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There were 1,034 mergers and acquisitions among insurance agents and brokers in 2021, up 30% compared with 2020, according to Optis Partners LLC.
Well-funded investors continue to be attracted to the sector, and brokerage owners are taking advantage of high valuations for their companies while capital gains tax rates are low, the Chicago-based investment banking and financial consultancy said in a report released Tuesday.
“If 2020 was a boom year for mergers and acquisitions, 2021 was a virtual explosion,” Steve Germundson, partner at Optis Partners, said in a statement.
In the fourth quarter, 384 M&A deals involving U.S. and Canadian brokers and agents were announced, a 26% increase over the same period in 2020 and a 32% increase over the third quarter.
“The fourth quarter rush to close deals by year-end clearly taxed the sellers’ deal teams, legal counsel and due-diligence providers. We expect a bit of a first-quarter respite before the cycle picks up again,” Mr. Germundson said.
Grand Rapids, Michigan-based Acrisure LLC was again the most active buyer, with 122 transactions in 2021, but for the first time in several years another buyer, Woodlands Hills, California-based PCF Insurance Services LLC, came close with 99 transactions completed. Chicago-based Hub International Ltd. was the third most active buyer with 61 acquisitions, followed by Traverse City, Michigan-based High Street Insurance Partners Inc. with 56 and Lake Mary, Florida-based AssuredPartners Inc. with 51.
Private equity-backed buyers and buyers with substantial outside financial support again dominated brokerage M&As in 2021, accounting for 76% of total deals.