The Benefits of Using an Outside Vendor During a Merger or Acquisition

February 26, 2020

Compliance Lender Services Outsourcing Lender Challenges

Over the last couple of weeks we have discussed some of the most important considerations for banks and credit unions during mergers and acquisitions (M&A), which has led us to today. You may have noticed a theme throughout the last two blogs - the role of vendors. We briefly touched on how a third-party vendor may be able to help with the internal processes during M&A as well as how they can combat some of the most common challenges, but today we are going to dive even deeper into the benefits of using an outside vendor during M&A.

Before we do that, let’s briefly go over some of the most important talking points from the last two weeks:

  • There are several different internal processes that may be impacted during M&A
    • Operational tasks
    • Strategic planning
    • Onboarding and training
    • Revenue
    • Reporting system
  • There are a handful of challenges that banks and credit unions may face in the event of M&A
    • Uncovering troubled assets
    • Property taxes
    • Employee retention
    • Communication tactics
    • Strategy

With these points in mind, let’s talk about vendors. Vendors are in place to help take some of the pressure - and responsibility - off of lenders. They provide a host of valuable services, from taking on escrow processing and real estate tax monitoring to other services that will help pinpoint and uncover any problem areas. Furthermore, a knowledgeable third-party vendor will also analyze and clean both institutions’ portfolios when a M&A takes place.

How a Vendor Can Help During a Merger or Acquisition

Let’s now take a look at some of the top benefits of having a third-party vendor by your side during M&A. Keep in mind that this is true regardless of what side you are on. In the event the institution doing the acquiring already outsources some services to a third-party vendor, the bank or credit union that is being acquired will likely reap the benefits of their expertise. When the scenario is flip flopped, it may behoove the acquiring institution to consider outsourcing some of their services to the other bank or credit union’s vendor, especially if they are a vendor that goes above and beyond.

Here are some of the top benefits of using a vendor during M&A:

Saves time

A vendor will train new staff members and take on otherwise time-consuming internal processes

Saves money

Outsourcing services such as tax monitoring and escrow processing will save an institution money in the long run, especially large institutions

Can help comply with audit regulations

As we’ve discussed, M&A are highly regulated, which means that will go a long way to have a vendor on your side that knows that needs to be done, and when

Mergers and acquisitions are complex, sometimes overwhelming events that oftentimes come with a lot of unwanted baggage. In order to ensure the transaction is a smooth one, it is important to take all the necessary steps. Whether you are being acquired or doing the acquiring, you should do everything you can to prepare yourself and your employees for what’s to come. By relying on the knowledge and expertise of an outside vendor during this process, you will already be on the right track.

To learn more about the benefits of vendors during M&A, please check out our latest ebook, Overcoming Challenges with Internal Processes During a Merger or Acquisition.

Download the ebook