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Broker M&As hit record pace


Mergers and acquisitions among insurance brokers and agents continued to surge in the third quarter pushing total deals to date in 2021 to 553, up 13% compared with the same period last year, according to the latest report from Optis Partners LLC.

The Chicago-based investment banking and financial consulting firm said all-time-high valuations for brokerages, aging owners and an expected rise in capital gains tax rates are helping drive the rise in deals.

In the third quarter 213 transactions were announced, which is 27% higher than the average for the period over the previous four years, the report said.

Private equity-backed buyers and buyers with substantial outside financial support remain the most active buyers, responsible for 76% of purchases in the third quarter.

Acrisure LLC, which has grown rapidly through acquisitions over the past several years, is again by far the most active buyer in 2021, with 79 transactions announced year-to-date (see chart).

Significant deals in the third quarter included insurtech Newfront Insurance Inc.’s purchase of ABD Insurance & Financial Services Inc., which had $112.5 million in 2020 brokerage revenue, according to Business Insurance’s most recent ranking, and Alera Group’s acquisition of Propel Insurance, which reported $107.6 million in brokerage revenue.

The hot pace of deals is expected to continue.

“The fourth-quarter 2021 may not reach the massive volume of deals done in the last quarter of 2020, but it will likely be close,” said Dan Menzer, a partner at Optis. “A number of active buyers have told us one of their biggest challenges is lining up legal and due-diligence providers for the remainder of the year.”