Bank mergers and acquisitions are inevitable. First Union and Wachovia, Washington Mutual and Dime, Bank of America and Fleet, North Fork and Trust Company and the list goes on. According to Federal Deposit Insurance Corporation statistics, there were 7,691 commercial banks reporting in the U.S. on June 30, 2004. That is down over 26% from 10,451 banks reporting on December 31, 1994. More markedly, the number of banks reporting with less than $100 million in assets has shrunk from 7,259 in 1994, to 3,819 in 2004. ¹

The practical ramification of this downsizing has been larger banking institutions that have less of a market focus on small business lending, and more on larger loan deals. If your lender is the bank being acquired, there is a strong possibility of downsizing in employee staffing due to economies of scale; and that staff could include your loan officer. In addition, what was once the target market of a bank lending department could change overnight. It is not unheard of for the loans of entire lending divisions to be either sold to non bank entities, or worse, for the borrowers to be asked to find a new lender on their own. The disruptions and costs that are associated with non-expected refinancing due to your bank’s acquisition are enormous.

If your business is having financial difficulties, a merger or acquisition could make the situation much worse. In many cases, it may be prudent to enlist an intermediary to work on your behalf in negotiating a restructuring with the lender or in arranging alternative financing. Organizations such as the Turnaround Management Association (www.turnaround.org) and the Institute of Management Consultants (www.imcusa.org) are excellent places to find talent in that regard. Both of these organizations provide certification programs to ensure that you can find qualified consultants in these areas.