DENVER—While the financials of a merger are critical, credit unions on both sides of the deal should base their decisions as much on people as the numbers, according to one group of merger veterans.
A panel of CU executives who have gone through mergers recently shared that advice, offering their insights, best practices and lessons learned.
“It’s all about relationships,” said Lauri Skinner, CEO of the $10-billion First West CU in Langley, B.C. “Look to people you like and can spend time with, get to know them. Start with a meet and greet, get a strong sense of who they are. The merger won’t work if it’s not a cultural fit and will lead to more issues—and it won’t be a lot of fun.”
Once First West decides a merger partner is good cultural fit, boards begin regularly meeting over dinner and team building events are held.
“Everyone has to buy into this,” Skinner said. “There has to be give and take throughout and a lot of trust has to be developed. The only way that happens is by spending time with people.”
Focus Early On Staff
Skinner recommends focusing early on the staff of the CU being merged in.
“We start from the inside out,” she said. “At the end of the day the employees need to buy into the merger or the membership won’t. The members will come in and ask the staff, ‘Should we vote yes or no?’”
Steve Dereby, board chair of the $173-million Air Line Pilots Association FCU in Burr Ridge, Ill., which recently announced its intent to merge with Wausau, Wis.-based Connexus, agreed that forming solid relationships with the acquiring CU is essential.
“Do this as early as you can so you know personally the people you are dealing with,” he said. “Second, have a plan for managing change with each group—employees and membership. As we know, change is the toughest thing on people.”
Panelists stressed the importance of a having a well-thought-out communication plan for employees and members, for both sides of the merger.
“Let members know the advantage of the merger from day one,” said J. David Christenson, CEO of the $1.1-billion Connexus. “Start articulating how you will add value to members’ lives from the start.”
Christenson said that is important because his CU always wants to get—and feels best when it happens—a heavy “yes” vote from the membership of the acquired CU.
Look To Merger Manual
Dereby advised that CUs approaching a member vote should consult the NCUA merger manual closely and pay attention to the CU’s own bylaws. He said those two resources provide clear details on what is required in a final vote to approve the deal.
“We actually had to go out and find members to pull into the meeting to vote,” said Dereby about his CU’s membership recently voting to approve the combination with Connexus. “Learn exactly what you have to do.”
Other advice offered by the panel:
- “The best mergers move fast,” said Christenson. “As more time goes on more things get in the way. I think the ideal time frame is nine months.”
- “Use a merger consultant. It saves management and the board a lot of time,” Christenson said.
- “The merger gets developed or broken at the board level,” said Skinner. “The board has to take this issue to heart.”
- “If in talking to the credit union you are merging with, you see the merger is not the right fit, just move on. We learn something each time that happens,” Christenson said.
The panel discussion was held at during the joint World Council’s World CU Conference/CUNA America’s CU Conference here.