Compliance Due
RECENTLY THERE HAS BEEN LITTLE MERGER AND ACQUISITION (M&A) activity in the
banking world. The difficult economy has been an equal opportunity offender, affecting almost
all banks in the country. There have been several large acquisitions and some FDIC-assisted
transactions involving distressed institutions, but normal M&A activity has been very quiet.
That may change, however, as the economy begins to pick up.
What happens if you’re assigned to evaluate a potential
acquisition for compliance concerns? Would you know
where to start? A common but severe limitation in these
situations is the accelerated time frame for performing an
adequate evaluation. While it would be nice to have months
to properly evaluate an institution’s compliance efforts, you
may have only a week (or less) to look at what you can, talk to
who you can, and formulate some opinions. You’re on the
spot, because those opinions could prove critical in your
bank’s decision whether or not to move forward in the ac-
quisition effort, or at least add some conditions to its offer.
How can you get the best bang for your buck, so to speak,
and perform a quick but effective compliance review of
an institution you likely know little to nothing about? Arrive
with a game plan. Know what you’re going to examine,
what you’re going to ask, and what you need to evaluate.
In other words, follow the Boy Scout
motto: be prepared.
