Identity Resolution and Mergers and Acquisitions
By Glenn Hopkins, Director of Financial Services
Joe Bel Bruno with the Associated Press recently pondered if the “beating Wall Street suffered this past week might have actually created the perfect conditions to launch its revival - cheaper stock prices can herald a comeback for corporate acquisitions.” This story prompted me to ponder databases and the glorious mess that M&A activity creates when one large enterprise gets the urge to merge with another large enterprise.
In his article, Mr. Bel Bruno quotes Quincy Krosby, chief investment strategist for The Hartford as saying
“Public companies are still sitting with tremendous amounts of capital, and with valuations going down, this is a very good opportunity for strategic takeovers. […] No matter what kind of stock market conditions you’re in, there will always be catalysts.”
So far in 2007, we’ve seen $1.26 trillion in acquisitions. And after a four year run-up in the market, conditions are ripe for companies to go on an M&A spree.
Just today I saw a $1.3 billion in cash deal when Dutch AEGON acquired the life insurance operations of U.S. investment bank Merrill Lynch. Regarding the acquisition, Patrick S. Baird, president and chief executive of Aegon USA, told the New York Times:
“But certainly, we are global and they are global — and having a good strategic relationship with them, we’d certainly intend to pursue more global product sales with them.”
Most certainly, the two companies will now be facing data compatibility issues when they begin to look at what databases they have in place now. For claims and underwriting purposes, AEGON will want to access all of Merrill Lynch’s data.
Instead of implementing a master data management program, I know that AEGON would be better served — and save lots of capital — if they bolted an identity resolution solution onto their existing architecture. And instead of merging or purging all the identities both companies possess, an identity resolution solution can sift through all the information and keep it all in its native formats for future use.
With mergers and acquisitions, there’s always customer overlap issues in any industry. In the insurance industry, with some customers attempting to defraud insurers by using multiple identities, it’s critical to the bottom-line to cross-reference multiple identity records against not just watch lists but also the following business applications:
- Automated fraud detection
- Underwriting risk management
- Enterprise identity management
- Transactional CRM
- Compliance
- Background checks
- Producer risk assessment
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