Will M&A Bounce Back in 2008?

By all accounts, 2008 will be a slow year for bank M&A. Indications that a recession was imminent earlier this year now appear to be fully realized—which will likely result in sluggish financial sector growth and a snail’s pace for transactions in the near term. Notwithstanding this prediction, some deals will close, but in most cases, viable sellers will have to realign their price expectations. At the same time, prospective buyers in this market are advised to leave no stone unturned during due diligence, and in some cases, a merger of equals may be the best option. For the majority of institutions, the best advice may be to concentrate on cost cutting and preserving capital, which will create funding for new opportunities that will arise as the economy rebounds.

In this year’s annual Outlook on M&A supplement, Bank Director magazine, in association with Grant Thornton LLP, gathered some of the nation’s most respected dealmakers to discuss these and other issues pertinent to boards considering growth strategies in the year ahead.The investment bankers and attorneys we spoke with agree 2008 transactions will be slow, but they also say relative values for U.S. bank stocks remain intact. And while the media’s coverage of the current subprime crisis seems to paint all financial institutions with a broad brush, in the end, well-managed banks that maintain conservative underwriting and a strong capital base will emerge in good standing.This, according to our experts, will lead to more opportunities for value creation when the economy bounces back—sooner, we hope, rather than later.

Bank Director and Grant Thornton are pleased to offer this year’s Outlook on M&A supplement as an informational resource for you and your board to help make key decisions in the year ahead.

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