Brought to you by:

Turf wars, misalignment threaten M&A success

Facebook Twitter LinkedIn Google

Significant merger and acquisition activity among insurers, brokers and underwriting agencies has sparked a warning from consultants Frazer Walker on issues that could derail the success of deals.

Partner Nick Careless says organisations often assume they have laid the groundwork because there is a business case for the purchase, but they should also delve into the details of how integration will be achieved if the bid is successful.

“Integration is often considered a technical exercise, with a focus on systems and IT, but typically that isn’t where the main challenges lie,” he said.

“Some organisations assume the acquirer will just assimilate the acquired company, but that can destroy much of the value and purpose of the acquisition.”

Organisations must define the end target for the merged business at the outset and the integration team must drill into contentious and challenging areas that could lead to disagreements, turf wars and misalignment.

“There can be differing viewpoints, but consensus is needed before the integration program can move ahead,” he said. “Some needs are mutually exclusive, so sort that out early in the process.”

Frazer Walker says the value proposition should be clarified by examining what both organisations provide, looking at products and services, claims experience, brands, customer segments, price position and markets, including geographic regions. Findings should be mapped against each other.

“You can’t develop the operational model until the value proposition is clear,” Mr Careless said.