Broker M&A deals fall in first half
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Mergers and acquisitions among North American insurance agents and brokers fell to 359 in the first half of the year, down 24% from the same period last year, as higher interest rates increased the cost of deals for many acquirers, according to Optis Partners LLC.
The total number of deals was the lowest first-half tally since 2020 but equaled the five-year average, the Chicago-based investment banking and financial consulting firm said in a report Monday.
The drop followed an 8% decrease in deals in the second half of 2022.
Optis Partners tracks M&As involving U.S. and Canadian property/casualty and employee benefits brokerages, third-party administrators and related managing general agent operations, and agencies focused on life insurance and related financial services.
“The drop-off in deal count continues as we move through 2023, which isn’t surprising anyone if for no other reason than the cost of capital has increased so much,” Steve Germundson, a partner at Optis Partners, said in a statement.
Hub International Ltd. was the most active buyer in the first half, announcing 29 deals, followed by BroadStreet Partners Inc. with 26. Inszone Insurance Services LLC, World Insurance Associates and Patriot Growth Insurance Services LLC filled out the top five most active buyers with 22, 17 and 16 deals, respectively.
Among previously most active buyers, PCF Insurance Services, Acrisure LLC and High Street Insurance Partners Inc. sharply reduced their deal counts, down 98%, 74% and 57%, respectively, and collectively accounted for more than 75% in the net decrease in transactions, the report said.
Despite the decrease in deals, valuations for better-performing companies remained strong, Mr. Germundson said.
“If interest rates continue to rise as expected, there may be more buyers forced to the sidelines, creating opportunities for those with stronger balance sheets,” he said.
