Measuring Value in Bank M&As
Investors and analysts are naturally fond of using simple metrics to evaluate bank M&A transactions – often with misleading results. One of the most popular metrics in recent years – TBV dilution earn-back – is particularly inadequate. Even more, traditional metrics alone do not provide a complete picture of a deal’s value. Crowe partner Rick Childs discusses how such metrics gained favor, why they fall short, and what factors investors, analysts, boards, and other stakeholders should consider in order to more accurately evaluate the costs and benefits of a deal.