With industry conditions improved, regulators more open to deals

Speaking about regulatory considerations for merger and acquisition transactions, are, from left: John Maxfield, The Motley Fool, Inc.; Rob Worley, IBERIABANK Corporation; Mark Kanaly, Alston & Bird, and Rob Azarow, Arnold & Porter Kaye Scholer.

A “regulatory thaw” has taken place in the M&A arena, said Mark Kanaly, a partner with the Alston & Bird law firm. He participated in a panel presented at the Acquire or Be Acquired conference in Phoenix on Jan 29.

“Banking is doing better,” Kanaly said. “It is easier to go to the regulatory agencies and get approval for a deal.” He said deals are being approved faster than they were a few years ago.

The ease of obtaining regulatory approval for any deal, however, still varies around the country. Kanaly said areas hit hardest during the financial crisis today tend to be home to the stiffest regulatory scrutiny.

Banks that have completed a number of acquisitions in the last decade or so are likely to have an easier time getting regulatory approval than an organization that is new to the M&A arena, he said. Kanaly also said regulators are likely to want to see an acquirer integrate an acquisition successfully before approving another one by that same institution.

Kanaly also encouraged bankers to learn how to communicate effectively with regulators when seeking approval for a deal. He urged bankers to avoid language about shareholder return and to instead develop narratives around mitigating risks.

Robert Azarow, a partner with Arnold & Porter Kaye Scholer LLP, said some acquirers would be wise to put together a community development plan to blunt the impact of potential protests to the deal.

Rob Worley, president of IBERIABANK Corporation, who also participated on the panel, encouraged bankers to prepare thoroughly before approaching regulators with an M&A transaction. “Prepare to work with the regulators, prepare for employee reactions to the deal, and communicate with the shareholders,” he urged.

Kanaly advised bankers to carefully plan the time between the signing of a letter of intent and the closing. A “100-day plan” following the closing is also a good idea, he said.

In light of generally good industry conditions, Azarow cautioned bankers against overconfidence.