As the owner of a small but growing insurance company, you’re considering your next step. Would a strategic partnership, an acquisition by a larger and more established business, make sense?
Would it put you on the fast track, gain you a competitive advantage, expand your reach to broader markets, have a favorable customer impact, and bring you a new team of partners and collaborators who could deliver real long-term value to your united enterprise?
That’s asking a lot, isn’t it? But you’re on top of it. You do your homework. Carefully consider the complementary strengths of your prospective merger and acquisition alliance. Alignment is, after all, critical to the long-term success of your M&A.
Why Strategic Fit Matters in an Acquisition
You’re going to have enough confusion, distractions, and misdirection before, during, and immediately after your M&A. And that’s assuming you’re in true alignment with your acquisition partner.
Imagine the turmoil if there’s a clash or disconnect in the vision, values, and goals of the partners. What then?
To succeed, both organizations must share a strategic direction for what the merged company will be and how you and your teams intend to get there. Simply put, your two companies must mesh in order to gain the full benefits of your partnership.
The Power of Shared Values and Goals
The last thing you want to see happen after your M&A is in the books is for two companies to pull in different directions. That’s why every successful merger and acquisition begins with long conversations on corporate vision, values, and goals.
Do you feel the culture of the other company is like yours? That your people and theirs will enjoy working together? Will they build a collaborative, productive, and seamless workforce? Are both management teams on the same page? Are you all focused on the same outcomes?
In short, do the two companies deliver a diverse but complementary set of talents to the partnership?
Thriving on Complementary Strengths and Synergies
It’s not always about finding a company that’s just like yours. The ideal strategic acquisition partner delivers the talents you lack, while you bring strengths the other company needs most.
It’s a matter of meshing diverse capabilities to make one stronger and more competitive company that can deliver more in terms of products, technology, customer service, and innovation than ever before.
Be careful you don’t overlap capabilities. If that’s the case, your sales forces might tangle and turn into competitors because they share the same geographic region and sell the same products. Your technologies might similarly clash if you haven’t first figured out how to seamlessly integrate systems and advance your company through technology.
Redundancies can also mean layoffs. Workforce reductions can bring about distrust. Both teams might be resentful of the other rather than working together collaboratively, and a loss of morale across the entire merged company can occur.
How Strategic Partnerships Drive Business Growth
If you’ve figured out the puzzle of diversification of capabilities and learned how to merge your complementary strengths, you’re aligned for shared business success. So extend your company’s talents and adopt those — and other unmatched resources — of the other company to your mutual advantage.
As a result, your new enterprise will enjoy all the benefits of new products, markets, and improved ways of doing business. You’ll boost the efforts and achievements of an expanded (and talented) sales and marketing team, gain popular brands, and maximize the expertise of two diversely accomplished workforces now finding a competitive edge collaboratively.
Financial and Operational Considerations in Assessing Fit
Do you know the financial situation of your prospective acquisition partner? Have your accountants seen the books? Are you sure there will be no bottom-line surprises after the deal goes through? It’s critical that both companies understand the financial realities of the other.
That doesn’t mean you shouldn’t conduct an M&A if the other team is challenged in this way — only that you know about the condition of the books well ahead of time.
Are there countering reasons to merge? The other company might still be a stable strategic partner because of an inventory of appealing insurance products, a strong sales base, recent innovations, or other countering advantages.
Just avoid unpleasant numbers-crunching surprises after the deal closes.
You’re also going to want a partner that does business operationally, much like your company does. This is partly in order to operate at maximum efficiency, but also to reduce the impact of the jarring changes that the two teams will inevitably go through.
The end result is a new company, after all. That might encompass a new corporate name and logo, probably even new offices, departments, insights, and work teams. The point being is that there are bound to be enough elements of distraction, confusion, and conflict in even the most seamless integration of workforces.
Try not to add to the inevitable bumps and bruises on the road ahead with two entirely different and contradictory visions of how business must be done.
Discover the Power of the Right Acquisition — Explore Growth Opportunities with Confie
As one of the nation’s leading personal lines insurance companies, Confie has merged with more than 160 talented and committed independent insurance companies like yours, all over the country.
In that way, we’ve given our acquisition partners strong competitive advantages with an expanded sales and marketing footprint, new technologies, and a diverse and attractive menu of products your customers already know. This means immediate access to some of the industry’s most recognized and trusted insurance brands — all while maintaining your brand identity and authenticity.
If you’re considering exploring an M&A relationship with Confie, just know that the process starts with in-depth conversations. Plenty of them. We want to know how well our two companies fit–and so do you.
Let’s get that initial conversation rolling. Share our long-term goals. Exchange our vision and values. See if there’s a fit. Call us at (714) 252-2500 or contact us online today.
