Mike Bruce on why consolidation really means integration
Insurance Post has featured Managing Director Mike Bruce talking about how the Group’s integration process for companies bought by GRP helps them to thrive.
A summary of the interview is below:
Mergers and acquisitions are headline news but Mike Bruce, CEO of broking at Global Risk Partners, believes the success can only be judged if there is true integration. In our industry ‘consolidator’ is commonly used in the media to describe acquisition vehicles (like Global Risk Partners) that buy brokers.
There is, perhaps, an undercurrent of cynicism about the term consolidator, as if it’s all chequebook and no aftercare. Consolidation is defined as ‘combining (a number of things) into a single more effective or coherent whole,’ so to meet the requirements of a dictionary’s criteria, a consolidator should not only acquire businesses but must also integrate them too.
It is fair to say that the mergers and acquisition aspect of the consolidator model gets plenty of news coverage while the hard work of integration seldom gets reported. It’s hardly surprising - M&A is always more exciting than the grunt work which follows, but the overall improvements in terms of customer proposition and business efficiency are hugely accelerated by getting the integration right.
In fact, while M&A grabs the headlines, the true test of success for all businesses that buy other businesses is to make sure they end up with a whole that is greater than the sum of the parts.
Integration should start as soon as a new business joins the group. Business models vary, of course, with some preferring a single brand and identity, but we believe it’s a good idea for our businesses to hold on to their trading names to maintain established client connectivity. Brokers know that regulation and compliance, while vital, drain management time, so taking on responsibility for all the central controls and oversight in areas such as risk and compliance, HR, finance and client money can be a real help.
This leaves management teams to get on with what they do best, looking after their clients and growing the business. Integration is also good for insurer partners. Consolidators can hold a lot of data information from individual businesses systems and by combining it with external data in can be analysed and provide feedback to insurers as well the group businesses.
The quality of data analytics can give partners new insight into how particular books of business are performing, and identify opportunities for new product development. This gives something extra back to strategic insurer partners.
If you’re on the acquisition trail, integration is a continuum as each new business joins the group, but what really matters in the long-term is value creation for the acquired business and their clients, insurer partners, and investors, and that only comes from integration.