How Analytics Technology Can Speed Integration Post-M&A
The record number of merger and acquisition (M&A) transactions involving insurance brokers and agents throughout the United States in the past year underscores the imperative for these firms to accelerate growth and compete more effectively. But for brokers and agencies in an acquisition mode, finding the right target at the right price is only part of the challenge. Once a deal is closed, the real work begins.
Combining firms often must act swiftly to integrate operations, systems, data, products, and marketing to start reaping the expected benefits – including increased market share, operating efficiencies, marketing and competitive advantages. Delays mean brokers have less time to hurdle such challenges as aggressive efforts by competitors to poach accounts and top producers.
Today, new analytics technology can help speed post-M&A integration and enable leadership to overcome many of the obstacles that have stalled or limited the success of brokerage and agency combinations in the past. Here are some of the critical areas where analytics technology is helping.
Driving Efficiency
In addition to providing leadership with a line of sight across all of a brokerage’s operations, today’s technology enhances the ability of top management to identify and quantify key opportunity areas for the combined organization to grow organically. Specifically, executives can pinpoint growth opportunities for the combined firm by geography, client industry sector, coverage line, and client size among other variables.
At the same time, technology enables business leaders to analyze the performance of individual producers and business segments over time. In the context of a business combination, this equips leadership with the insights needed to develop a comprehensive integration strategy.
Underlying this initiative are the hard numbers and trends to help determine how to redeploy resources where they are likely to yield the greatest results as well as to identify opportunities for cost savings and the need to address redundancies across the combined enterprise.
The ability to move forward with informed and timely decisions on all of these matters can enhance productivity and help reduce the employee turnover of key producers or top performers.
Boosting Productivity
For individual producers and their support teams, the latest technology platforms offer the ability to benchmark client insurance purchases, program structure, coverages, limits, premium and other program elements against peers by industry, geography, size, and other factors.
Some systems also have tools to track insurance company risk appetite by coverage line, industry group, geography, client size, as well as other variables.
When brokerage organizations are combined, their collective knowledge and placement experience can be captured quickly and made available to individual producers at both predecessor firms. Armed with an expanded resource, producers can begin applying all this information to their existing client relationships and new business opportunities.
Facilitating Teamwork
In the aftermath of a merger or acquisition, a common reaction among many producers and their supporting casts is to be reticent to share their account information and details regarding their external and internal relationships with supervisors and business managers responsible for the integration process. Unfortunately, these types of responses can stall integration initiatives and delay or reduce opportunities to achieve synergies and other anticipated gains.
At the operational level, newer technology platforms offer tools for client executives and their supervising executives to benchmark and analyze coverage limits and program structure by individual client, pointing out opportunities where higher limits, better program structure or other types of coverage may provide specific benefits to an individual account. This opens the door for client executives to form teams to pursue cross-selling opportunities and re-engage clients and prospects of both predecessor firms by introducing new resources available in the combined organization.
External Relationships
Mergers and acquisitions involving brokerages and agencies sometimes are met with skepticism and concern by existing and potential clients as well as insurers.
Here, technology can help merging firms reinforce and reinvigorate their external relationships. In some cases, combining firms have a number of shared accounts with one predecessor brokerage handling certain coverage lines and the other predecessor firm handling other lines or providing ancillary risk services. Client tracking features in new technology platforms enable the combined organization to identify these situations quickly and give the organization the ability to be proactive in contacting any shared clients, designating appropriate account servicing teams and managing the accounts going forward.
With respect to insurer relationships, today’s technology platforms enable brokers and agents to track relationships with insurers by account and on an aggregate basis. Combining firms will quickly gain the ability to engage their insurance company partners with a clear understanding of how and where business has been generated.
Navigating Logistics
As they try to determine the best ways to upgrade their information systems, many brokerages and agencies today remain mired with outdated legacy systems that were able to perform limited functions efficiently, but lacked the ability to deliver the data and analytical capabilities critical to running an expanding enterprise in the current business environment.
In terms of combining brokerages involved in a merger transaction, these systems may have limited ability to capture and retain the information needed to make critical decisions regarding personnel, operations, business segments, and insurance company relationships.
Many providers of new systems offer the ability to upload information rapidly from across the enterprise or combined organization. They also provide accelerated training designed to optimize utilization and user benefits. This often includes a combination of in-person instruction and coaching, as well as online tutorials and readily available telephone and online helplines.
The adoption of a single technology platform across the combined enterprise not only can align how individuals at all levels perform their specific functions, it also helps facilitate internal communication, coordination, and collaboration.
Reconciling Corporate Cultures
Often cited as the key reasons deals don’t meet expectations, cultural differences represent a significant obstacle in many mergers.
Among brokerages and agencies, these range from variances in overall vision and strategic direction to differences in the autonomy of individual producers, offices, regions and practices. Firms may differ in their compensation structures and reward systems, approaches to client retention, sales and marketing, and insurer relationships.
Although these all can be significant, in many cases they may be reconciled by a thoughtful and collaborative integration process that includes a clear and well-communicated vision for the combined enterprise.
While not a panacea, the adoption of a universal technology platform for analyzing client business and performance can help get individuals at all levels on the same page. Along with clear direction from the top, the operational support and insights provided by current information technology systems can help remedy some of the more challenging cultural barriers to a merger’s success.
New analytics technology offers an array of solutions to strengthen performance at all levels of brokerage and agency organizations, which have exciting implications for firms involved in M&A.