Can help your next deal: takeaways from the financial crisis.

• Author: Stadtler, John
• Position: DEALS & DEALMAKERS

The global financial crisis in 2008 and the great recession combined to ignite a transformative wave of merger and acquisition activity in the financial services industry, creating unlikely bedfellows of once-fierce competitors and hastening the demise of weakened financial institutions.

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Two years on, financial reform is expected to force many banking, asset management and insurance companies institutions to hold more capital, consider asset sales and exit certain lines of business, And, M&A activity in the financial services industry is once again poised to increase.

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The long-term success of these deals, and the value that will ultimately be derived from them, has direct implications for other industries that rely on financial services organizations for their own growth and expansion.

More importantly, although few industries will experience an upheaval similar to those undergone by financial services in the past several years, there are some key insights that financial executives in other industries can draw as they contemplate strategic M&A transactions. These insights can help better guide future M&A decisions in virtually any situation and improve the odds that a strategic transaction will result in the desired outcomes.

In contrast to the initial wave of activity led by financial buyers in 2008 when the industry was in crisis, M&A activity in financial services industry since then has been marked by corporate buyers looking to pick up strategic assets, build out portfolios and product offerings, obtain economies of scale and expand their geographic footprint in an effort to achieve growth that otherwise might have been organically challenging.

Financial institutions emerging from the pre- and post-crisis dealmaking blitz are now rationalizing what they acquired and sorting through a multitude of complex integration operational, valuation, human resource and technology challenges. It's a difficult process in any business environment; but in a climate of sluggish economic growth, new capital restrictions and uncertain regulatory changes, the M&A integration challenge is even more daunting.

Valuable Takeaways

Yet the process is yielding some valuable takeaways for any business considering M&A as a strategic business tactic. Through this latest round of integrations, financial services companies are developing valuable hindsight on some key questions such as: "What due diligence activities were most critical to the success of a deal?" "In what ways could integration risks have been minimized or avoided during the negotiation phase?" "What does a successful 'Day One' look like?" "How does the company maintain that momentum on 'Day Two' and...