Your bank merger is on hold…now what?

Chris McGuire: As part of our ongoing series on bank mergers and acquisitions, we brought Jennifer to discuss a situation that’s becoming more and more common. Mergers of banks like M&T Bank and People’s Bank, as well as US Bank and MUFG have been stalled as the FDIC and White House tighten restrictions on bank mergers. Jennifer is going to offer some advice on what you should do if your merger or acquisition is suddenly put on hold. So Jennifer, I know you have a lot of experience with this. In your experience, how long would it to typical merger acquisition take given that most of these businesses or banks are fairly large in size?

Jennifer Fondrevay: Right. And I would say, I don’t want to even answer typical because as you pointed out, right, this is the administration intentionally slowing things down to hold back on M&A deals, and really it varies. Multi-billion dollar deals can take longer. The one I went through with NAVTEQ when we were acquired by Nokia went through fairly quickly, but the actual integration took much longer. So the bigger the deal, the longer it tends to take, because it’s got to go through governance and compliance and certainly legislative scrutiny. So I don’t want to say typical, but I would say everyone ends up being in limbo for a period of time regardless of size and that’s what we’re going to talk about, is how to handle the limbo.

Chris McGuire: Yeah and just be patient because things happen. So as these timelines…because no matter what the situation is, there’s always delays and no matter what no one ever puts a real stake in the ground like ‘it’s going to happen by this date’ because things just happen. So when there’s just this big question mark about when, what advice do you have for how employees-

Jennifer Fondrevay: How to navigate, how to survive it?

Chris McGuire: Yeah.

Jennifer Fondrevay: Yeah. So the one, and this is advice, even if you weren’t in banking, it’s just right now that industry in particular, there are a lot of people suffering as they wait. I always say focus on what you can control. There’s so much energy that’s wasted when people are theorizing and thinking, well, if this goes through, I don’t know if my job’s going to be there. You can drive yourself to distraction theorizing about all the potential scenarios that could play out. I’m always, and it’s both executives and frontline leaders, counseling them to focus on what you can control and show your value consistently every day. Demonstrate not only how you do your job well, but how you can adapt to different situations. And you can do that by staying focused on the things you can control and not wasting mental energy on the variety of things you can’t.

Chris McGuire: Yeah. I always think of it as how can I keep pushing that rock up the hill? You’re trying to help the company continue to progress in the direction that it’s trying to go in and how can you be a contributor in that and not just sit on the sidelines and see what’s going to happen next.

Jennifer Fondrevay: Yeah. For my book, one of the people, she was a CMO. If you remember Office Max and Office Depot, that merger was taking forever. It was under scrutiny and the consultants kept creating work for her team. And she finally said, “Stop. Cease. We have no idea how this is going to play out, but you’re making work that is adding to my team’s stress and pressure.” So the other thing that I would say is, because that can happen too where people start to do projects that potentially could put them ahead but if it’s adding to already your workload, there’s advanced planning and being able to be ahead of the curve, should the merger or acquisition play out. But at the same time, you don’t want to overburden your team with additional make work that may or may not be valuable, right. You have to see how things will move forward.

Chris McGuire: Yeah, I think during this limbo time, you still have the day to day business for each company, whether you’re being acquired or you’re the acquirer and you still need to continue to get new clients and sell more products and everything. And sometimes it can be hard to keep that focus when you’re like, am I really, is my work really going towards the good, right? Cause you’re still stuck.

Jennifer Fondrevay: But as you pointed out, Chris, the key thing is showing your value, demonstrating… we’re a great team. The things that we contribute, the work that we do is important to the value of this company and to the brand that we’re creating, or let’s say you’re more about the marketing strategy and you’re supporting in the sales continually demonstrating the value that you bring through the work that you do. My greatest piece of advice is don’t waste the mental energy of thinking, well, what happens if this does go through, will I still have a job? Do the job that you have well, keep a positive attitude. More than even the actual work, keeping a positive attitude, should the deal go through people will want to work with you because you just kept a level head.

Chris McGuire: Yeah. In your book, you talk about the stages of grief and when you’re at a bank that’s being acquired and maybe you have a really strong attachment to the brand and what you have helped build and grow. How does this timeline impact that, those stages of grief and can you talk a little bit more about what are these people going through as they’re in limbo? What emotional challenges are they going through as they are breaking up with maybe their last brand? The brand that they’ve been working on so hard with.

Jennifer Fondrevay: Yeah. My local bank, so I won’t name names, but my local bank just recently got acquired and you could, it was palpable walking into the bank. All of them were going through the stages of grief. I gave out my book to a number of the, because they’ve been at that bank for years.

Chris McGuire: Yeah.

Jennifer Fondrevay: Right. It’s been the local bank. It’s the bank that’s sponsored parades and the 4th of July fireworks and you can, the benefit of that is the people identify with their company, right, with their bank. And so, that’s what makes the company wonderful, right because so many people have devoted their lives to it. So now suddenly they, that’s why I call it the stages of grief. You feel like you’ve lost something, right. You’ve lost the certainty of what you’ve had. You’ve lost the familiarity of the people who you work with because some people will leave.

And you’ve lost, for me what is the most important component I would say of the stages of grief, which is you’ve lost that expected future. When people envision their career and a lot of the men and women at my local bank right, they’ve been there for a while and they’ve envisioned continuing to play a role and contribute. So when that gets called into question, it’s very difficult. A grief counselor actually is the one who identified it for me. She said it’s called ambiguous loss or secondary loss, right. You didn’t, you haven’t lost a person, but you’ve lost the future you had envisioned. And so, I wrote intentionally about the stages of grief from my M&A experience because I felt that too much of the time, it was more an academic approach, right.

Jennifer Fondrevay: I had consultants that came in, in the three multi-billion dollar M&A deals I was a part of, and they talked about the change curve or the S curve and they made it almost feel linear, right. Well, you go through these stages but then you get to acceptance. And that was not my experience, nor was it the experience of my colleagues. So the stages of grief, what I would say to anyone who might be experiencing that, you’re not alone. It is expected, particularly if you’ve identified with your company for a while. But also what I’ve found interesting is even people who are new to the bank, right. Maybe they’ve just joined, but they joined, they were excited, they went through a rigorous hiring process and now suddenly they aren’t clear on what the future hold. So there’s a component of grief there too, because the future is unclear. And the main point I would say Chris, is just know that they are stages. It takes a while to get to acceptance. It’s not a linear path, but work to get towards acceptance should the deal go through.

Chris McGuire: Yeah. Kind of related, we’ve talked a lot in the articles on The Teller about building trust with employees or within an organization and you outlined in your book an “us versus them” mindset. And regardless of which side of the acquisition you’re on, there’s trust issues about where the organization is headed and what you’ve been told and how you feel about the organization, but also trusting the other side. The goal is to come together as one, but this is the way we’ve always done it versus this the way we’ve always done it. And can you talk a little bit about how to navigate some of those things and any advice that you have for people going through this?

Jennifer Fondrevay: Yeah. So that article that I wrote for Harvard business review, it came from the research that I was doing for my book and in interviewing CEOs and CFOs, marketing executives, HR executives, and what was fascinating to me is the “us versus them” dynamic our company or our bank versus their bank, that’s the more expected one, right. So there’s baggage that comes with that, right? Can we trust them? And I always say, well, both sides needed each other, right? This, whether it’s a merger and acquisition, both sides needed each other. So you’ve got to work towards trusting each other. Because if you hold back, the whole reason for this union is never going to happen and certainly won’t have the success that you’re looking for. But the other two components of that trust factor that I identified in research was the executives versus frontline leaders.

And you may have even, Chris, I know you said you’ve gone through your own M&A experience. That was probably the more fascinating piece of it and the one that had the greatest, where trust gets broken because oftentimes frontline leaders feel like, well, I didn’t even know about this. I didn’t even know we were thinking of this merger or acquisition. And the perception is, why didn’t I know? I thought I was a valuable member of this company or organization or bank, and yet I was blindsided.

And so, that trust that you work so hard to build up can fray significantly. And then the third piece of that “us versus them” dynamic is “who stays versus who goes.” And the tough part there is oftentimes you, aren’t sure who’s going to stay or who’s going to go. So people tend to clam up, they’re wondering is this person even going to be here? Should I even talk to them? And it can really inhibit collaboration. And that’s why I talked about it in the article is how do you address that? How do you make sure that you’re continuing to build that trust moving forward.

Chris McGuire: How do you minimize the mindset of “us versus them?” Are there things that an organization can do in order to bridge some of those divides more quickly?

Jennifer Fondrevay: Yeah. And so one, and I work with executives a lot on this topic, key to building that trust right from the get-go is how you communicate the vision. I feel unfortunately, often times and I’m going to say, I’ve seen it with bank videos, right. The two CEOs put out a video, “this is great. It’ll be a wonderful partnership,” but you haven’t painted a picture of the future, right. So people interpret that. They see that and they go, well, great. You guys are going to get a huge paycheck and who knows, one of you is going to leave and yet I’ve got twice the work and I don’t know if I still have a job. So I say to CEOs, you’ve got to communicate it in a way that your next level down understands where you’re going and how they can contribute and what’s it going to mean for their future so that they can then message that to their teams.

Jennifer Fondrevay: You can’t keep it at that 30,000 feet. So the emphasis on how critical communications is during M&A is absolutely spot on, but I say there’s also a cadence and a way that you communicate. So communicating the vision in a way that people can understand, okay, where are we going and what’s the benefit of this. But then I say to that next level down, it’s your job to then translate that vision to your team, your department, right. So maybe you’re marketing, maybe you’re sales, maybe you’re product, what does this mean? And then the other piece that I would say to that too, is both sides needed each other. There can be this belief that the acquiring company says, well, we acquired you. Well, you acquired us though, but you needed us. And the better you come to that union with respect for the other side, and an acknowledgement that, Hey, our opportunity to grow is through collaboration. The faster you get to that, the more success you’ll have.

Chris McGuire: Yeah because together you’re going to be a bigger, stronger company. At least that’s the goal, right? That’s what everyone’s-

Jennifer Fondrevay: Right. And that’s why, but it’s critical for executives to set that tone and then enable and empower their frontline leaders to be able to message that to translate it for their teams.

Chris McGuire: Because every employee, regardless of which side they, in the back of their mind is thinking ‘what does this mean for me?’

Jennifer Fondrevay: Absolutely.

Chris McGuire: Am I, do I have a job? Is my job going to get bigger? Am I going to be promoted or am I just going to be saddled with more work? There are a lot questions that are going to go and the sooner you can probably communicate what that means for each individual, the easier the “us versus them” mentality is going to be when people have a clearer vision about what it means for me.