From the outside looking in, it seems that a key metric of a successful takeover is the feeling that everything and, simultaneously, nothing has changed once the deal is done. As an industry, insurance sees more than its fair share of deal-making activity, with transactions ranging from small regional purchases to global mega-mergers.
Given the constant merry-go-round of news detailing the latest deals, it’s little surprise that recent research from Willis Towers Watson found that global M&A performance surged in Q1 2021 and looks set for a record-breaking year. It is also unsurprising how easy it can be to forget that every headline announcing acquisition news represents the culmination of complex negotiations, a time of upheaval for employees and an altered stitch in the tapestry that makes up the insurance profession.
I was reminded of this during a recent media briefing with RSA’s Scott Egan in which he outlined what life after RSA’s takeover will look like, touching on everything from key metrics to staffing arrangements to that age-old question of identity.
What’s in a name? It is a question that’s been asked for centuries and one which becomes increasingly pertinent when evaluating how linked a name is to the very essence of a company. Of course, identity stretches far beyond a name, indeed, far beyond any branding and any one individual or board of individuals. A company sinks or swims through the identity it has created and this is something that should never be erased by an acquisition.
Longer ago than I would care to admit, I was interning at a local publishing house when it was snapped up by a larger business. Throughout the summer that the deal took place, it was fascinating to see letterheads, website branding and organisational structure shift all around you, and to watch the letter of the law change direction while the spirit stayed steadfast.
It is the mark of a successful acquisition or merger if what prompted the purchaser to make an offer remains when the ink is dried on the final contracts.
There is a certain flippancy to be found in the phrase favoured by so many interior decorators, personal shoppers and start-ups ending with (-) tech – out with the old and in with the new. When discussing life after takeover, it’s all too easy to focus on what changes an acquiring business will be looking to implement.
Yet a healthy transaction offers a voice and vote to both sides of the process and the decision to make instrumental changes that overhaul the status quo may well come from the acquired business instead. Like a child faced with the prospect of a shiny new toy, the sight of new systems and structures and markets may prove too tempting to ignore, with businesses running the risk of committing that corporate cardinal sin of innovation for innovation’s sake.
That being said, the above feels a little like preaching to the choir as, across the insurance profession, C-suite executives discussing post-takeover changes tend to emphasise the blending of existing standards and new opportunities as inherent to their onboarding process.
Offering the perspective of somebody who has been on both sides of the acquisition equation, Chris Luker, principal at Luker Rowe, highlighted in a recent interview that the success of an acquisition hinges on its cultural fit. It is a statement corroborated by many executives, whether they’re operating giant insurance intermediaries or working at a slower acquisitive rate.
And the truth is, that when the regulatory approval is through and the contracts are signed and the Press releases have all been sent, cultural fit is what will make or break the successful integration of new people, offices, customers and insurance partners. It is integral to the retention of talent and business and the bedrock of where to begin when the initial furore of the deal has died down.
With a strong foundation in place, both businesses will be well-placed to make sure that, unless you’re discussing the fundamental principles of mathematics, one plus one can make so much more than two.
