If you can’t eat them, join them

Marc Sidwell
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TIME for a new direction: that is the conclusion of insurance M&A specialist Resolution, which announced plans yesterday to give up on its strategy of aggressive acquisitions and focus on becoming “an entirely conventional company”.

In Silicon Valley, they call this a pivot. It’s something of a badge of pride among the Californian tech start-up set, where strategic flexibility is seen as the hallmark of firms that listen to their customers and follow where the numbers lead them.

In the case of Resolution, it seems more the product of having tried every other option first. After the market for insurance acquisitions dried up, Resolution has faced shareholder resentment over the cancellation of a planned £250m payback in July, the looming threat of regulators running its unconventional structure out of the FTSE 100 and sceptical reactions to previous tentative plans to split part of its business. As a result, there were few places left to turn.

Still, the true test of a pivot isn’t how gracefully it is executed but whether a company can adjust itself to the new approach. The market was initially hopeful, or at least grateful for a settled direction, but as the day wore on and the share price fell back somewhat, it seemed that not everyone was convinced of the profit to be made as Resolution sees the journey through.