The banking report—mergers and acquisitions
THE MATCH MAKERS...
The forces of consolidation remain an ongoing dynamic within the insurance and reinsurance industries, and continue to shape both sectors and individual companies. Intelligent Insurer investigates what kind of support investment banks can offer to businesses during mergers and acquisitions.
M
erging two companies is rarely easy. It requires patience, a steady hand and a high level of organisational skills on both sides of the deal to ensure things go smoothly. And this is
where investment banks can help, according to Andrew Cook, president of Alterra Bermuda.
“When going through a transaction, there is a signifi cant amount of
work that has to be done, particularly in the due diligence phase,” he says. “I have found that investment banks have been very helpful in terms of setting up the data room, and making sure that information is properly organised, accessible and up-to-date.
“That is a really valuable service when you are in the throes of an M&A
transaction—it’s all about maintaining and keeping track of information on both sides.”
Jack Sennott, chief corporate strategy offi cer at Allied World agrees. He
believes that investment banks play a vital role in M&A negotiations. “Investment banks are experts in the process, and set a very good rigour
around the steps to be taken and the setting of timetables that need to be kept in order to move these activities along expeditiously,” he says.
“When we are in negotiations, there are going to be items that are more
sensitive than others, and investment banks are generally the right people to discuss these issues with, whether they be people issues, exchange
32 | INTELLIGENT INSURER | September 2011
rates or even around unfl attering comments that might have been made regarding a company’s position on a line of business or some other matter.
“Obviously, investment banks can’t negotiate the deal for you. In the
end, you have to understand how the companies fi t together and that is best left to management.
“But investment banks can be very helpful as a sounding board, because
they are objective. While they have a vested interest, they are outside of the business and that perspective is helpful.”
Julian van Kan, head of fi nancial institutions group at BNP Paribas,
agrees. He argues that good communication is essential in ensuring a smooth transaction.
“There is going to have to be two sides to the acquisition—the buyer’s
side and the target’s side. Invariably, the two advisory sides will work together in ensuring a smooth process,” he says.
“I would say that about 80 percent of all acquisitions are friendly—
and they will always become recommended at some point, which is where all parties need to work to get to. Very rarely do we see major hostile takeovers where you have two sides warring with each other.
“In some cases, this may be the case at the start of a process. But that is where the two advisory banks need to come up with a common set of
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