Insurance Brokerages: Is it the Right Time to Merge or Acquire?
05-Jul-17
Insurance Brokerages: Is it the Right Time to Merge or Acquire? With the advance of technology causing disruption to the insurance broker market, brokers are finding that investment is needed to stay relevant and profitable. Many smaller insurance brokers are concluding that acquisition and consolidation by larger buyers is a healthy move for their companies. Statistics show that as recovery from economic downturn began, so the number of mergers and acquisitions within the broker market has increased, with an approximate increase of 33% in 2014 and 26% in 2015.[i] Furthermore, Investment News Magazine suggests that 2017 is to be “the year” for consolidation and mergers of brokers. [ii] What are the benefits of mergers and acquisitions? Acquirer Benefits Acquiring businesses is a massive opportunity for buyers, with huge financial pay-offs if the acquisitions are well chosen. Consolidating a number of smaller companies can allow each business to specialise in their own area of expertise, creating a parent company that can offer a wide variety of very high-quality services. In addition, each company that is acquired is likely to come with an experienced team that is already very invested in the business with a depth of knowledge and relevant skill set. There may also be the benefit of a pool of clients that are already loyal to the business, who can then be introduced to other departments and services within the company. Wise acquisitions can be extremely profitable with plenty of opportunity; though choosing the right businesses to pursue is a skilled task. Seller Benefits Consolidation can marry a business with other complimentary companies, attracting new clients. It can allow a business to focus on its own strengths, prioritising and specialising – in the knowledge that other important areas will be met by other departments. Because of this, the business need not fear that they will put off potential clients by lacking in some areas. At the same time, they ...
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