Mega-deals and the challenges of integration
Many years ago, when I first started in sales, I happened to visit a London-based insurer called CGNU at St. Helen’s, in the days before the Gherkin. As the ‘exciting’ brand name implied, CGNU was formed from an amalgamation of many insurers after a massive spending spree—Commercial Union, General Accident and Norwich Union. I dared to try to sell a core platform to their CEO. His response went something like: “Don’t try and sell me another system, I’ve got one of everything,” and to be honest, he did.
I can imagine this conversation happening again in offices across the globe given that 2015 became the biggest mergers and acquisitions (M&A) year ever. This theme was also rampant in the insurance market where M&A was at its highest level for many a year—ACE Chubb ($28 billion), Willis Towers Watson ($18 billion), Tokio Marine & HCC ($7.5 million), Mitsui & Amlin ($5 billion), and XL Catlin ($4.2 billion) made up the top five. This list excludes the life and health mega-mergers—Anthem & Cigna ($55 billion) and Aetna & Humana ($37 billion).
This M&A theme is surely no surprise given the aggressive stance of Chinese investors, the poor returns available in the investment marketplace and the availability of low-cost capital. There are certainly some mega-brands disappearing in this frenzy.
With the repercussions of the acquisition spree still being felt, I wonder what is presently going through the minds of the victorious CEOs now that the frenetic post-acquisition activity has quietened down.
Having been through a few M&As myself over recent years the ‘100 day’ checklist goes something like this: new team in place—tick; customers reassured—tick; easy cost synergies achieved—tick; key staff retained—tick; new strategy devised and communicated to investors—tick. Phew, time for a cuppa.
But now for the difficult challenges, such as creating unified processes, harmonising cultures, rationalising operations, disposing of non-core assets and one dear to my heart: consolidating systems.
Consolidating systems used to be one of those activities that could be conducted over a long period of time, but nowadays systems are increasingly transparent to the customer or business partner. While this transparency is a key theme there are many other drivers, meaning that time to rationalise is of the essence.
The new demographic—the ‘Apple’ generation—won’t accept clunky processes that aren’t elegantly served by online services. This means that online and offline features and information need to be aligned and sophisticated, relying on one version of the truth.
The need for data technology in the form of analytics, and better data use, is a key battleground as all participants in the supply chain weaponise information for their benefit. An Accenture report on digital transformers ranked data and analytics as the most important aspect of their digital strategy.
Key trends
