Investment banking and financial firm OPTIS Partners said the count of agency mergers and acquisitions during the first half of the year was 359, down 24% from 475 during the same time last year.
“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,” said Steve Germundson, a partner at OPTIS Partners, which specializes in the insurance industry.
The first-half total was the lowest since 2020 but still equal to the average over the last five years, according to the firm’s M&A database.
Hub International and BroadStreet Partners recorded the most transactions in the first half with 29 and 26 deals, respectively. Inszone, World, and Patriot Growth followed with 22, 17, and 16 deals, respectively.
PCF, Acrisure, and Highstreet Partners – historically among the most active buyers – cooled in H1, accounting for over 75% of the net decrease in the number of completed transactions.
“We’re seeing the effects of relative inactivity of some previously very active buyers, yet others are successfully completing more deals,” said OPTIS managing partner Timothy J. Cunningham.
Active firms that picked up the deal pace in H1 2023 versus H1 2022 are World Insurance Associates (up 112%), Risk Strategies (86% higher), and Broadstreet Partners (up 62%).
The report breaks down American and Canadian buyers into four groups: private equity-backed/hybrid brokers, privately held brokers, publicly held brokers, and all others. The private equity-backed/hybrid group of buyers maintained their dominance in the buying spree with 69% of all transactions for the quarter, while transactions between private parties accounted for 22%. Publicly held brokers and all others accounted for just 9% of deals.
For sellers, the report breaks them down into four types: agencies property-and-casualty insurance agencies, agencies offering both P&C and employee benefits, employee benefits agencies, and all other sellers (life/financial services, consulting and other businesses associated with insurance distribution).
P&C sellers accounted for 60% of the total, or 214 transactions. Sales of benefits agencies totaled 45, and there were 47 sales of P&C/benefits agencies. All other sellers accounted for 53 sales.
“The nine-quarter deal bubble that began in Q4 2020 is clearly in the rear-view mirror,” Germundson said. “But we’re continuing to see interest in the buy-side from a large number of firms, and there is evidence that valuations for better firms remain strong. 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.”
Topics Mergers & Acquisitions Trends
Was this article valuable?
Here are more articles you may enjoy.
Heritage Insurance Reports Third Straight Quarter of Profit After Shedding Policies 
Could Georgia Be Next With Major Tort Reform? Kemp Calls for Limits 
Finance Firms’ Return-to-Office Crackdown Could Backfire: Deloitte 
Kellogg’s ‘Woke’ Workplace Diversity Programs Are Illegal, Group Claims 
