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Bain Medium Merger & Acquisition

Lizard Insurance

#Financial Services #Technology
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 26 minutes
Difficulty Medium
Source Darden
36 / 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.
Mock Interview
Interviewer

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.

You

Thanks. Before analyzing, I'd like to clarify a few key questions...

Interviewer

Good question. Let me provide some background information...

You

Based on this, I suggest analyzing from these dimensions...

AI Score
Structure Analysis Communication Business Sense Quantitative
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Lizard Insurance acquired TechSize as part of MediumSure acquisition and needs to determine whether to keep or sell the B2B insurance software subsidiary. The case guides candidates to conclude that keeping TechSize is unpalatable due to high investment requirements, no cross-selling opportunities, no cost synergies, and an unattractive stagnant market. Using comparable transaction multiples and market data, candidates should value TechSize at approximately $1B and recommend a full sale.

Key Insights:

  1. Strategic fit is as important as financial valuation—high valuation alone does not justify retention if synergies are absent
  2. Market attractiveness analysis (Exhibits 1 & 2) reveals a fragmented, stagnant market ($5.5B with no growth), making investment unappetizing
  3. Comparable transaction multiples (5x EBITDA from Insurance App Co) combined with market share analysis can estimate target valuation without detailed financial models
  4. B2B vs B2C business model mismatch eliminates meaningful cross-selling and eliminates primary synergy argument for retention
  5. Structured decision framework (Keep vs Sell tree) helps organize complex strategic options and systematically eliminate inferior alternatives