Risk management and workers' compensation have become critical these days for companies of all sizes and industries. It's also become a key component of many M&A deals. Risk management in general, according to Aclaimant Co-Founder and Board Member Michael Schultz, has been either misunderstood or at times underserved. The reason, he says, is it's been predominantly an operational component.
"It's never been viewed, in our opinion, at times to be able to convert from a cost center to a profit center," he says. "And in recognition of all the things that are taking place within society, you can only imagine that risk is omnipresent — it's not limited to just workers' comp, it's just a general state of mind that we feel up until now has not been given its proper place, even in the C-suite."
So, the genesis of Aclaimant, Schultz says, was a byproduct of his experience in the world of third-party administration for workers' comp claims administration and adjudication. He says the underlying theme behind all of what the company does is not only from a fiduciary standpoint and a due diligence standpoint, but it offers an opportunity to understand the culture of an organization in terms of whether or not they've made the decision to be passive when it comes to risk management or they're active when it comes to risk management.
"The differential between those two is so far removed from the reality of an M&A deal when you're first doing the so-called analysis behind it," he says. "What you come to find out if you're really inside baseball — going through the weeds, checking things out the way you could and should — you'll go deep and you'll find out with respect to workers' compensation where you have categories like reserves; categories like IBNR, which is incurred but not reported, which is the prospective potential cost of an ongoing claim — and your ability to fund for that, your ability to create both collateral requirements and more importantly collateral relief opens up the possibility, from a financial standpoint, the economic value that I think an organization really stands by both currently and prospectively."
Recently Aclaimant raised about $15 million through a combination of debt and Series B venture funding, which the company expects to use for a variety of growth-oriented initiatives. Schultz says, to that end, talent is everything.
"If you don't have talented people, you don't have the wherewithal to put people in the position to grow personally and professionally, it really doesn't matter what your organization stands for," he says. "That is what it needs to stand for. And then what you can take advantage of is listening to your audience, listening to your end user and understanding, from the end user experience, what it is that they consider to be most important to them — what are their priorities, what's their level of urgency? But when you take it all back and peel it, you have to ask yourself: is what we're doing making a difference in the lives and livelihoods of the people that we're working with or is it just designed to be different?"
Schultz spoke at the Chicago Smart Business Dealmakers Conference about his company, dealing with risk in M&A transactions, and how his company is applying its recent $15 million raise. Hit play to catch the full conversation.
Michael Schultz was the recipient of a 2021 Smart Business Dealmakers Dealmaker of the Year Award, which recognizes achievement in M&A in the various markets served by the Dealmakers Conference. If you would like to nominate someone, contact [email protected].