Study of 100 brokers finds less than a third of deals delivered on all objectives.
Most broker acquisitions fail to deliver their objectives, a new survey of senior brokers has found. Almost a third of brokers said the deals generated little or no value.
The research revealed that just over a third of mergers were considered by brokers to have completely delivered on their objectives.
However, 25% of acquisitions were not successful at all, while 39% were described as having been only “partially” successful, according to the research commissioned by software house Insurecom.
The study, which was undertaken by researcher Vanson Bourne, questioned 100 leaders of consolidating intermediaries across the UK on what drove them to undertake a merger and to reflect on the challenges posed by integration of the two businesses.
The study results revealed that just over a quarter (27%) of senior brokers felt the mergers they had implemented delivered significant value, while 23% of brokers felt “very little” value had been generated.
Nearly a tenth of brokers (7%) felt their merger had created no value at all and had been a “waste of time and resource”.
The report also showed that many of the brokers who participated in the research had appeared to amend their priorities for future acquisitions based on lessons learnt.
When describing the possibility of undertaking a future acquisition, brokers placed less importance on the integration of financials and far greater importance on the integration of other business areas.
Almost two thirds (64%) believed the integration of operations would be important to the success of future consolidation and three quarters (76%) stressed the importance of integrating business processes and procedures in future mergers.
On average, brokers estimated that their businesses were significantly disrupted for an average of a year and half. About 17% of brokers interviewed said the interruption still continued.
Philip Walter, chief executive of Insurecom, said: “The evidence gathered for this report statistically revealed that brokers who neglect to encompass a holistic approach to acquisition through fear of rocking the boat with their staff and causing ‘too much’ change were also the same brokers that experienced the greatest negative impact on staff morale, the greatest long-term business disruption, and the least actual financial reward.
“To achieve sustainable value from a merger, our investigations indicate that brokers must dedicate more time and money towards the proper integration of all areas of business, in particular IT systems and its involvement with business process. This ensures effective bonding and control with the acquired brokerage, creating business productivity and growth.”
