One of the more clever ways to get rich is to sell something you don’t own.
This is a well-established fact in the community banking world, of all places. It is the key concept that drives the conversion of many smaller mutual banks into public stock ownership, a process that commonly leads to the sale of that institution a few years later.
Technically, mutual banks are owned by their depositors. In a sense, everyone owns them and no one owns them. This is the kind of gray area that makes an investment banker’s pulse race.
Sure, some converted banks remain independent for years and become bigger themselves through the purchase of even smaller institutions. But they are the exceptions.
Here’s why: Executives who run these banks and drive the entire conversion process are the big winners — paying themselves much more during their years at the helm of public companies and cashing out millions more in stock at the eventual sale. Usually, those banks are sold by executives who happen to be ready to retire.
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