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Insurance sector sees robust M&A activity: MarshBerry

Posted On: Jul. 26, 2019 11:40 AM CST


There have been 280 announced transactions within the insurance distribution space through June, compared with 283 announced transactions over the same time period in 2018, according to a report from analysts Marsh Berry Capital Inc. released Thursday.

Despite the small decline in deal count, the firm maintained its first-quarter forecast that deal total could eclipse 600 for the full year 2019.

Transaction prices crept up through the second quarter, with the average transaction priced on a multiple of earnings before interest, taxes, depreciation and amortization, or EBITDA, basis of 10.94 times including base purchase price, realistic earnout potential and maximum deal value potential, compared to the first quarter 2019 average transaction total potential deal value of 10.86 times EBITDA, Woodmere, Ohio-based MarshBerry said.

Additional data showed these values have been rising since 2016.

Ample capital continues to buoy the sector together with expanding buy-side demand, the firm said in the report. “With a continued influx of capital and new buyers into the insurance distribution space, there is no indication that the demand from buyers, nor the transaction values, will be decreasing any time soon.”

Private equity-backed brokers, independent brokers and public brokers dominate the buying ranks, report data showed.

Patriot Growth Insurance Services LLC led buyers with 23 transactions, 8.2% of the year-to-date total, followed by Hub International Ltd. with 19 transactions, 6.8% of total; AssuredPartners Inc. with 18 transactions, 6.4% of total; BroadStreet Partners Inc., with 17 transactions, 6.1% of total; and Arthur J. Gallagher & Co., the only public broker to break into the top five, with 14 transactions, 5.0% of total.