Looking Ahead: Renate Mueller discusses the 2012 M&A market
Narrator: 2011 saw some major activity in the Canadian mergers and acquisitions market, Intact Financial’s acquisition of AXA Canada, and the Desjardins acquisition of Western Financial Group, are two prime examples. But what about 2012, can we expect more of the same? ILSTV posed this question to Renate Mueller, President of Renate M. Mueller Consultants
Renate Mueller: I do. And the reason I do is particularly with the foreign-owned insurers who will want to consider selling off their divisions that are perhaps not as profitable. The shareholders of these foreign owned companies will expect that the ROE, which is the return on equity, to be sustained and not just sustained but also improved.
And if they can’t see an improvement on their return on equities then the answer is for the shareholders to direct their companies to divest of their subsidiaries and use that capital in perhaps some emerging countries where they could enhance their profitability and return better returns to their shareholders. So yes I think we will probably see this coming about in 2012 as well.
Narrator: We asked Renate if she was surprised by any of the deals that occurred in 2011
Renate Mueller: No, I don’t think so. I look at the big picture. The insurers have a responsibility to their shareholders. The consolidation within the brokerage side, it will continue because of the economies of scale when you have larger brokers buying smaller brokers, the numbers work for them. They have an infrastructure for their overhead and their management style. So I’m not surprised consolidation will continue into the future.
Other titles of interest:
Renate Mueller explains the criteria used to place a value on a business
Renate Mueller explains why some brokerages are harder to sell
