by Shawn De Santis and T. Marshall Sadd
As the coronavirus pandemic continues to grip the global economy, many businesses have slowed or halted M&A activity altogether. Reports from firms such as Deloitte had already forecast a global downturn in 2020, mostly due to trade and economic uncertainties, but the realities of COVID-19 have made M&A even more difficult. Among Canada’s insurance industry, M&A activity has slowed substantially, and while some weren’t able to adjust quickly enough to the new business environment, Navacord continues to successfully drive M&A activity.
Part of the reason for this M&A success during COVID-19 is Navacord’s unique, decentralized model, which resonates highly among entrepreneurial brokers who want to maintain their individual integrity while partnering and growing together with a larger organization. These brokerages are able to maintain their own brand, office, staff and client relationships, while leveraging Navacord’s national scale, infrastructure and stability, all of which are particularly attractive during times of uncertainty.
Over the long-term, these businesses will continue to grow and add value for Navacord through deeper expertise and synergies, while also supporting their vision to build the great Canadian brokerage.
Pivoting strategy in a pandemic
Another possibility for advancing M&A opportunities throughout the pandemic is by proactively approaching deal sourcing, and due diligence, in a different way. Social distancing requirements have eliminated face-to-face meetings, at least for the near future, so all parties had to pivot quickly and adapt how they approach the process. Navacord worked successfully to source deals and conduct due diligence processes in a fully virtual manner, facilitated mainly by Zoom video calls.
This has also meant looking even more closely at the data and conducting deeper due diligence on brokers’ clients, the make-up of their book of business and any exposures that may arise from that. As a result, more time has been spent studying the economic impacts due to COVID-19, as well as the impact on their portfolios in the short/medium and long-term.
Lessons learned
For Navacord, the M&A process has focused on finding great people, even if only virtually. While nothing replaces personal interaction, virtual communication can successfully replace face-to-face meetings in many cases and, with proper planning and preparation, can be extremely effective.
It has also underscored the importance of effective communication. More than ever, the ability to clearly articulate your value proposition in a way that people can quickly digest on a short video call is essential.
They have also adapted how – and what – data they collect and analyze. Whereas staff were mobilized, and business operations quickly adapted for COVID-19, the M&A process also requires prudence and a thoughtful approach. For example, taking a deeper dive into client lists, which are an area of particular importance for understanding the potential implications of a prolonged economic slump on the business.
Looking to the future
The new reality moving forward for conducting M&A activity points to a hybrid model, with virtual meetings becoming part of the ongoing process. The COVID-19 crisis has tested agility among all businesses but in the process has shown that it’s possible to mobilize and deploy strategic plans at extraordinary speeds. With a successful strategy in place, and an attractive value proposition, Navacord is confident they will continue to attract top-performing, entrepreneurial broker partners who are interested in growing as part of something bigger.
