Merger Resources

Your members are the top priority when considering a merger. Ensure that the merger enhances their experience and the products/services they can utilize. 

While you will need to perform effective due diligence, acceptable financial metrics are not enough to justify a merger. However, unacceptable metrics can kill a merger. It is important to focus on the opportunity for your membership that the merger presents.

In our experience, the most important element in considering a merger is your people. If you take care of your people, and this includes members, staff, your board, and the community you serve, all the other challenges that may arise are solvable.  

The members of your credit union truly care about the staff and want them to be treated well. Determine what the staff members want for their future with the organization. Some may be ready for new challenges and others may have plans to not continue with the combined organization.  

If there are people that are not going to support your mission going forward, it is important that you take swift, empathetic action. Thank them for their years of service, offer them recognition, and provide a reasonably generous severance. Often, excess staff can be solved in a gentle manner through attrition, within a relatively short period of time. 

Simply combining both boards of directors could lead to a group that is too large to be effective. You will need to first determine which directors have a desire to serve post-merger and establish a plan that includes representatives from both credit unions. While you may initially need to include all directors from both credit unions’ boards, look for a way to return to a workable number of directors (generally, seven to nine people) as soon as possible.

Create a merger team. Each credit union should establish a cross-functional team to lead the entire merger process and should also identify one primary contact for communication between the credit unions. This is vital to keeping the communication flow manageable. Additionally, utilize planning software to track all the merger activities. It is important to establish a secure data sharing platform to exchange sensitive documents and files.

Early, frequent, and transparent communication with all stakeholders is vital to a successful merger. Be sensitive with timing to avoid offending people during changing times. Staff, members, vendors, membership groups, community leaders, and regulators should all be made aware of the merger as soon as possible. Your business partners, like Corporate Central, would like to know as soon as you are able to notify them. This allows your partners adequate time to ensure a smooth transition and implantation of changes.

Combine your due diligence process with learning about the other credit union. Collect and organize useful information for each functional area to support the integration process (human resources, products and services, vendor contracts, procedures, policies, etc.). Due Diligence and learning about the merger partner should run continuously from the point of interest to completion of the entire process. 

High-level due diligence should include: 

• Financial statements 
• Regulatory and audit reports 
• Board packages 
• Loan portfolio 
• Contracts (including exit costs) 

Identify key decision points where the credit unions confirm that they are still moving forward. This will help minimize the frustrations of moving too far into the process and details of the merger, when it is determined that the merger is not a good fit. 

Immediately communicate with the other credit union. Learn as much as you can about the issue. Attempts should be made to resolve the issue and allow the merger to go forward. If resolutions cannot be made, you may end the merger process at any time before the effective merger date. 

Determine what the new package of products and services should be going forward. Combine similar products and eliminate low-usage ones. Prepare a comparison chart of each credit union’s current products and services and the new products and services. This is helpful for the staff of both credit unions when discussing changes with members.

Identify all the vendors that process data for both credit unions. Determine if there are systems that can be sunset. You will also need to identify any vendor constraints on data conversions, such as lead times and blackout dates. Create reports for any necessary data cleanup.