Merger and Acquisition Support
Two types of merger and acquisition activity are most prevalent in the insurance industry. The first type is repositioning by divesting non-core operations while acquiring others to build efficient mass in the core businesses. The second type is the classic consolidation in which a company recognizes that it needs to join with a larger entity to achieve the necessary business mass and capital base.
DCG has developed a process to address the specific challenges faced by acquirers in the insurance industry. Companies offered from the traditional deal flow available through contingency brokers and the investment banking community rarely meet the needs of our clients for the following reasons:
- Properties offered for sale are often widely shopped, thus intense competition prevails on price and terms for good candidates. Such properties can also suffer a loss in value during the process as their distribution systems and customer base are attacked by competitors.
- Properties offered for sale often have material flaws that prove unacceptable to the client after a significant and costly due diligence effort.
- Properties offered for sale at a given time generally have a low probability of meeting the client’s specific target profile.
The DCG process is tailored to address client requirements for privately negotiated merger and acquisition candidates, which include the following qualities:
- Meet the client’s unique strategic profile for size, business mix, distribution systems, products, administration, asset mix, organization, culture, and personal chemistry.
- Not recently or currently offered for sale by the owner or control group.
Since it was founded in 1983, DCG’s mainstream practice has been in development and implementation of marketing and distribution strategies at the CEO level. Through this work, DCG has developed an extensive network of high level personal relationships in the industry and is a trusted source of strategic insight. DCG’s merger and acquisition support services rely upon these personal relationships and the credibility that are essential to reaching the target at the ownership or control level.
DCG’s role in merger and acquisition support is to break free targeted companies and assist the client to develop and nurture the new relationship through the closing and beyond. The basic steps in this process include:
- Refine the desired target profile.
- Create a universe of appropriate targets.
- Screen that list with DCG’s client to select the highest potential opportunities.
- Conduct personal meetings between DCG and the selected target CEOs to inspire and assess willingness to consider an integration.
- Support the completion and subsequent transition.
DCG serves as part of the client’s team with attorneys, actuaries, investment bankers, and other key client advisors to support the overall effort. This process can assist clients to develop targets on a confidential basis, save significant senior management time in screening and “working” prospects, and create opportunities that provide strategic fit at fair value. Bypassing the traditional deal flow can accelerate the process to reach acquisition goals on a cost-effective basis.
While the majority of our clients have full time staff dedicated to merger and acquisition activity, they still find it cost effective to utilize our services. DCG’s best value is in the role of an advisor with broad industry relationships that can inspire selected target companies that their strategic challenges can be favorably addressed by joining with DCG’s client.
The DCG approach offers clients an opportunity to initiate an acquisition program that can produce results with minimum diversion of precious management time. Our role is to perform the background development work that can identify targets that match up with the client’s strategic profile and are ready for substantive strategic level discussion of an acquisition or strategic alliance. The economics of this process can be assessed in advance.
DCG’s individualized and proven process can also be applied to other strategic situations, including:
- Forging capital alliances.
- Developing joint ventures.
- Acquiring blocks of business.
Exceptional results can be achieved when an organization realistically defines its goals, assembles the necessary expertise, adopts an objective process, and follows through a thoughtful integration plan.
DCG continues to work with the client in addressing the issues raised for a successful integration including review of corporate culture, management, and distribution issues for the acquisition or transition.
DCG consultants bring extensive industry experience to the merger and acquisition arena. We believe in focusing our energies on developing key relationships, rather than focusing only on the transaction.
Our Strategic Growth team, consisting of James DeHayes, offers a strategic level industry perspective and understanding of client objectives. We welcome the opportunity for a strictly confidential discussion of your merger and acquisition objectives.