BB&T announced that it plans to acquire SunTrust primarily in an effort to scale its technology capability such that it may deliver more on-demand services to customers. This is a corporate governance issue. You simply DO NOT have the luxury to wait for Payments upstarts like Square (tkr: SQ) to capture a $30B-plus valuation ($40B-plus at peak) before you are motivated to take action. Square is 10 years old and could have been acquired years ago at a fraction of the current valuation. The biz model proved itself years ago. Similarly, Payments infrastructure company Stripe (pvt., best-in-class fraud detection and frictionless payments acceptance) could have been acquired for a fraction of its $20B valuation. Further, rather than acquire another Financial Institution that shares your predicament, why not embark on a bold FinTech M&A strategy?
Who is accountable? Senior Management Teams and Boards who aren’t willing to disrupt from within and are happy to wait for the house to burn down before taking action are the primary culprits. BBT ad STI observed market disruption for years and choose to do nothing until Q1 2019.
Similarly, institutional investors who have little desire to learn the industries they invest in and are content so long as portfolio holding companies meet or beat guidance are almost as guilty. Today’s reported numbers are a function of strategic decisions made years ago. One must ask: “What are you doing today to ensure the company thrives tomorrow?” followed by dozens of drill-down questions. Former Accenture Chairman and CEO Bill Green used to say “we have one foot firmly planted in ‘today’ and the other in ‘tomorrow’ “. CEOs and Boards would do well to mimic Green’s approach.