Around 90% of mergers don’t work out because financial incentives are put ahead of integration of companies’ cultures.
That is according to Daniel Zurbruegg, CEO of BFI Infinity, which was formed as a result BFI Wealth Management and Swiss Infinity merging in December 2016.
'If you are unable to merge the culture of two companies, it would be really hard to make it work. Because, at the end of the day, it is not so much about the process or strategic focus, but about people coming together and functioning as a team.
'People often talk about financial synergies of mergers and in our particular case it wasn’t of the most importance.'
An important step, Zurbruegg said, was that the companies' leaders shared a similar vision from the outset, which made the merger process much smoother.
‘The owner of BFI, Frank Suess, and myself didn’t have our first meeting to discuss the merger in our offices, but went mountain biking instead. For two hours we talked about the strategies of our two companies and came to the conclusion that they were a great fit.’
Both companies had initial focus on US clients, which had grown after they started frequently participating in US-based conferences.
BFI Wealth Management started out as an insurance solutions provider and later grew its UHNW client base.
Almost at the same time Swiss Infinity branched out from its global peer Alpine Atlantic Global Asset Management and started expanding its US-focused wealth management business.
‘BFI Wealth Management had a broader range of strategies from the beginning and now, by integrating the global macro strategy of Swiss Infinity into that line-up, we have a very attractive offering for clients.’
Zurbruegg said US clients expect Swiss portfolios to provide international diversification, which is why BFI Infinity focuses on non-US assets.
'The US equity market is trading at peak premiums right now, if you compare it to 40-50 years ago. I think this is the third time in history when we have an extreme valuation gap between the US and international markets.'
The asset manager says such an allocation makes sense for two reasons: valuations outside of the US look more attractive, while the US dollar is trading at its turning point.
‘After hitting the all-time lows in 2011, the US dollar has rallied strongly - on and off - over the last couple of years. But let’s not forget that we are still far below the peak in the 80s and 90s, or early 2000s.’
‘As good as the last five years were in terms of the recovery of the US dollar, the next year can be a very different story. That’s why now is an ideal point in time for US clients to consider selling some US dollars and use that money to go into internationally diversified investments.’