The acquisition that didn't happen
Operational duediligence on a claims business - and the synergies that didn't survive scrutiny
CASE STUDY ~ MERGERS & ACQUISITIONS
THE CLIENT
Who we worked with
A private equity fund with an existing insurance-services portfolio company, evaluating the acquisition of a claims business it intended to integrate with that company.
THE SITUATION
What was at stake
The investment case rested substantially on synergies: cost savings and revenue opportunities that would come from combining the target's claims operation with the portfolio company. Financial and legal due diligence were in hand. What the fund needed was an operator's view — someone who had run claims functions — on whether the synergies were real, what integration would actually cost, and how long it would take.
THE BRIEF
What we were asked to do
Focus the operational due diligence on two questions: are the identified synergies achievable, and what does the integration plan — sequencing, cost, risk — really look like? Not a general review of the target, but a hard test of the specific assumptions the deal price depended on.
WHAT WE DID
The work
Took each proposed synergy and tested it against how the two claims operations actually worked — systems, people, processes, client contracts and service commitments — rather than against the headline numbers.
Synergy validation
Integration plan and cost
Built a realistic integration roadmap: what would need to happen, in what order, at what cost, and with what disruption to clients and claims performance during the transition.
Identified where synergies depended on assumptions the operations didn't support — including where combining functions would create cost or capability gaps rather than remove them.
Risk assessment
Clear advice
Reported the findings to the deal team plainly: which synergies held, which didn't, and what the deal case looked like once the difference was reflected.
Measured on outcomes
We flagged material concerns about the proposed synergies — the largest of them relied on integration assumptions the two operations did not support, and the realistic integration cost and timeline were significantly different from the investment case. After careful consideration, the fund chose not to pursue the acquisition.
THE OUTCOME
It is easy to make a case for a deal and much harder to test one. The fund got the truth about the synergies before signing rather than after, and kept its capital for a better opportunity. Sometimes the most valuable outcome of due diligence is the deal you don't do.
Evaluating an acquisition in the insurance value chain
RD Advisory Group
Independent insurance advisory for insurers, brokers and MGAs
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CONTACT
Robert Dewen
robert.dewen@rdagrp.com
+1 802-829-5812