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April 07, 2002 at 08:00 PM
Look Before You Leap On Agency Mergers And Acquisitions
Surprisingly, some independent insurance agencies and brokerage firms do not do their homework prior to entering a merger or acquisition, and not surprisingly, the honeymoon is often over before it has begun.
Possibly enthralled by the thought of new beginnings, some agencies allow emotions to replace due diligence, which is akin to rearranging deck chairs aboard the Titanic. When such an important decision is treated in such a cavalier fashion, choppy water ahead is virtually guaranteed.
Succinctly, much like many modern marriages (because, in a business sense, that is exactly what they are) mergers and acquisitions demand pre-nuptial agreements that should be thoroughly thought through and agreed upon before ink is placed on any contractual agreement. This usually involves a considerable amount of give-and-take on the part of both parties involved.
There are specific areas that especially demand extensive scrutiny throughout the negotiating process, with every “i” dotted and every “t” crossed, then checked again, before sailing forth to new horizons. Such precautionary measures are absolutely necessary for any organization to protect itself from present and future misery prior to steering in new directions.
The areas include:
Transformation and reorganization.
Virtually all acquisitions and mergers mean some, if not considerable, redesign of jobs to make them more productive, service-related and satisfying. This also usually means the jobs become more challenging, complex and customer-centric. Therefore, the emphasis needs to be placed on training, employee development, and continuous workplace learning during and not after negotiations.
Whoever becomes the major partner will undoubtedly have one way of doing things, and the other involved party another way. But what has worked for one won’t necessarily work for the other, at least not in all operational areas.
It follows that strong consideration must be given to what demands to be changed, and what should remain the same. The purpose is to focus on the customers needs to be served by more productive, and usually happier, employees. This in turn will lead to top-notch service.
Customer service will improve because most employees are equal to most challenges. And they will meet and often surpass them as long as they are told why there is a need for change, are trained and compensated fairly, and kept constantly posted on what is, or soon might be, transpiring within the agency.
Management.
Management means different things to different people and organizations, and therein is the hitch. Specifically, if the interested parties cannot come to a consensus on a management philosophy and related practices, it is probably time to end negotiations. There is no sense in attempting to create a lifelong relationship if the involved parties agree to disagree with one or the other, or both, and neither is willing to compromise.
Conversely, and going on the presumption that there is needed flexibility at the negotiating table, those involved in the proposed alliance must target, as part of the desired management structure, such important areas as:
1) What needs changing and why it does.
2) Deciding who will be responsible for needed changes within an agreed upon timeframe.
