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Bain Medium M&A Divestiture Valuation

Lizard Insurance

#Insurance #Software #M&A
ProHub Comment

This is a classic M&A strategic decision case requiring candidates to evaluate a keep-vs-sell framework for an unwanted subsidiary. The case emphasizes strategic fit analysis (B2B vs B2C mismatch, lack of synergies), market attractiveness assessment (stagnant $5.5B market with fragmented players), and valuation using comparable transaction multiples. Strong candidates must recognize that TechSize is a poor fit despite reasonable valuation (~$1B), ultimately recommending divestiture.

Estimated Time 15 minutes
Difficulty Medium
Source Darden
50 / 100
Our client, Lizard Insurance, is a US-based auto insurance provider that recently acquired a rival auto insurance company MediumSure. As a part of the acquisition, Lizard Insurance also acquired a subsidiary of MediumSure named TechSize, that provides software for many insurance companies. Lizard Insurance wants to know what they should do with TechSize, and they’ve brought us in to help.

Clarifying Information

  1. Does Lizard Insurance have any experience in the software space? No – they would need to develop capability.
  2. What is TechSize? The TechSize software makes it easier to comply with government regulations when a customer moves from state to state.
  3. Does Lizard Insurance have plans for TechSize? No – they bought MediumSure for other reasons and don’t have plans for TechSize.
  4. How does Lizard Insurance make money? They sell auto-insurance direct to consumer and collect monthly premiums.
  5. How does TechSize make money? They sell B2B services helping insurance providers comply with government regulations.