CHICAGO – Finding the right cultural fit should be the cornerstone of the merger and acquisition strategies in all sectors, says a senior executive in an insurance broker.
With M & As likely to speed up, acquiring companies should take an unemotional approach that focuses on the details of the agreements and get to know the leadership of the target company, says J. Powell Brown, CEO of Brown & Brown Inc.
While Risks are Intrinsically, a transaction that adopts an acquisition strategy that looks beyond the figures can reduce the risks, he said.
"We have an unprecedented time because there is so much dry powder out there and chasing a limited number of offers," said Mr. Brown under the keynote address at Hays Symposium in Chicago on Wednesday.
Brown & Brown bought Hays Group Inc. in a $ 730 million deal last year.
Daytona Beach, Florida-based Brown & Brown has completed more than 500 deal's in 1
"We believe it is fundamental that it is about cultural fit, the period," he said.
Brown and Brown always insist on direct and open access to the companies they want to acquire, whether a business broker or investment banker is involved, Brown says.
"We always want to have inaccessible access to the leading leadership. If we do not have undue access to the senior management team, we will go away," he says.
The Brown & Brown team also considers softer issues as if they would like socialize with the managers of companies they acquire, and consider whether the managers have their "head and heart" in the sale, Mr. Brown said. "The management team delivers the team and we spend a lot of time on it."
Due diligence is also the key , and making frequent transactions helps a management team to develop a "rhythm" and learn from past mistakes, he said.
When the agreements are completed, the acquiring company must address three main issues that concern employees of the acquired company: Having a job, they get the same pay and benefits and will they report to the same people?  After these issues have been addressed, "they can learn about your culture," he said.