A merger between Main Street Financial Federal Credit Union and Jefferson Financial Credit Union of Metairie was recently quashed due to member opposition. According to Jefferson Financial, poor communications played a significant role in the merger’s failure. This was one of two failed mergers in recent weeks involving large or mid-sized credit unions.
Readers in Louisiana may know that managing a public merger successfully is a delicate matter, requiring in-depth knowledge of business law. Positive messaging and containing opposition are also two keys to the success of a merger of this sort. According to one merger consultant, failing these two requirements resulted in the downfall in the recent debacles. Management simply did not address public concerns and dramatically underestimated the scope of the opposition.
In most cases, challenges to a merger are cleared up long before a formal vote is ever even considered. However, that clearly did not happen in this case, and the results speak for themselves. Management at Jefferson Financial acknowledged the miscalculation and mistakes in communicating the benefits of the merger, but vowed to work toward a revote in 2012.
In some ways, managing a merger is as much an art as it is a skill. The complex array of financial and legal concerns, combined with accurate and responsible communication, requires the skill and know-how of an experienced professional who deals specifically with business law. Anticipation of member opposition is important in any transaction of this kind, but since the circumstances of each merger are different, finding an experienced attorney is essential to managing a merger successfully and guaranteeing success.
Source: Credit Union Times, “Failed Mergers Caused by Multiple Factors,” Jim Rubenstein, Feb. 12, 2012