- Service:Strategic benchmarking
- Sector:Healthcare
Issue
A merger with its nearest competitor seemed the only way to challenge the top-tiers firms in this niche insurance market, but an approach would only be made if potential synergies could be quantified with a reasonable degree of certainty. Given the dearth of information, AMR was asked to provide the required data.
Approach
AMR conducted a programme of strategic benchmarking, using proprietary methodology to gain an in-depth picture of the competitor’s cost base, operational performance and customer relationships. This was then compared on a like-for-like basis with the client so that potential savings could be quantified and key post-merger challenges were identified.
Recommendations
Several areas where best practice could be spread and cost could be reduced were identified, but during the course of the research it became clear that the competitor was underperforming and customers were leaving, often switching to the client. In addition, the parent company seemed to have lost faith in the business. AMR recommended that an approach should be delayed for several months to allow the competitor’s position to weaken further whereupon the parent company would be more likely to agree to an acquisition at a lower cost.
Result
Armed with AMR’s report, the client was able to put a plan of action before the board which was approved unanimously. AMR’s recommendations were accepted and takeover or merger negotiations were put on hold. The client is still monitoring the situation while simultaneously using AMR’s work to create a thorough integration plan.
Insight from AMR’s research
AMR’s strategic benchmarking methodology is an effective way to help quantify potential cost savings but it can also help to deliver strategic insight into an acquisition target and can give clients a crucial edge in acquisition planning and execution.