Merger & Acquisition Case study from Cognizant Technology Solutions

With industry returns and capital levels under pressure, conditions are more conducive to industry consolidation and increased M&A activity. Global merger and acquisitions in the insurance sector have reached all time record of 148.7 billion dollars in 2008, up 34 per cent from the previous year. Strategic activity accounted for 97 per cent of total activity in the industry, as compared to 83 per cent in 2007. Insurance companies in the United States made the maximum number of acquisitions. US-based insurers made acquisitions worth $71.6 billion, up by 102 per cent from the deals in 2007. Deals worth over $10 billion each accounted for nearly 36 per cent of 2008 volume, which stood $53.4 billion, up from just 10 per cent in 2007 whereas deals in the range of $1 billion to $5 billion range made up 25 per cent of the total with an announced value of $36.7 billion.

Few organizations have expertise integrating business after mergers and acquisitions activity, yet business success is dependent upon successful integration of its People, Process, Technology and a well planned M&A strategy. Without a well thought and effectively managed plan, the merger or acquisition risks an incomplete integration, business frustration, loss of critical staff, higher costs and an unnecessary complex environment. Successful integration starts before the merger or acquisition. Due diligence must be used to develop an integration strategy, plan and team that will give confidence to all stakeholders. Identifying key decisions around which applications, infrastructure and IT processes can go forward and key actions to create the new organization after the merger or acquisition is also a necessity.

The post-merger integration phase covers the operational part of any merger project. Often this phase determines if the merger becomes a success or failure. The four key aspects of any business organization are typically Strategy, People, Process and Technology. Many of the critical success factors of the post-merger integration are “soft” factors, which involve people and their interactions with technology and process. Value is created by focus and adherence to strategy.

Therefore, Cognizant feels it is necessary to focus attention on issues such as

  • Development of a new management structure for the new, larger organization; especially overcoming leadership problems in very large units
  • Bringing together formerly separate units from both former organizations
  • Allocation of clear roles and responsibilities in the emergent merged entity
  • Communication of the new strategic objectives and the new vision of the merged organization
  • Implementation of a new shared corporate culture and management culture
  • Integration of the multiple IT organizations
  • Reduction in redundancy and duplication of IT systems
  • Harmonization of management compensation and management incentive systems
  • Overcoming of language barriers and country specific cultural differences
  • Overcoming of staff’s suspiciousness of the other organization
  • Knowledge transfer among units that are to be integrated
  • Maintenance of customer and intermediary relationships during integration
  • Employees who fear being earmarked redundant
  • Impact on the existing corporate culture

(The full case study is no longer available for download.)

About Cognizant

Cognizant is a global leader with over USD $2.81 billion in revenue and over 60,000 employees is in the business of providing information technology, consulting, infrastructure and business process outsourcing services with the headquarters in Teaneck, N.J. Cognizant’s single-minded mission is to dedicate our business process and technology innovation know-how, our deep industry expertise and worldwide resources to working together with clients to make their businesses stronger. Our Insurance Practice, with over 8200 associates, is led by industry veterans possessing deep domain knowledge and awareness of the issues and obstacles facing the industry that is unique to various regions. Cognizant provides services to 14 of the top 30 Life and P&C Insurers across North America, Continental Europe and Asia Pacific and has been recognized by the analyst community as having the industry’s most mature and fully developed Insurance Practice. For more information, please visit