Why It's So Hard to Time Bank M&A Decisions

By Davis, Paul | American Banker, July 31, 2017 | Go to article overview

Why It's So Hard to Time Bank M&A Decisions


Davis, Paul, American Banker


Byline: Paul Davis

A stagnant stock price drove the frustrated board of Southwest Bancshares in Stillwater, Okla., to look for a buyer.

Internal discussions about selling began in June 2016 as directors fretted over a stock price that "had been relatively flat" since late 2013, according to a regulatory filing tied to the $2.6 billion-asset company's pending sale to Simmons First National in Little Rock, Ark.

The story that unfolds in the filing is a lesson in timing. However, it's in the eyes of the beholder as to whether it's a good lesson or a bad lesson. Unforeseen events several months later -- the election of Donald Trump as president and the huge lift it gave to bank stocks -- would completely change economic conditions after deal negotiations had begun.

Southwest's stock price shot up last fall after the election as part of the overall run-up in bank stocks. By that time, the company was well into talks to sell itself to the $8.6 billion-asset Simmons. The deal, announced on Dec. 14, was the ninth-largest bank acquisition of 2016 and one of the year's richest by premium paid.

Mark Funke, Southwest's CEO, first mentioned a potential deal to George Makris, Simmons' chairman and CEO, just days after the board decided to explore a sale. But Southwest approached other banks, too.

In July of last year Funke discussed the potential of a transaction with a large, unnamed bank in Texas. A month later, Southwest executives met with the CEO of another Texas bank to revisit a prior discussion from 2015 about a potential merger of equals.

In the meanwhile Southwest continued to manage itself as though it would stay independent, approving a series of cost-cutting moves and pursuing an acquisition in Texas. The acquisition target, however, declined Southwest's letter of interest in early August.

By mid-September, Simmons and the larger Texas bank entered confidentiality agreements with Southwest. The second Texas suitor was still operating under a 2015 confidentiality agreement.

Simmons and the larger Texas bank quickly submitted letters of interest, making offers that were not detailed in the filing. Simmons, when pressed by Southwest's investment bank, said it would be willing to raise its bid; the other bank would not budge. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Why It's So Hard to Time Bank M&A Decisions
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.