Poorly executed succession planning is a primary driving force behind the increase in merger and acquisition (M&A) activity, according to John Prescott, managing partner, Johnson Lambert and Company.
Speaking on the ‘shaping the captive leaders’ panel at the Captive Insurance Companies Association (CICA) 2019 conference, Prescott said there had been “a wave of retirements that have been happening and will be expected to continue”.
He added: “Not coincidentally, there has also been a wave of M&A activity in our industry and that too is not expected to let up anytime soon.”
“I don’t want to oversimplify the reasons behind that M&A activity but certainly, a reason and a primary driving force is that the lack of ability to execute an effective succession plan has led to companies looking to sell to the next tier of firms above them.”
“Every single week we see medium and small firms being gobbled up in our industry.”
Prescott emphasised that effective succession planning and effective recruitment did not come without significant effort.
He explained: “It is a day in, day out task developing leaders that you are confident will be in place five or 10 years down the road.”
“It is a year-round commitment to ensure you’re building those leaders that will be there down the road.”
On recruiting talent, he said: “It is a year-round effort and it takes commitment.”
“It takes years to gain credibility on college campuses. It has taken us six to eight years to have a track record and have some name recognition on campus. You just have to stay at it.”