Mastering M&A: Opportunities and Challenges in Tech and Life Sciences

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Slide: Wednesdays with Woodward (registered trademark). Webinar Series.

A slide displays a laptop open to the Wednesdays with Woodward presentation on a desk next to a potted plant and a red mug with the Travelers umbrella. Logos: Travelers Institute (registered trademark), Travelers.

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JOAN WOODWARD: Hi, everyone. Welcome, and thank you so much for joining us. I'm Joan Woodward, President at the Travelers Institute. Welcome to our webinar series and thank you for coming back, as always.

Before we get started, I'd like to share our disclaimer about today's program.

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Slide: About Travelers Institute (registered trademark) Webinars. Text: The Wednesdays with Woodward (registered trademark) educational webinar series is presented by the Travelers Institute, the public policy division of Travelers. This program is offered for informational and educational purposes only. You should consult with your financial, legal, insurance or other advisors about any practices suggested by this program. Please note that this session is being recorded and may be used as Travelers deems appropriate. Logos: Travelers Institute (registered trademark), Travelers.

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And I'd also like to thank our terrific program partners, the Master's in FinTech Program at UConn, the National Association of African American Insurance Agents or NAAIA, the MetroHartford Alliance, the Independent Insurance Agent & Brokers or the Big I.

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Slide: Wednesdays with Woodward (registered trademark). Webinar Series. Text: Mastering M&A: Opportunities and Challenges in Tech and Life Sciences. Logos: Travelers Institute (registered trademark), Travelers, MetroHartford Alliance, Master's in Financial Technology (FinTech) Program at the University of Connecticut School of Business, Big I (Independent Insurance Agents & Brokers of America), and National African American Insurance Association (NAAIA).

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At Travelers, we're really committed to understanding new and emerging risk, and we talk about a lot of them on this show, especially, though, as they impact risk management functions.

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A slide displays the cover of a report titled: 2025 M&A Study: A Travelers Special Report. Today's M&A trends--what risk teams need to know. Logos: Travelers Institute (registered trademark), Travelers, PitchBook.

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Mergers and acquisitions, or M&A, has had a significant impact on a company, influencing its outlook, workforce and risk management. Today's program is the second in a series looking at the impact of the M&A in different industries.

So back in May of this year on a webinar, which you can access the replay now-- we're putting that in the chat for you all-- we took a deep dive into Travelers’ Special Report, which surveyed 800 risk and insurance professionals and explored how risk teams are navigating the evolving M&A landscape. We learned that in 2024, over 9,000 deals closed in the United States, with a total deal value of $1.2 trillion. That is a lot of money.

Today, we're following up with a look at our findings on the technology and life sciences sectors in particular. M&A is a major growth strategy, and tech and life sciences companies are leading the charge with billions in transactions. So, how are risk teams in life sciences and tech navigating the evolving M&A landscape? To break it all down for us and to give us the lay of the land on the impacts of the deal-making today, I am pleased to introduce two of Travelers' leaders in technology and life sciences.

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Slide: Speakers. There are three profile pictures, from left to right. A woman with short blond hair wearing a white blouse. Text: Joan Woodward, Executive Vice President, Public Policy; Presdient, Travelers Institute, Travelers. A woman with long blond hair wearing glasses and a black and white diamond pattern sweater over a collared shirt. Text: Jen Ampulski, Assistant Vice President, Life Sciences Segment Lead, Technology & Life Sciences, Travelers. A man with short brown hair wearing a black blazer and white collared shirt. Text: James Standish, Vice President, National Practice Leader, Technology & Life Sciences, Travelers.

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First, James Standish is the National Practice Leader for Travelers’ Technology & Life Sciences business unit. In that role, he leads the team that provides insurance solutions to tech and software companies, electronic manufacturers, telecommunications and life sciences companies. That's a lot, James. You're a very busy guy.

James has a really extensive experience in career leading underwriting teams at the regional and national levels. So thank you for joining us today, James.

JAMES STANDISH: Thanks for having me.

JOAN WOODWARD: Alrighty. So then, we have Jen-- Jennifer-- Ampulski. She is Travelers Assistant Vice President and Life Science Segment Lead for Travelers. In this role, she is responsible for finding risk management solutions for life sciences companies. Previously, she was in leadership positions in life sciences and business tort claim. She's practiced law for 11 years as a trial lawyer. So we're really thrilled to have you as well, Jennifer. Thank you both for joining us.

JEN AMPULSKI: Thank you.

JOAN WOODWARD: Alrighty. So today, we're going to start out with some presentations from our speakers. We think it's really important to understand the landscape and what the entire industries of life and tech look like today before we get into a moderated discussion. So, James, the virtual floor is yours. Thank you.

JAMES STANDISH: Hey, thank you, Joan, and good afternoon, good morning to everyone.

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A slide shows the cover of a report, featuring a person tapping on a virtual screen, and the title, 2025 M&A Study: A Travelers Special Report. Today's M&A trends--what technology risk teams need to know. Logos: Travelers, PitchBook.

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Very happy to be here today alongside my friend and colleague Jen Ampulski, representing the Technology & Life Sciences business unit within the Travelers.

So just to kick us off, mergers and acquisitions are not a new trend in the tech world. And we see companies of all sizes leverage these activities, some as a catalyst for growth, while others are eyeing an acquisition-- eye acquisition as an exit strategy.

And so starting with those companies that are pursuing growth, M&A really opens up access to cutting-edge research, intellectual property, geographic expansion and the like. And within our special report for technology that we developed in partnership with PitchBook, we focus on several top-line themes, including the latest wave of tech innovation that's fueling M&A growth. That's largely being driven by advancements in AI.

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Slide: Tech M&A Report Themes. Text: Mastering M&A. Tech innovation is fueling M&A growth, largely driven by advancements in artificial intelligence. Strong consolidation across the tech industry with private equity backing some larger deals. Regional diversification of activity beyond Silicon Valley. Culture and company impacts range from talent changes to risk management enhancements. 2025 M&A Study: A Travelers Special Report.

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There's strong consolidation despite some slowed tech deals in 2024, with private equity involvement driving some of the larger deals. There's some regional diversification of M&A activity, notably increasing in areas such as New England and the Great Lakes. And we also focus on the culture and company impacts of M&A activity, ranging from talent changes to risk management enhancements.

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Slide: Tech M&A Activity. Text: in 2024, Tech M&A surpassed 450 billion dollars across more than 3,300 transactions. 2025 M&A Study: A Travelers Special Report.

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So let's take a look at the current state of tech M&A. In 2024 alone, tech M&A drove $450 billion across more than 3,300 transactions. While this did mark a 17% decline in the value of these deals, the decline in deal count year over year was a little bit more narrow, at only 2% down. And so these declines were less severe than the previous year, which signals that there's a slow return to deal execution. The blockbuster deals, some including exceeding $30 billion, continued to close despite some economic headwinds, and private equity transactions helped drive activity as well, with PE deal value up 14.5% in 2024.

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Slide: Trends Across Tech Subsectors. Text: Information technology (I.T.) remains the strongest driver of both M&As and Private Equity activity. I.T. accounts for more than 80% of both total tech deal counts and value in 2024. Software dominates the sector due to relatively low startup costs and numerous user bases. P.E. deal value in the I.T. sector demonstrated 24.7% annual growth. Telecom deal value surged 130% year-over-year. Mastering M&A. 2025 M&A Study: A Travelers Special Report.

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So if we look at some trends across technology subsectors, the information technology, or IT, segment remains the strongest driver of both M&A and PE activity, accounting for more than 80% of total tech deals-- counts and value in 2024. Software is dominating the sector due to relatively low startup costs. And while PE firms are identifying opportunities for tech portfolio expansion, we see double-digit annual growth of 24.7% in the PE deals value in the IT sector.

While IT stands out in the tech industry for M&A activity, telecom is also strong, surging 130% year over year, which, according to PitchBook data, is driven by EchoStar's $26 billion acquisition of Dish in January of 2024. And as the legacy infrastructure yields to market demands, like 5G and national fiber expansion, telecom consolidation is accelerating.

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Slide: Post M&A: Workforce Impact for Tech Firms. A bar graph is titled, Survey respondents experienced significant changes and disruptions as a result of the M&A, with New tools/processes at 77%, Change in company leadership at 77%, Employees resigned or quit at 73%, Reporting to a new manager at 71%, Your role changed significantly at 66%, Employees had to relocate at 56%, Some offices/locations were closed at 43%, and Employee layoffs at 39%. Source: Travelers M&A Study, 2025. Text: Mastering M&A.

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So post-M&A, let's think about the workforce impact. The impressive scale and pace of these tech deals creates opportunity but also risk. In addition to the data we collected in partnership with PitchBook, Travelers also conducted our own study of over-- survey of over 100 technology business leaders with risk-related responsibilities at companies that underwent a merger or acquisition in the last five years. Our tech M&A report shows just how much disruption can unfold when merging company cultures and operations.

According to our survey respondents, the post-merger or acquisition workforce impacts, the experience ranged from operational to talent changes. Roughly three-quarters of the respondents said they rolled out new tools or processes. They made changes to their leadership team or had some employees resign. Just over half relocated staff, and two-thirds said that their role individually had changed significantly.

Other key challenges for tech companies going through M&A include system integration, cybersecurity risk mitigation and protection of intellectual property. So let's take a look at how technology firms can strengthen risk management practices to help overcome some of these potential pitfalls.

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Slide: Post M&A: Impact on Risk Management for Tech Firms. A bar graph is titled, Changes companies made after or due to merger or acquisition, with Implemented new risk management/mitigation practices at 49%, Changed or added physical safety practices at 44%, Engaged with new suppliers at 43%, Changed or added new technology safety practices at 42%, Changed insurance carriers or brokers at 38%, Changed insurance coverage at 32%, Hired a new risk manager at 25%, and Changed the role of the CFO at 12%. Source: Travelers M&A Study, 2025. Text: Mastering M&A. 2025 M&A Study: A Travelers Special Report.

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So post-M&A risk management, according to our survey, 91% of respondents said that they changed their risk management practices post-deal, and 94% reported that their risk management practices became stronger. How'd they get there? Let's take a quick look at the changes implemented post-merger or acquisition.

Over 40% of our respondents implemented new risk management practices, updated physical safety protocols, engaged new suppliers or added tech-specific safety measures. Over 30% shifted carriers or brokers or adjusted their insurance coverage. And a quarter, a full quarter of our respondents hired a new risk manager.

M&A has the potential to strengthen a company's overall risk posture, and getting there requires thoughtful execution. Best practices can help pave the way. From pre-deal due diligence, including cybersecurity assessment, to detailed operational planning, transparent communication and tailored insurance solutions, companies can help mitigate risks that might otherwise lead to coverage gaps or data security vulnerabilities.

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Slide: Looking Ahead. Text: M&As are expected to remain a central growth strategy for tech companies. Rising R&D costs, regulatory challenges and increasing competition strain tech companies. Rapid tech advancements intensify headwinds such as supply chain disruptions, geopolitical conflicts and component shortages. Themes to watch out for include new regulatory treatment of AI and litigation targeting social media platforms. Complex, higher-valued deals demand deliberate planning and thorough risk assessment. Mastering M&A. 2025 M&A Study: A Travelers Special Report.

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So to wrap up, in looking ahead, as companies continue to face rising costs, regulatory challenges and increased competition, we would expect to see M&A remain a central growth strategy in the technology industry. Rising R&D costs, regulatory challenges and increasing competition continue to strain tech companies, and rapid tech advancements intensify headwinds, such as supply chain disruptions, geopolitical conflicts and component shortages.

Some emerging themes for tech companies to watch out for include new regulatory treatment of AI, litigation targeting potentially addictive social media platforms and unfolding trade conflicts that may impact international customer bases. As complex, high-value deals emerge, deliberate planning and thorough risk assessment will be critical.

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A slide shows the cover of a report, featuring a person looking into a microscope, and the title, 2025 M&A Study: A Travelers Special Report. Today's M&A trends--what life sciences risk teams need to know. Logos: Travelers, PitchBook.

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JEN AMPULSKI: Thanks, James. So within the life sciences market, mergers and acquisitions and private equity deals have really become a key strategy for unlocking growth and competitive advantage as companies are really striving to develop innovative therapies and scale globally.

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Slide: Life Sciences M&A Report Themes. Text: Key drivers of M&A activity range from rising R&D costs to scaling commercialization. Diversification of M&A activity is seen across the U.S. Impending impacts of the "patent cliff" for pharmaceutical companies. Workforce and cultural integration challenges for merging companies. Mastering M&A. 2025 M&A Study: A Travelers Special Report.

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So within our special report for life sciences that was also developed in partnership with PitchBook, we focus on several top-line themes, which include the drivers behind M&A growth and life sciences, and that's from rising research and development costs to manufacturing needs to scale commercialization; regional diversification of M&A activity, with only one region seeing growth in the 2024 deal count; a phenomenon referred to as the “patent cliff” and what it means for the pharmaceutical industry; and how workforces and operations are impacted by a merger or acquisition.

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Slide: Life Sciences M&A Activity. Text: 2024 M&A exceeded 150 billion dollars across 374 transactions. Median deal size surged over 70%. 2025 M&A Study: A Travelers Special Report.

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So what's the current state of life sciences M&A activity? Well, despite a slowdown in 2024, life sciences M&A activity remains robust, with over $150 billion in closed deals for the past two years. We've observed a shift toward larger deals, with median deal size up 72.8% after a dip in 2023.

The three most active subsectors for M&A deals-- biotechnology, pharmaceuticals and drug discovery-- are all involved in developing and bringing new medications to market. PE buyouts held steady in 2024, with firms acquiring companies with strong IP and scalable models.

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Slide: Key Drivers of M&A Activity in Life Sciences. Text: Rising research and development costs, regulatory hurdles and intense competition. Expansion in personalized medicine, gene therapy and AI-driven drug discovery. Integrating cutting-edge medical technologies with large scale commercialization. Companies with FDA-cleared or fast-track-approved products. Next-generation manufacturing capabilities. Mastering M&A. 2025 M&A Study: A Travelers Special Report.

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So what were some of the key drivers of M&A activity in life sciences? Well, rising research and development costs, regulatory hurdles and the race for late-stage assets all continue to fuel big ticket M&As. Expansion in personalized medicine, gene therapy and AI-driven drug discovery is prompting consolidation for scale and efficiency. And strategic acquisitions underscore the growing importance of integrating cutting-edge medical technologies with large-scale commercialization.

Now, this industry, regulatory approval remains a key factor, with buyers often seeking companies with FDA-cleared or fast-tracked-approved products. And next generation manufacturing capabilities are increasingly relevant in M&A activity. Lastly, AI applications are driving interest as established firms look to fully integrate these capabilities.

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Slide: Post M&A: Workforce Impact for Life Sciences Companies. A bar graph titled, Survey respondents experienced significant changes and disruptions as a result of the M&A, with New tools/processes at 76%, Change in company leadership at 71%, Reporting to a new manager at 69%, Employees resigned or quit at 65%, Your role changed significantly at 64%, Employees had to relocate at 62%, Some offices/locations were closed at 47%, and Employee layoffs at 44%. Text: Mastering M&A. 2025 M&A Study: A Travelers Special Report.

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So what's the post-M&A workforce impact? Well, in addition to the data that we collected in partnership with PitchBook, Travelers Life Sciences also conducted a proprietary survey of 243 life sciences executives with risk-related responsibilities at companies that underwent a merger or acquisition in the last five years.

In life sciences, where that specialized knowledge is really critical, cultural integration challenges can be costly. When asked about workforce impacts experienced post-merger or acquisition, our respondents highlighted 76% of companies implemented new tools or processes to support the transition, and 71% experienced changes in leadership. Over half of respondents indicated that employees either resigned, underwent major role changes or had to relocate.

So not only could these disruptions impact employee productivity, but they can potentially delay clinical milestones and increase regulatory risk. That's why a robust operational integration plan, supported by specialized insurance and risk management tools, is critical for a more seamless transition.

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Slide: Post M&A: Impact on Risk Management for Life Sciences Companies. A bar graph is titled, Changes companies made after or due to merger or acquisition, with Changed or added new technology safety practices at 55%, Implemented new risk management/mitigation practices at 51%, Engaged with new suppliers at 48%, Changed or added new physical safety practices at 36%, Changed insurance coverage at 36%, Changed insurance carriers or brokers at 34%, Hired a new risk manager at 24%, and Changed the role of the CFO at 23%. Source: Travelers M&A Study, 2025. Text: Mastering M&A. 2025 M&A Study: A Travelers Special Report.

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Now, despite hurdles, M&A often strengthen life sciences companies’ approach to risk. According to our survey, 97%, so nearly 100%, of respondents said that they changed their risk management practices post-deal, and 94% reported that their risk management practices became stronger.

So what changes did life sciences companies make? Well, roughly half engaged with new suppliers, implemented new risk mitigation strategies or updated their technology safety practices, while slightly over a third said they changed insurance carriers or brokers, they changed insurance coverage, or they enhanced their physical safety practices.

So introducing more rigorous safety protocols, stronger compliance monitoring and greater visibility into operational exposure can help sharpen a company's overall risk posture. So what are some other suggestions to help prepare for M&A risk exposures?

Companies could conduct early cultural assessment as part of their due diligence. They can create integration roadmaps that address the technology compliance and supply chain processes so that those reduce disruption; prioritizing frequent and transparent communication; and lastly, but not least, use specialized insurance products and risk management tools to address the unique exposures of life sciences M&As.

So to wrap up on life sciences, looking ahead, M&As will likely remain a staple of the life sciences industry dynamics moving forward, with billions shaping the competitive landscape each year.

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Slide: Looking Ahead. Text: M&As likely to remain a staple of life sciences industry dynamics moving forward. Large transactions signal the need for upgrades in drug portfolios, next-generation manufacturing capabilities and broader growth strategies. AI applications will likely inspire more M&A interest, such as in patient data management. Strong risk mitigation practices and tailored insurance solutions can help position these companies for long-term success and stability. Mastering M&A. 2025 M&A Study: A Travelers Special Report.

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Large transactions signal the critical need for upgrades in drug portfolios, next generation manufacturing capabilities and broader growth strategies. And AI applications in clinical trial planning and patient data management will likely inspire even more M&A interest.

With cultural and operational challenges, disruptions ranked as the top future concerns for life sciences executives, as well as the ongoing challenges presented by fragmented supply chains, geopolitical uncertainty, it's really imperative for companies going through M&A to have strong risk mitigation practices and appropriate insurance solutions in place. Despite the challenges, 87% of life sciences risk management professionals report that the overall impact of M&As has been positive, with expansion to new markets and reaching new customers topping the reasons for this positive assessment.

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Joan?

JOAN WOODWARD: Thanks so much. I really appreciate it. Those were very, very informational. But I guess I'm wondering, why now? What's driving all this M&A activity in these sectors? So maybe, James, you first. What is the catalyst? What are we looking for that's driving this M&A? So maybe tech with you, James. And then Jen, go ahead on life sciences. Thank you.

JAMES STANDISH: Yeah. Sure, Joan. And as we touched on just a little bit in the presentation, the latest wave of innovation in technology's sector is really, that's what's driving the M&A growth. So we've seen rapid advancements in our AI, artificial intelligence. That's really at the forefront. And then with surging demand for cutting-edge semiconductor chips and data center infrastructure, it's really fueling intense investment and competition.

So, Jen, how about life sciences?

JEN AMPULSKI: Well, life sciences companies are really pursuing that strategic growth through the access to cutting-edge research and technologies, including, as I mentioned earlier, personalized medicine and AI-driven drug discovery. Rising research and development costs and the regulatory hurdles are really prompting larger M&A deals to achieve those economies of scale and streamline operations. And pharma companies, in particular, are consolidating to enhance drug portfolios and achieve operational efficiencies, which will then allow them to reduce the time to get their products to market.

JOAN WOODWARD: OK, great. So let's talk about geography. So, are there different places or maybe regional hubs, for example, James, where this is happening for tech?

JAMES STANDISH: Yeah, Joan. So not surprisingly, the West Coast has historically had prominence here. That's about a quarter of the annual deal volume.

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Slide: U.S. Technology M&A Activity. A map of the continental United States shows colored dots over different regions. A large red dot on the west is labeled West Coast, two large dots in the midwest and northeast are labeled New England and the Great Lakes, a smaller blue dot in the east is labeled Mid-Atlantic, a yet smaller dark blue dot in the east is labeled Washington D.C. and Virginia, and the smallest dot, a yellow dot in the east, is labeled New York. Text: Mastering M&A. 2025 M&A Study: A Travelers Special Report.

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Mid-Atlantic is actually not far behind, at about 20%. New York is a natural home for tech firms, given the size and breadth of the market there and the networks that exist within the city. D.C., Virginia, they appeal to the cyber companies, cybersecurity companies that are seeking the proximity to the federal agencies.

And then New England and the Great Lakes have both seen double digit growth in 2024, supported by the strong graduate talent that exists in that region and the prominent research institutions, along with the venture capitalist funding that naturally just floods to these areas as a result.

JOAN WOODWARD: Yeah. No, that makes sense, for sure. The research hubs and the bright students coming out of Ph.D. programs and others.

Jen, what about you? Where is it regionally happening in the life sciences space?

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Slide: U.S. Life Sciences M&A Activity. The map shifts to have a large gray dot in the west, labeled West Coast, a large blue dot in the east, labeled New England, and two smaller dots, in green in the Midwest and yellow in the East, labeled Great Lakes and North Carolina's Research Triangle, respectively. Text: Mastering M&A. 2025 M&A Study: A Travelers Special Report.

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JEN AMPULSKI: We're also seeing a good mix across the country, with a few regional highlights very similar to tech. The West Coast typically accounts for the highest volume of life sciences M&As. Since 2023, the shift toward larger deals has led over half of total U.S. M&A deal value to concentrate in that region.

New England saw nearly $50 billion in M&As in 2024, ranking second behind the West Coast at over 77 billion. But North Carolina's Research Triangle was the only region to see growth in 2024 deal count. And then last but not least, the Great Lakes region maintains a consistent level of activity each year.

JOAN WOODWARD: Yeah. OK. Very good.

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And so what are you hearing? Obviously, in the survey, what are you hearing from risk professionals in tech and life sciences who've been through this M&A? I mean, so they do the M&A, and now what? What is their experience, and what's keeping them maybe up at night?

JAMES STANDISH: Yeah. So within tech, Joan, what we're seeing, amongst the concerns keeping these professionals up at night, is really the employee satisfaction and the retention. People first, right? The data security, the IP concerns, intellectual property disputes, IT integration challenges, such as information loss or inefficiency, some of the hidden costs also with restructuring, and, of course, the contending with the possible redundancies as a result of M&A.

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Slide: Risk Professional Concerns: Technology. Text: Key talent attrition and dissatisfaction. Data breaches during system integration. Intellectual property disputes. Loss of critical information or inefficiencies. Costs associated with restructuring. Possible redundancies. Mastering M&A. 2025 M&A Study: A Travelers Special Report.

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JOAN WOODWARD: All right, Jen?

JEN AMPULSKI: Well, in life sciences, the risk professionals are primarily concerned with those operational disruptions and the supply chain inconsistencies I mentioned earlier, potential delays in the expected benefits of the merger.

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Slide: Risk Professional Concerns: Life Sciences. Text: Operational and supply chain disruptions. Potential delays in expected merger benefits. Technology, systems or process integration issues. Organizational culture differences and talent retention. Systems upgrades needed to keep pace with technological advancements. Mastering M&A. 2025 M&A Study: A Travelers Special Report.

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And then there's always the technology, the systems, the process integration issues. And then that organizational culture differences and talent retention is huge in life sciences, and then lastly, systems upgrades that may need to keep pace with technological advancements.

JOAN WOODWARD: OK. That certainly makes sense.

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The speakers' videos return.

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So what if I'm a risk manager? I'm a risk decision-maker in tech and life sciences. What does all this activity tell us about those people in those positions?

JAMES STANDISH: So with the tech firms, as high value acquisitions, especially for the software and semiconductors become more common, obviously, the diligent risk mitigation is really essential. And pre-closing, companies really have to evaluate the financial exposure, the regulatory compliance, again, as we mentioned earlier, the cybersecurity vulnerabilities and the integration challenges. So as part of their planning, risk professionals really should look to modeling scenarios to help them prepare for those impacts of the geopolitical shifts and regulatory changes.

Also, in tech, you could have multiple layers of regulation, creating added complexity for firms. I mean, you may not only have to deal with local and national, or even international regulations, but some firms cross over many industries into areas such as fintech or even governmental technology, which increases the number of regulations that they need to track and adapt to.

And again, with some of the legislation, such as the California AI Transparency Act, outlining disclosures and other requirements, companies have to be diligent in their compliance. There are also frameworks, like the National Institute of Standards and Technologies, or NIST, and the AI Risk Management Framework can help us, can help them navigate this complex risk environment.

And going back to what we heard from the risk professionals in our survey, they responded to the potential of M&A risk, some of which we just reviewed, by implementing new tools and new processes, changing suppliers and modifying insurance coverage. The risk management professionals can also make sure that insurance solutions are rightsized, as we mentioned before, for the merger or acquired company, and that it complements a strong risk management plan that can be crucial for positioning firms for long-term success and stability.

So despite the challenges that may accompany M&A, 88% of the technology risk management professionals we surveyed reported that the overall impact was positive.

JOAN WOODWARD: Oh, that's wonderful, right? I mean, was that a surprise to you? Eighty-eight percent, that seems pretty high.

JAMES STANDISH: Nothing surprises us, Joan, in the insurance business.

JOAN WOODWARD: OK. All right. Jen, what about in life sciences?

JEN AMPULSKI: So similar to tech, those life sciences risk decision-makers are tasked with managing the due diligence and assessing how to best integrate the company's cultural and operational processes. What adds greater complexity to life sciences M&A is that these companies are highly regulated, including both the Food and Drug Administration oversight and, in certain cases, HIPAA compliance. So doing an audit of the acquired and the acquiring companies to make sure that they're compatible and that they don't have any holes in their systems and their risk management strategies and insurance coverage is crucial.

So a great example of what this could mean for a life sciences company is there's required reporting of adverse events associated with the company's medical devices and pharmaceuticals, and they have to report that to FDA. So are you looking at an apples-to-apples intake of adverse events, or is one company only taking direct feedback from sales reps and the other is collecting from sales reps, patients and doctors in the aggregate? If the two companies are using different measurements, that could be problematic and expose the company to claims or potential litigation, for example.

Now, looking at whether the systems can talk to each other for operational efficiency and business continuity, but also cybersecurity to prevent any gaps that could lead to a data breach, to the extent either company has a process that's working better, risk professionals should evaluate if that process could be implemented across the board post-M&A. And even with the challenges that these deals can present, the overall impact of M&As for life sciences has been positive as well according to the 87% of risk professionals we surveyed.

JOAN WOODWARD: OK. Well, that's good, too. So what are the watch-outs? What are the concerns? Say if you're an agent or a broker, what are you thinking about when supporting a tech or life sciences customer who is going through all of this? James? You want to go first?

JAMES STANDISH: Yeah. So, Joan, I think that the earlier that agents and brokers can get involved in the process, the better. And by having a proactive consultation, they can really seek to understand the nuances of the transaction and how that can influence insurance decisions, such as renewals or coverage updates.

We mentioned a statistic earlier that over 30% of our survey respondents said that they changed carriers or brokers, and that number is 38% to be precise. So there is potential for a retention or a new business opportunity to emerge for our agents and brokers.

If merging companies will have different footprints with different physical locations in new areas, it's important to assess new property or new potential global exposures that might need to be addressed. And of course, each deal will have its own unique set of circumstances and new exposures, potentially, that come with expansion into new markets, new manufacturing operations, contract relationships. All these things generate their own risks and opportunities.

So agents and brokers who follow any changes to the regulatory environment and market fluctuations can help position themselves as a consultative partner equipped to support their customers through the process.

JOAN WOODWARD: OK. Thank you. And Jen?

JEN AMPULSKI: Yeah, I agree with James's comment, that whenever possible, agents and brokers really should get involved as early in the process as they can to potentially help minimize disruption risks and get ahead of any insurance gaps. When we surveyed life sciences risk professionals, 36% said that they changed insurance coverage, and 34% changed their carrier or their broker. So if the agent or broker can walk alongside their client during due diligence, they can help offer tailored solutions that fit the post-M&A risk management needs of the companies, and then potentially retain or foster that relationship.

And as I mentioned earlier, the life sciences industry, being that it's so highly regulated with FDA approval and protection of IP, including patent protection being critical for a company's survival in the market, brokers and agents who understand that life sciences regulatory environment, and specifically how it relates to patient safety and product efficacy, will be better equipped to support their clients through that merger or acquisition.

JOAN WOODWARD: OK. And Jen, I want you to talk about something very, very timely, which is going on now called the “patent cliff” in life sciences. It's creating a unique M&A environment. And tell us about that. That's really interesting, what this is and how companies are taking advantage of it.

JEN AMPULSKI: Yeah. So over the next few years, a large set of pharmaceutical patents are set to expire. And those are the brand name products that we all know and see on TV. When they expire, it's going to cause something known as the “patent cliff.” While the patents are in force, the company that owns that patent is at an advantage in terms of competition, exclusivity and associated financial results.

But once those patents expire, generic and biosimilar drugs, to use an example, can be produced by competitors, and that will drive down the original company's financial benefits and potentially limit their ability to fund new research and drug discovery. So acquisitions can help offset expiring patents by securing new protected drugs or absorbing those producers of generic and biosimilar drugs.

JOAN WOODWARD: OK. There's a lot to dissect there. So, we have-- I'm going to pull in the audience now. We have a number of audience questions coming in around all this. And it's just, one, it's complex to understand. Two, unless you're in the weeds on it, like some of our agent and brokers specialize in this, it's not always apparent what's going on in these sectors.

So, OK, first audience question coming in. I'm going to go to James I think on this. Is there a checklist that you would or maybe could share on any M&A for clients or insurance professionals?

JAMES STANDISH: Yeah, Joan. So again, through the survey of the risk professionals who've recently been through the process, we asked for their ideas. And we really feel like this is pragmatic and battle-tested advice from the front line.

And so the digital playbook that we put together for risk professionals brings together their successes and struggles, along with some of the insights for how to navigate things, like cultural challenges and integrations, pain points, like data consolidation, different management, communication styles and workforce turnover.

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Jen touched on it earlier, but one key insight example is starting the cultural integration planning as early as possible. And so you can find this valuable resource on our website. And we can drop the link right in the chat, which--

JOAN WOODWARD: Yeah, we'll do that.

JAMES STANDISH: In the chat box.

JOAN WOODWARD: Yeah. OK. Thank you for that.

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Were you finished, James? I'm sorry.

JAMES STANDISH: Well, yeah. Yeah, please, go ahead.

JOAN WOODWARD: OK. I have another question coming in. Obviously, this is going to be for Jen on life sciences. Here's a question. Do newly acquired life sciences companies pose more product liability risk? And if so-- if yes, why?

JEN AMPULSKI: Yeah, so as a former product liability lawyer and then somebody who's steeped in products liability in life sciences, companies that manufacture any product, liability risks are an issue when you're acquiring or divesting or remaining in the status quo. Product liability is a crucial consideration in life sciences, where safeguarding the innovation and patient health is a top priority.

So, we've heard throughout today's session on the importance of comprehensive M&A due diligence that considers risk management strategies and product liability insurance to help life sciences companies prepare for any issues that may arise. These potential product liability issues can appear years after a product is made. So always preserving records-- that might be the design, the manufacturing, the warnings-- is essential, especially as you're going through the M&A process. And I've seen it happen where companies haven't, and it's caused problems later on.

So, how can life sciences companies mitigate product liability risk? Well, obviously you're reviewing your design decisions. You're checking it against today's standards. You're comparing your designs to competitors. And that's very common in the life sciences industry, especially when there are five 10-K products that are based on predicate products that exist already out in the marketplace. You want to assess your critical quality control records, and then determine if those warning labels, the manuals, any videos that you might have on how a product is to be used, so all are-- those things adhering to today's best practices.

And then evaluate how you're addressing warranty issues, the complaints, the adverse events and then also social media. And make use of all available legal protections through contractual risk transfer with suppliers and customers. Those contracts are key.

JOAN WOODWARD: OK. We're glad you were a lawyer in your previous life. You have quite the experience. So thank you for being at Travelers and leading this team.
I noticed a lot of questions coming in around private equity, and I know that our friends of agent and brokers out there, private equity is very, very active in the agent and broker community, right, with lots of acquisitions happening in the last five years or so. So this viewer is asking, are there any noticeable-- maybe, James, this is for you. Are there any noticeable trends with the directions PE firms are taking with these acquisitions in tech and life sciences?

JAMES STANDISH: Yeah, sure, Joan. So in 2021, we saw the most activity, but that's providing to be a post-pandemic surge. Say that 10 times fast. As many firms came out of COVID ready to invest, capital availability really drove the 2021 boom. From '22 to '24, those represent more of a normalization period, as a lot of firms were thinking about the outcome of the election, the regulatory concerns that might emerge with a change in administration.

Certainly, we've seen the long-term strategic planning ebb and flow with the various changes and the uncertainty that that can provide. And while deal flow for PE firms has been down, especially compared to the high of 2021, the private equity hold periods are on the rise. And so within our private equity practice here at Travelers, we're seeing a lot of the PE firms that are taking more time to focus on risk management across their portfolios. They want to understand which of their companies have the best risk practices and why. And we're also starting to see PE firms that are investing in more resources dedicated to their portfolio company's risk management.

And so to sum that up, really viewing sophisticated risk management is a key value driver for these private equity firms.

JOAN WOODWARD: OK. That makes sense, right? Well, listen, I think it's incredibly important that our viewers go look at the M&A study we did with PitchBook, again, back in May. We also did a webinar back at that time on the overall M&A activity. And now we're going to do another deep dive coming up into manufacturing in the next month here.

So listen, thank you so very much for joining us. I know you're incredibly busy, both James and Jen, and I just appreciate your time coming on. And this will be available for replay very shortly in your inboxes if you missed it or you want to send it to a friend. So, I have a few closing remarks, but James and Jen, thank you so much for your expertise, your leadership in our industry. You really are both leaders in life sciences and tech, and you're recognized as that. So I just appreciate your thought leadership here with me today.

JEN AMPULSKI: Thanks for having us, Joan.

JAMES STANDISH: Thanks, Joan.

JOAN WOODWARD: OK. So now, folks, of course, there's a link in the chat about the survey for today's program.

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Slide: Wednesdays with Woodward (registered trademark) Webinar Series. Text: Take Our Survey. Link in chat.

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Please let us know what you thought about the session today, or speakers and the topic.

And in case you haven't heard, we do have a brand-new initiative at the Travelers Institute, which we just launched yesterday.

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Slide: Risk. Regulation. Resilience. Responsibility. (Service mark.) Logos: Travelers Institute (registered trademark). Travelers. Text: H.T.T.P.S. colon slash slash institute dot travelers dot com slash insurance hyphen availability hyphen affordability.

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It's a multiyear effort exploring how shifting environmental, economic and societal patterns are impacting the availability and the affordability of insurance across certain marketplaces. We labeled it. We call it Risk. Regulation. Resilience. Responsibility. And the initiative is really going to focus on how policymakers, insurance agents and brokers, insurance carriers and consumers can address these challenges within the insurance marketplace.

So through a series of educational events and webinars, our Risk. Regulation. Resilience. Responsibility. will explore how shifting environmental, economic and societal patterns are impacting the availability and affordability. So, please join us in these conversations. We hope to have actionable insights for how these policymakers, regulators and, again, us, the insurance carriers, the agents and brokers can navigate these risks and focus on solutions.

So we kicked this off yesterday in St. Paul. And we are going to be in several cities over the next six or 12 months. Just to give you a few, we'll be in Tulsa, Oklahoma, if you have any friends or neighbors there in the insurance industry, October 20; in Atlanta, October 28; at Dallas at the Bush Presidential Library-- if you've not been there, please join us-- on December 3. So if you're in any of those locations, we also have more details in the chat.

So in addition to our in-person events, we have a very, very busy fall lineup for our Wednesdays webinars. 

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Slide: Wednesdays with Woodward (registered trademark) Webinar Series. Text: Upcoming Webinars : Oct 8: Global Cyber Resilience: Lessons from Former White House and C.I.S.A. Leader Jeff Greene. Oct 15: Mastering M&A: Risk Management in Manufacturing Transitions. Oct 29: Strategic Connections: Short-Term Negotiation Tactics for Long-Term Success. Register: travelers institute.org.

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October is Cybersecurity Awareness Month, and October 8 we're going to be joined by a former White House cybersecurity leader, Jeff Greene, for an insider's view of today's evolving cyberthreat landscape and what he saw at his time at the White House.

October is also National Manufacturing Month, and October 15, we're going to have part 3 of our M&A webinar series, this time looking specifically at the manufacturing sector. So if you ever wondered how you can negotiate effectively without compromising your long-term relationships, then I hope you're going to join me on October 29, when I sit down with expert Dr. John Burroughs in a mini masterclass in negotiation strategy.

So of course, you can also listen to our webinar series on the go with our new podcast, the Travelers Risk & Resilience podcast, now available on Apple, Spotify and Google.

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Slide: Travelers Institute Risk and Resilience. An image of a podcast microphone. Logos: Travelers Institute (registered trademark), Travelers.

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And that's a wrap, folks. Thanks so much for joining us today. We really appreciate your engagement.

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Slide: Wednesdays with Woodward (registered trademark) Webinar Series. Icons for Watch, travelers institute.org, Linked In, Connect, Joan Kois Woodward, and Listen, Wherever you get your pods.

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Do fill out the survey. I personally read every single comment. Take care and be well, my friends.