Sharon Brown, Miles Smith Insurance Group’s Distribution and Marketing Director discusses the impact mergers and acquisitions (M&A) have on the group’s business and why they are such a crucial part of the company’s strategy.
Miles Smith’s core value is that it is a relationship company; its focus is on delivering the best product, proposition and service to the policyholders, brokers, insurers and affinity organisations with which it works.
What do Miles Smith look for in an M&A?
Miles Smith only does M&A where the objectives of the M&A are aligned to its culture and strategy:
- It brings better propositions to customers and insurers
- It strengthens and augments those relationships
- It improves and expands the skills in the business
But most importantly the culture must fit.
For Miles Smith, fundamentally the M&A must add value to its proposition; it is not used as a way of enhancing power in the chain.
Why do Miles Smith do M&A?
Miles Smith does M&A to support the proposition it delivers to all stakeholders (policyholders, brokers AND insurers), i.e.
- The acquisition brings expertise and product depth
- Miles Smith is able to take that expertise and product depth to a broader market through its diverse distribution channels
- Utilise their combined expertise to enhance efficiency of operation
It’s not just about delivering volume, it’s about working with companies that create mutual benefit for stakeholders in the insurance relationship.
What does that then enable the business to do?
- Grow skills, experience and expertise relatively quickly – coupled with Miles Smith’s own skills and experience in enhancing the market presence of the acquired business
- Provide solutions, for example, an exiting shareholder who wants to know that the skills and experience within his business will be utilised and his customers will continue to receive quality service and product going forward
- Support Miles Smiths’ unique product proposition, either in terms of product base or route to market such that more people (policyholders, brokers and insurers) can benefit from it in the future
What do Miles Smith want to gain from M&A?
The ambition of Miles Smith is not to do M&A for the sake of it but to do the right M&A to enable continued development and augmentation of the business, brand and ultimately the shareholder value. Putting the relationships of the business with its key stakeholders first is paramount.
How do Miles Smith find potential acquisitions?
Miles Smith has a particular strategic acquisition profile that takes certain criteria into consideration, such as:
- Niche expertise
- Ageing shareholders with no succession plan in place, looking to exit
- A business that has outgrown its model and requires the support and scalability of a larger parent
- A strong and experienced workforce that fits its culture and philosophy
- Experienced management team with ambitions and cultural alignments to Miles Smith
- Businesses which can enhance existing distribution channels
- A track record of growth delivery
Identification of strong synergies between the businesses and the relationships of the management and staff is always paramount.
How does Miles Smith identify potential opportunities?
Potential opportunities can fall into several categories, be they individual, team, retail or wholesale brokers and are identified applying Miles Smith’s strategic acquisition profile. Potential opportunities arise from:
- Acquisition software tools
- M&A industry experts
- The CRM knowledge of its brokers
- Commercial market opportunities
- Insurer referrals
Managing the pipeline closely is imperative as the market conditions change frequently, keeping an ear to the ground can save time and energy.
How does Miles Smith ensure success with M&A?
Miles Smith has an acquisition model that allows it to dedicate existing and incremental resource to target and integrate potential M&A. Based on its previous experience, it is able to integrate businesses within a very short period of time. Funding methodology is dependent upon the individual acquisition and can include bringing debt into the business. Financial advisors and an internal project team are integral to integrating the acquisition smoothly into the business.
There are many lessons to learn following each acquisition, however Miles Smith is always mindful of the following:
- Consideration of what success is and how it’s measured using KPIs
- Communication – this may not always be possible during the process and leakage of information is always a risk, managing this can be challenging
- Time – things always take longer than anticipated. If the business hasn’t done any preparation for sale then due diligence tends to take a little longer
Miles Smith CEO, Paul Chainey, says on the subject
“Everyone should leave the party with a balloon! For Miles Smith, M&A is all about adding value to its proposition for all stakeholders and is not to be used as leverage in the chain.”