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Mergers and Acquisitions: How to get them right in 2020

by  Alex Zukerman  |  5 Mar 2020

The insurance industry is currently a hotbed of M&A activity. For a long time now, mid-to-large size companies have been aware of the economies of scale and synergies that can be leveraged through a merger or acquisition, with many firms enjoying the benefits of adding additional services, capabilities and business coverage to their existing portfolios through M&A.

However, these advantages also come with their fair share of challenges; the M&A process requires a steady hand on a number of moving parts. From managerial oversight to the integration of technology, here are our top tips on how to get M&A right in 2020:

A holistic strategy

Management teams will have a number of difficult decisions to make, both pre and post-M&A, and will therefore need a comprehensive view of the industry in order to make the right choices. From deciding on the right business and operating models to gaining an understanding of market conditions and competitors, the company strategy will ultimately hinge on this oversight. This will not only allow the board to set realistic expectations, but also to identify the resources needed to manage integration and determine how to leverage the company’s strengths effectively.

The ‘HR’ position  

Assimilating two different company cultures is bound to create some conflict, so it’s important that employees aren’t forgotten during the process of integration. Integration can be an anxiety-inducing time for workers at all levels, so neglecting them can lead to loss of both employees and clients during the early days of integration.

To help overcome this, companies should present a clear roadmap for the future, and build a strong post-merger integration team that will help feed the business roadmap to all  relevant entities, helping turn the vision into a practical plan and a reality in the field. By communicating the company’s targets and clarifying the present and future position of employees and their benefits, businesses can ensure that their staff remain focused and engaged during this period of uncertainty.  

IT landscapes

Insurance in particular has always been a data-heavy business, so post-integration, it’s not surprising that insurers find themselves with access to vast amounts of information. While there is great value in the data pooled from multiple insurance firms, insurers often fail to turn it into actionable insights.

To address this challenge, IT needs to be a key consideration. Firms can now use technology to break down data silos – often a major pitfall in integration – and apply analytics to deliver key insights and benchmark performance. This will allow a company to forecast new business and spot potential growth areas, which is essential for both profitability and success.  

Ultimately, these insights will inform operations and business processes and allow management teams to set realistic goals and make accurate predictions. This approach will not only enable the clear communication of targets within the wider workforce, but will also provide the information needed to make effective and informed decisions.

 

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