Many insurers see cultural integration as a major post-deal challenge, but few use employee engagement as an indicator of integration success, according to a survey of senior insurance executives conducted by Willis Towers Watson M&A Risk Consulting in conjunction with Mergermarket.
While nearly half (42 percent) of insurance companies surveyed recognize the critical importance of cultural integration and of hiring and retaining employees to the overall success of a deal, only 12 percent use employee engagement as an indicator of integration success.
Instead the research shows a focus on top-line growth as measure of success for acquisitions, with survey respondents citing the most important factors as the extent of revenue and commercial synergies (62 percent), return on capital (55 percent) and financial synergies (48 percent).
“Employee engagement and customer experience have a known link to improved financial performance, so it is disappointing that employee engagement does not feature more prominently among deal-success measures,” said Steve Allan, EMEA M&A practice leader at Willis Towers Watson.
“Unaddressed cultural clashes are the most cited reason for deal failure which, without proper measurement warning signs, may be overlooked and could ultimately lead to a deal failing to deliver on its promise,” Allan added.
Lessons from Serial Acquirers
Additional research entitled “Serial Acquirers in Modern Times: How to Handle the Assembly Line?” by Mats Stenerson Kallum* goes further by suggesting that early involvement of human resources is critical to a successful deal, said Willis Towers Watson.
This research covers the lessons learned from serial acquirers including the importance of people in the outcome of deals.
“Serial acquirers have become experts at M&A, so for this group to recognize the importance of people in the outcome of deals suggests that we should all take heed,” commented Allan.
“Keeping people issues front and center at all stages of the deal process should support a successful integration process, and ultimately help deals keep on track to reach their financial objectives,” he added.
About the reports
The survey was conducted by Willis Towers Watson M&A Risk Consulting and supported by researchers from Mergermarket, the London-based M&A intelligence specialist. Mergermarket canvassed 750 senior insurance executives from life, property and casualty and composite insurers, as well as reinsurers, regarding their outlook for M&A in the insurance industry, and their own company’s plans and strategy. The companies involved were split equally across the Americas, Asia and EMEA regions. Interviews were carried out in the second and third quarters of 2015.
* The additional research was written by Mats Stenerson Kallum from the M&A Research Centre (MARC) at London-based Cass Business School, which was supported by Willis Towers Watson.
Source: Willis Towers Watson
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