How can banks drive successful M&A integration?

This article was originally published on RSM US.

Bank mergers and acquisitions continue to reshape the financial landscape, bringing opportunities and challenges for institutions striving to grow and remain competitive. Strategic clarity, readiness and proper structures are important areas for leadership teams to consider before undertaking transactions, especially with banking M&A activity on the rise.

The number of bank deals in the United States grew to 182 in 2025, up from 125 in 2024, according to S&P Global Market Intelligence. Deal value also rose in that time frame, from $16.3 billion to $50.5 billion. We expect a continued increase in 2026, particularly given deal announcements already this year.

This momentum—driven by a favorable regulatory environment, healthy financial fundamentals among banks and increasing competition from fintech and nonbank companies—underscores the importance of successful M&A lifecycle execution for financial institutions. Achieving that success depends on a disciplined, end-to-end integration process that addresses strategic, operational and cultural complexities.

Addressing the entire M&A lifecycle

M&A integration holds the potential for enormous value, but banks must go beyond the initial deal to align their operating models, cultures, systems and reporting mechanisms. As always, delivering the anticipated synergies and protecting deal value have become critical objectives for leadership teams.

Successfully executing M&A deals to capture value and drive growth requires tried-and-true best practices, which—from start to finish—include:

Deal structure and tax considerations

Deal structure and tax considerations are critical in banking M&A transactions. Financial institutions must carefully evaluate which structure will best achieve their intended tax outcomes. Engaging external advisors early in the process can help identify and address the full range of tax issues, optimizing the transaction and minimizing post-closing surprises.

Key considerations for bank M&A transactions include:

• Taxable transactions − Asset vs. stock sale: In an asset or deemed asset sale involving a purchase price premium, purchasers may be able to achieve a step-up in the tax basis of acquired assets, including the amortization of goodwill over 15 years. A deemed asset sale for tax purposes can be achieved through a pre-close F reorganization of S corporation banks or through a section 338(h)(10) election for either the carve-out of C corporation banks from a consolidated group or the acquisition of S corporations. While sellers may prefer a stock sale to avoid triggering inside level gain in assets, buyers may prefer an asset sale for the potential step-up to assets and limited tax liability carryover as compared to a stock sale.
• Nontaxable transactions – Tax-free mergers: Most bank M&A transactions are structured to qualify as tax-free reorganizations under section 368(a)(1)(A).
  • Stock vs. cash: Using stock as a consideration can help meet continuity of interest requirements for tax-free reorganizations, typically at least 40% of the deal value in stock, with higher percentages providing greater certainty. Cash can still be part of the transaction, but selling shareholders will be taxed on the cash portion, and excessive cash may cause the transaction to fail the continuity of interest requirement.
  • Regulatory and shareholder impact: Using more cash consideration by tapping existing cash reserves or maximizing leverage can reduce regulatory capital, whereas additional stock issuance would result in earnings per share or book value dilution. These nontax strategies would need to be considered together with required tax-free reorganization measures to achieve the best outcome for all parties involved in the transaction.
  • Tax due diligence considerations: Several tax considerations in bank M&A transactions must be reflected in the purchase price or addressed in the transaction agreements. Depending on the type of transaction and the target entity classification, these include future tax liability associated with bank-owned life insurance premiums; state tax nexus; admissibility of deferred tax assets; and the impact of section 280G on change of control payments.