It’s been a big year for mergers and acquisitions across all industries and throughout the country. Online retail giant Amazon purchased Whole Foods. Verizon added to Yahoo to its portfolio. IKEA snatched up freelance handyman company TaskRabbit, and WebMD, Popeyes Louisiana Kitchen and Kate Spade were all acquired by larger companies.
Utah also had its fair share of mergers and acquisitions in 2017. In February, Salt Lake City-based accounting, auditing and tax firm Haynie & Company acquired another Utah company, Robison, Hill & Co. By purchasing the Holladay-based tax audit firm, Haynie & Company hopes to increase its strength in bankruptcy and employee benefit plan markets. The acquisition also raises the company’s employee count to 120 across five offices.
In August, Chicago-based commercial real estate firm Cushman & Wakefield announced the acquisition of the Cushman & Wakefield Commerce operations in Utah, Nevada and Washington, including the 200 brokers in those states.
One of the state’s largest acquisitions took place in October, when the banking division of People’s Utah Bancorp acquired Banner Bank’s seven Utah locations and $260 million in loans. The newly acquired branches—located from Woods Cross to Salem—will be rebranded as Bank of American Fork.
This is not the first foray into mergers and acquisitions for People’s Utah Bancorp. In 2013, the holding company merged Bank of American Fork with Lewiston State Bank. In November, People’s Utah Bancorp completed the acquisition of Town & Country bank in St. George as well.
Despite People’s Utah Bancorp’s activity in the M&A space over the past few years, president and CEO Richard Beard says, “It’s just one tool in the kit—our business isn’t M&A, our business is banking.”
The mergers and acquisitions may have not been the company’s primary focus, but Beard says they have learned a lot throughout the process. Many of those learnings not only apply to banks but any company considering a merger or acquisition.
Savings through consolidation
People’s Utah Bancorp’s acquisitions have come during a time of rapid consolidation of the entire banking industry, which has shrunk from 9,000 banks to 5,000 over the past 20 years.
Beard says the consolidation is a result of several factors. “There have been a lot of regulations put on banks—some of them are good, some not so good. But either way, it costs a lot of money to comply with them, in terms of hiring lawyers and more compliance people,” he says. Combine the increased costs with a low profit margin, and it’s easy to see why many banks—especially small community banks—have been acquired or closed up shop entirely.
His organization realized it could keep more community banks open (and grow its own footprint) by consolidating services. When Bank of American Fork merged with Lewistown State Bank, each entity kept its name, employees and customers intact. But many of the backend services were combined.
“When was the last time you cared about the internal audit crew or compliance group at the bank?” Beard asks. “We’re trying to consolidate the things that customers don’t care about into a central point and run them in a more efficient manner.”
For banks, some of the highest operating costs come in the form of lawyers, compliance teams, accounting and IT. After a merger or acquisition, these services can be shared across multiple companies.
“We’ll be at about $2.1 billion when we get these deals done, so we can afford to have a few more people and spread it across a lot more transactions. Because of that, we’re able to try to contain costs a bit,” Beard explains.
Improving customer experience
Containing costs is not the only benefit of a merger. By combining efforts, you can often offer customers a more sophisticated service or product, Beard says. But there are also some risks with consolidation.
“If you’re not careful, you centralize everything and you end up destroying the community bank model,” he cautions. “That’s the trick: balancing the sense of community that the customers want with getting the most cost benefit out of the non-customer-facing things.”
People’s Utah Bancorp has tried to keep its customer-facing changes to a minimum. When the company brought Lewiston State Bank into its portfolio, it was a very deliberate choice to keep the original name.
“A lot of our customers in Lewiston have dealt with Lewiston State bank for four generations. It gives a certain amount of comfort when it’s the same name for a long period of time and they’re seeing the same people,” says Beard.
The changes that customers do see are those that will help them. “The advantage they get is the economic power of the whole,” Beard explains. “Loans can be made in a much larger amount than could have been made as Lewiston Bank alone. That’s a win for our customers and a win for us.”
Welcoming employees into the family
Even when a merger or acquisition makes sense for companies and customers, it can be rough on the frontline employees. Beard says the first question employees ask when they find out their company is being acquired is “Do I still have a job?”
“If the answer is yes,” he says, “the next concern is about compensation—which isn’t as easy as it sounds.” Each company has its own benefits package, from salary structure to insurance plans to time off, and blending them can be very complicated.
As a result, some benefits may be better for employees after an acquisition, and others may not be as good. Beard says as companies navigate these complex decisions, they need to be as fair and equitable as possible and deliberate about communicating changes to employees.
“There is always some risk that the cultures won’t mix and the acquiring party is going to be viewed as the big bully,” Beard explains. To avoid that perception, Beard recommends making sure the company being acquired is involved in the integration process early on.
“[You] want to make sure that their people are engaged and they have a say in things in terms of how things come together. It’s not that they can control everything, but they’re listened to and, quite often, different things are adopted as a result of this sort of consultative arrangement,” he says.
This type of listening needs to continue even after the deal is complete. People’s Utah Bancorp develops collateral to help its employees get to know its brands and each other. The company also surveys its employees regularly to understand how people are feeling about the changes.
The most effective communications, however, are those that take place in person. Beard’s organization works to create opportunities for the newly integrated businesses to celebrate and spend time together outside of work. “We want to make everyone feel like part of the family,” he says. “That doesn’t happen in one meeting; it happens over time and through consistency in the message.”
Growth is always risky
After the successful merger with Lewiston State Bank, People’s Utah Bancorp was in a better position to acquire Banner Bank.
“When [Banner] became available, we were able to negotiate a deal that would help us get in the areas we had already targeted, and have branches with people and customers already up and running,” Beard says. But that doesn’t mean it wasn’t still a risky proposition.
“There are a lot of risks in mergers and acquisitions, just like there are in organic growth,” he adds. “You weigh those things and, at the end of the day, if you can get the right price and you can make all the other pieces fit, the M&A gives you a substantial boost over where you would have been had you done it organically.”
As People’s Utah Bancorp looks to the future, Beard says organic growth will be the primary focus. In fact, his organization has purchased additional pieces of land to build on over the coming years. But the company won’t shy away from other opportunities.
“We are not in the merger business, but if we see something that makes sense, with someone who has the same basic vision we do, we would love to have them become part of our community banking family,” he says.
2017 Acquisitions and Mergers
January 2017 – Salt Lake-based Aviacode acquired the assets of Florida-based Revant Solutions.
February 2017 – Larry H. Miller Dealerships acquired California-based Corona Nissan.
February 2017 – Regional accounting firm Haynie & Company CPAs acquired Holladay-based Robison, Hill & Co, APC.
March 2017 – Salt Lake-based Complete XRM, Inc. acquired productivity app maker Fanatic Software, based in Texas.
March 2017 – Intermountain Staffing acquired LCL Staffing, a temporary staffing company operating in Texas, Oklahoma and New Mexico.
April 2017 – Provo-based CircusTrix Holdings, LLC acquired California-based Rockin’ Jump Holdings, LLC.
April 2017 – Salt Lake-based Ivanti acquired Concorde Solutions, a provider of SaaS software asset management solutions.
April 2017 – Salt Lake-based Global Diamonds was acquired by North Carolina-based Diamonds Direct.
May 2017 – Florida-based Optima Healthcare Solutions acquired Hospicesoft, a supplier of cloud-based software for hospices based in Salem, Utah.
July 2017 — Ivanti acquired digital workspace software firm RES Software; the acquisition marked Ivanti’s 10th acquisition in five years.
July 2017 – American Fork-based Four Foods Group acquired Mo’ Bettahs, a Hawaiian-style fast casual restaurant with six locations in Utah.
August 2017 – Chicago-based Cushman & Wakefield acquired Cushman & Wakefield Commerce, which has operations in Nevada, Utah and Washington.
August 2017 – Deer Valley Resort was acquired by a newly formed entity controlled by affiliates of KSL Capital Partners, LLC and Henry Crown and Company that in July joined Intrawest Resorts Holdings, Inc., Mammoth Resorts and Squaw Valley Ski Holdings.
August 2017 – Sandy-based SilverVue acquired Ergo Sum Health, based in California.
August 2017 – Sandy-based Simplus, a provider of Quote-to-Cash implementations, acquired Basati.
September 2017 – Orem-based Hawkins Advisors, LLC became part of Eide Bailly LLP, a regional certified public accounting and business advisory firm. Hawkins Advisors brought eight partners and 58 staff to the firm.
October 2017 –Technology consulting company Spring2 Technologies, based in Sandy, became part of Eide Bailly LLP, which was recognized as NetSuite’s 2017 Partner of the Year and is also a Salesforce Silver Consulting Partner and Authorized Sage Partner.
October 2017 – 1-800 Contacts acquired Draper-based Liingo Eyewear, which offers free in-home try ons of prescription eyewear.
October 2017 – Salt Lake-based AlphaGraphics, Inc. was purchased by Milan, Italy-based MBE Worldwide, a global third‐party logistics, printing and communications services network with approximately 2,600 locations in 39 countries.
October 2017 – People’s Utah Bancorp acquired $250 million in loans and seven Utah branch locations with $165 million in low-cost deposits from Banner Corporation’s banking subsidiary Banner Bank.
November 2017 – Larry H. Miller Dealerships acquired Nissan San Bernardino, marking the group’s second acquisition in Southern California in 2017.
November 2017 – Simplus acquired fellow Salesforce Ventures-backed consulting firm, CRM manager. The acquisition was Simplus’ fourth Salesforce partner acquisition since receiving Series A funding in Q3 2016 from Salesforce Ventures and other investors.
November 2017 – People’s Utah Bancorp completed a merger of St. George-based Town & Country Bank, Inc. into People’s Utah Bancorp.
November 2017 – Salt Lake-based Aviacode acquired Hyderabad, an India-based medical coding company.
December – Salt Lake-based Simplus acquired consulting firm CRM Manager, a Salesforce implementation, integration and consulting partner with offices in Philadelphia, Pittsburgh and New York City.
December 2017 – Bluffdale-based Listen Technologies, a provider of assistive listening products, acquired the Audio Everywhere brand and products from ExXothermic, Inc.
December 2017 – Lehi-based HFN Inc., developer of the Nanoheal predictive tech support platform, acquired consumer tech support provider, Bask Technology, Inc., also based in Lehi.