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Simon Fitzsimmons, director of mergers and acquisitions (M&A), Mazars
10 September 2019 Insurance

Brexit doing no harm to insurance M&A prospects in UK or Ireland: Mazars

The UK’s possible departure from the UK has not had any discernible impact on appetite for deals in the UK insurance sector, with the fall in the pound making valuations attractive and quantitative easing ensuring there is plenty of money looking to be invested.

But Simon Fitzsimmons, director of mergers and acquisitions (M&A) in the deal advisory practice at Mazars, has warned acquiring companies to think carefully about what they are buying, cultural compatibility and the impact departures could have if key employees are unhappy in the newly formed company.

“The court cases we have seen recently will make people think more about the impact the loss of certain teams could have. In some cases, it teams or even individuals leave the whole deal can no longer make much sense,” Fitzsimmons said.

Such is the appetite for deals, and the relative scarcity of targets following ongoing market consolidation, acquirers may be pushing such concerns to the back of their minds.

Fitzsimmons said: “We are running out of big players because they keep buying each other.

“But there are always other big players, people talk about the likes of Google or Apple buying their way into the insurance market, and such a deal is certainly feasible.”

Such companies might be put off by negative associations in the insurance industry, such as that people think about insurance only when something bad has happened, he noted. “But on the other hand, it makes a lot of money.”

The potential implications of disruption from one of the technology giants, or any innovative technology company, are fascinating, added Stephen Skeels, partner and national head of valuations at Mazars in the UK.

“Size is important, but I sometimes wonder whether the model is not even more important,” said Skeels.

“Look at what has happened in the banking industry with innovation in payments, for example. We see a little of that in insurance already, but if it continues it will be intriguing to see where it leads.”

Brexit is not looking all bad for Ireland, noted Fitzsimmons.
“Ireland is also going great guns,” he said. “The insurance industry there is very excited about opportunities that could arise post-Brexit. People are buying into that, everyone wants to do deals in the English language and the market is attractive.”

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