As the financial services industry consolidates rapidly, companies are entering into merger and acquisition agreements to grow and to gain infrastructure efficiencies, but many do not deliver the expected cost savings or revenue synergies. Many merger initiatives drag on interminably. There is often insufficient understanding of what is being merged or purchased. The business orientations have not been set at the outset, and the projects may have little direction. The plan to align the two organizations is often superficial. The subsequent steps and accountabilities to ensure that the benefits are delivered are not specified. Cultures clash over processes and information technology.
It is crucial to overcome these problems, and a structured and focused management approach to planning merger projects will contribute to building a thriving new entity.
To manage a successful merger project, a multi-disciplinary project team needs to actively participate throughout the project. This team is responsible for managing change.
Depending on the vision, the business objectives and the nature of the agreement between the two companies, a number of areas within the organizations will need to adjust their operations to integrate.
It is important to thoroughly scope the project, identifying all the activities that need to happen. A set of orientation questions needs to be used to support the project team during the planning phase. This approach can be used either in preparation for a merger or as a result of agreements that have already been signed.
These questions should be considered as a checklist. By answering these questions, the merger team members will identify areas within all companies that will be affected. Subsequently, these identified areas will need to be analyzed and the magnitude of the change assessed and quantified, which will then form the base for the overall project plan.
Each merger project is unique, and new challenges need to be addressed for each. Consequently, the list of questions should evolve as new merger situations are identified. This will allow subsequent project teams to take advantage of accumulated knowledge in this discipline if mergers take place in the future.
Insurance Frameworks has developed a list of questions for mergers and acquisitions in the financial industry, primarily for insurance and wealth management organizations. The questions are divided into 11 sections. Each section is a domain within an organization that needs to be managed by the executive management. More than 330 have been developed using our Panorama 360, which is being used by more than 1,000 insurance, wealth management and banking organizations globally.
The 11 domains are:
- Marketing
- Product development and management
- Distribution and sales
- Alliance service channels
- Customer care
- Sold product services and management
- Money management
- Asset management
- Business management
- Infrastructure development and management
- Organization management
- Is there a holistic vision for this merger?
- Is this merger about penetrating new markets?
- Will you be keeping the status quo once the agreement is signed or are improvements expected out of this merger?
- What are the objectives to achieve and by when?
- Are there any regulatory requirements or merger contractual agreements that need to be completed within a certain time?
- What are the biggest constraints foreseen during this project?
- What is and what is not part of this merger project?
- What are the indicators that will tell you that the merger has succeeded?
- What is the customer service strategy for this merger?
- Is the service strategy different than the one you have in your organization?
- Is there a different service strategy as a result of new markets you are now entering as a result of this merger?
- Is the expected service level from the new markets different than what you currently provide to your existing market segments?
- Can you support any new markets with your existing support infrastructure?
- Are you inheriting product brands that belong to the merged company?
- Will the former brands still exist once the merger is completed?
- Will promotional campaigns be necessary to increase the visibility, focus and recognition?
- Does the merger include affinity, group or association businesses that might require specific promotional efforts?
- Will there be an official launch of a new brand, services or products?
- Does the industry media need to be advised?
- What are the messages to be conveyed?
- Which media approach will be used?
- Will you need an infrastructure to answer questions once the messages have been communicated to the media?
- Do you need to develop material to support the messages?
- What will be communicated to the distribution channels?
- What will be communicated to the clients?
- What will be communicated to the competition?
- What will be communicated to the employees?
- What will be communicated to unions?
- What will be communicated to the service provider?
- What will be communicated to other employees of your group of companies (if any)?
- Is there anyone else who needs to be kept informed of any developments?
- Will you need an infrastructure to answer the questions once the messages have been communicated?
