, the frequency – and size – of mergers continue to increase. Developing a merger strategy is now imperative for institutions of all sizes, especially those searching to pool their resources and deliver greater member impact.

While the process of a merger can be complex, getting started with healthy dialogue is a great place to start. Here are a few actionable tips to begin the process of developing a proactive plan and defining your cooperative’s merger strategy:

1. Survey executives and the board of directors. As we work with credit unions throughout the country, we’ve found this initial survey is a key step to measure the temperature of key stakeholders, identify deal breakers and squash misinformation. It can also help open the door to discussion surrounding culture and organizational change while enhancing strategic communications.

2. Ask tough questions. The initial survey results help set a baseline and should be followed-up with deeper questions, including those that respectfully challenge the “way things have always been done.” For example, where do executives and board members see the credit union in five years? Where do they see their competitors? What are the implications of merging or not merging? Do the benefits outweigh the risks?

3. Know what your credit union wants. Depending on your cooperative’s strategy, merging may or may not make sense. Know your organization’s why and begin by evaluating potential opportunities through a strategic lens. How could a potential opportunity align with your strategic goals? What would your key stakeholder be looking to gain through a merger?

  • Bench strength: With increased industry retirements in the C-suite, adding top-level talent could be a critical need for your credit union. Specialized talent, such as commercial lending expertise, could also be a key benefit of a strategic merger or acquisition transaction.
  • Technology. Keeping pace with rapidly evolving digital transformation, including the ability to leverage AI tools effectively and safely to meet member expectations, is a key challenge for forward-looking cooperatives. A merger could improve members’ digital experience and position the combined institution for continued innovation.
  • The ability to scale for the future. Are you offering members a complete suite of financial solutions today or are there gaps? How well is your cooperative positioned for the future? Scale could be an important driver behind joining forces, resulting in more services and more value for members.
  • Geography. Does long-term, sustainable growth mean exploring new geographic areas? For institutions looking to diversify their risk profiles and serve new members, geographic diversification could be an important strategic goal to consider.
  • Footprint. If your credit union’s strategic objectives include expanding its footprint, the buy it vs. build it question is one leaders should be asking. Buying an existing branch infrastructure could be much more cost-effective and enable a faster expansion into new markets.
  • Etcetera. What other strategic goals could a merger or acquisition help your credit union achieve?
4. Consider each of your key stakeholders. Of course, every decision a cooperative makes should begin with its members. Not every credit union needs or wants to merge. Based on your current state and vision for the future, consider what is best for members, employees and the communities the credit union serves. For example, would pooling resources now allow for greater member impact down the road? What about professional growth opportunities and enhanced compensation and benefits?

5. Remember, communication at every level is key. While the discussions may begin at the board and executive levels, it’s important that the “why” behind merger decisions is clearly communicated to all stakeholders. If a merger partner is identified, and both organizations ultimately enter into a definitive merger agreement, both employees and members alike must understand the “why” that led there in addition to what they can expect during the process. How will this impact them? What do they stand to gain? What changes are ahead? What will remain the same?
As with any organizational change, clear and strategic communication throughout the entire process is paramount to its success. Starting early and repeating clear and impactful messages often can make all the difference – assuaging member and staff uncertainty.

Jessica Richardson is Managing Director for Strategic Solutions Group at ALM First in Dallas, Texas.

Jessica Richardson

Tracy Cameron is Director for Strategic Solutions Group at ALM First.

Tracy Cameron

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