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The number of insurance broker mergers and acquisitions over the first nine months of 2016 rose to 344 from 338 in 2015, according to Optis Partners L.L.C.
The Chicago-based investment banking firm’s quarterly report, released Monday, also said 108 deals were announced for the third quarter, up from 104 in 2015.
The report breaks down buyers into five groups: private-equity backed brokers, privately held brokers, publicly held brokers, banks and all others.
Private-equity-backed firms continue to drive the M&A market, Optis said, accounting for more than half of all reported transactions over the first three quarters. One firm, Caledonia, Michigan-based Acrisure L.L.C., made 44 acquisitions in the nine-month period.
Overall, Optis said, there’s been a slight increase in the privately owned broker group and more slippage in the public broker activity levels in 2016.
“Achieving organic growth is challenging, so acquisitions are a key growth strategy for many firms, especially those backed by private-equity capital,” Timothy J. Cunningham, managing director of Optis, said in a statement. “Perhaps surprisingly, bank acquisitions are up almost 50% from last year.”
Property/casualty agencies continue to be the focus of acquisitions, accounting for 53% of the deals in the year to date.
“If you are a potential seller, consider acting sooner than later while the irons are hot and the pricing is favorable,” said Optis partner Daniel P. Menzer. “If you are a buyer, make sure you are doing your homework on the potential seller and have fully evaluated their risk and growth potential.”
Despite the furious pace of M&A activity, most agency owners aren’t interested in buying or selling at any given point. Mr. Menzer advised these firms to ignore hyperbole and focus on growing their agencies and improving their metrics every day.
Private equity-backed buyers again dominated the insurance brokerage merger and acquisition landscape during the first half of 2016, but their share declined slightly amid increased activity by privately held and bank-owned brokers.