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Planning To Sell
Do you have a working plan to make your bank saleable? Need help thinking through your strategic plan? We can assist you. Learn more.
What to consider in your exit strategy:
Exit with confidence, but make sure you have addressed the following before you sell:
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Understand your personal objectives and financial requirements
- Determine the value of your business
- Keep in mind what will and what might influence its future value
- Market timing — determining the best time to move forward
- Learn and decide the best way to package your bank for a potential buyer or buyers
- Develop a strategy for proceeding with total confidentiality
- A methodology for attracting the best possible buyer or buyers
Exit Strategy and Selling Your Bank
The world's oldest bank, founded in Japan, has been run by the same family since 578 A.D. Clearly, banks can outlast their original ownership. Whether you plan to sell your bank or pass ownership to someone close, it's never too early to think about an exit strategy.
Planning Your Exit
Exit planning should begin at least one year before a target sale date. In a perfect world, it begins on the first day of the bank's operation. Essential considerations should include: timing, exit strategies and enterprise and realization values.
Timing is critical. A bank's market price — the amount buyers are willing to pay — can fluctuate dramatically over time. Careful planning versus late planning can mean the difference in a favorable or unfavorable outcome.
The Exit Strategy begins with a vision of your desired outcome. Do you want to retire fully, obtain a limited employment contract, retain a minority share, or gain a senior career position as part of a much larger entity? These are all questions we can help you address.
Enterprise Value, or asking price, usually is determined by a multiple of book value, or return on assets. If you have no real earnings to show, bank age or investment account for little. If you have a sales figure in mind, you need to plan to achieve the kind of earnings or book value it takes to get that price. An unrealistic asking price is the primary reason banks don't sell.
Another tool in proving a bank's value is a confidential business review that describes in detail the history, current condition and prospects for a bank. It should also contain an extensive financial analysis. Such a report will represent a well-run organization, simplify the sales process and tend to result in a higher realization value.
Finding Potential Purchasers
Once you decide to sell, how do you attract buyers while maintaining confidentiality? If you wait for buyers to contact you, you default to their timing. Further, the ideal buyer may never appear. One way around these issues is to involve an intermediary who specializes in M&A's. A qualified service provider of this type should help bank owners navigate through such issues.
Broaden Your Scope
Your future and the future of your bank are too important to leave to chance. Talk to industry peers, read up on the subject, discuss the potential sale with your accountant, and hire an intermediary to represent you. These are all ways to become more fully prepared for your final sale and successful exit.
Learn More About:
Chartering A DeNovo
Business Planning & Strategy
Bank HR