I enjoy my Twitter community because I get diverse views on banking, sports, politics and entertainment. One of my Tweeps, Rick Childs, a Crowe partner, recently tweeted about the amount of time it is taking merger deals to get regulatory approval. His numbers are raw, and buck the conventional wisdom that regulators are dragging their feet on approvals. A conventional wisdom that our clients are asking us about, so it is tremendously beneficial to have actual data, instead of my standard answer: "we haven't noticed it at smaller bank deals." Data rules.
Conventional wisdom must result in actual wisdom, right?
Average Months From Announcement to Closing
Average Months From Announcement to Closing (Terminated Deals Separate)
Average Months From Announcement to Closing by Asset Size
Average Months From Announcement to Closing by NPA/Assets
Average Months From Announcement to Closing by Tang. Eq./Assets
Average Months From Announcement to Closing by ROA
Average Months From Announcement to Closing In-State vs. Out-of-State Acquirors
Average Months From Announcement to Closing for Merger of Equals
There you have it. Merger deals are taking no longer from announcement to closing this year versus recent history. Terminated deals intuitively take longer because the regulatory approach is not to reject the merger, but to inflict pain on the parties until they withdraw their application and subsequently terminate, a process that obviously would take longer.
Larger deals are taking longer, as has been the case in recent history. I should note there is likely a smaller universe to calculate averages, that likely skew the numbers for >$50B bank deals. Also intuitive is bank deals where targets have lower capital levels and profitability (ROA) took longer.
Not intuitive is that there doesn't seem to be a correlation between the seller's asset quality and time to complete a deal. And rounding out Rick's deep dive into the merger completion timeline rabbit hole, MOE's and out-of-state transactions take longer for approval.
There you have it. Now bankers don't have to rely on investment banker opinion as to the length of time it takes deals to get done.
Thank you to Rick Childs and the Crowe researchers for keeping us steeped in facts!