Brian M. Stovsky notes that Covid has given M&A a bumpy ride and suggests how the industry can smoothen the journey.
Finding value in a virtual landscape
According to Brian M. Stovsky, to survive the stormy waters, he advises that an M&A partner should be skillful and effective at working virtually to improve enterprise value. He explains that traditionally, insurance companies have used onsite walkthroughs, but now with Covid, it’s no longer possible.
He suggests that insurance companies could have virtual walkthroughs to continue engaging with their portfolio companies and targets. Brian M. Stovsky adds that it’ll lead to top-notch products as people get more familiar with the new systems.
Representations and Warranties (RWI) are now crucial
Another observation that Brian M. Stovsky makes is that Representations and Warranties (RWI) are now more critical in the insurance industry. He says companies have used RWI for over a decade to reduce risks during a sale or purchase.
Brian M. Stovsky believes that RWI is still effective from now on to minimize risks and “potential liabilities found during due diligence.”
He also adds that insurance companies have considered Covid in their policies. Brian M. Stovsky says that Oswald Transactional Risk Advisor Practice (TRA), for example, has taken RWI into account for its “financial and strategic buyers.” It’s a good policy as it “lays a good foundation going forward,” says Brian M. Stovsky.
Driving value for existing holdings
In addition, Brian M. Stovsky says some investors and fund companies are trying to get as much value as possible from existing portfolios. Instead of looking for new deals, they’re tightening their current holdings to lessen risks.
Healthcare tends to be the highest expense on the Profit and Loss statement, according to Brian Matthew Stovsky. He suggests that improving the buying process can slash costs, letting firms see overstated SG&A (Selling, General & Administration expenses).
He explains that adding SG&A to EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) could improve an organization’s value. M&A can recover “top-line and margin lost” owing to Covid, Brian M. Stovsky says.
Risk management strategies are crucial as they can assist M&A with “future cost avoidance.”
Brian Stovsky is a native of Cleveland, OH, and a former high school student of University School, where he played hockey and lacrosse. After graduating with an MBA from Cleveland State University, he worked for PWC in Cleveland, Chicago. Brian Stovsky then moved to Edge Point Capital, an investment bank in the same state.
His time at Edge Point Capita was brief as he soon found himself hired to run Business Development for Oswald Companies Private Equity practice. Based in Cleveland, OH, Oswald is an insurance brokerage.
Brian Stovsky has been at the same company for 3.5 years and lives with his girlfriend and his dog in downtown Cleveland.