In 2014, there were 357 announced agent-broker M&A transactions, an increase of more than 30% from the previous year and more than 10% higher than in 2012. Notwithstanding an extremely vibrant buy-side community, is it logical to assume that sellers are primarily motivated to capitalize on the value of one of their portfolio's largest assets and take their proverbial chips off the table at top-of-the-market values?
The answer is a quiet and subtle no. Lost in all of the hoopla over the extremely active M&A environment is the fact that the great majority of sell-side transactions occur due to many firms' inability to perpetuate internally.
Frankly, the demographics are not good. The agency population is aging. Not only are the equity owners reaching that magical exit-retirement age and selling to acquirers, so too are a significant number of the other production, management and support staff reaching their retirement ages. Baby boomers abound, and the industry has done a woefully inadequate job of creating the environment to attract millennials and Generation X-ers. And that was during the down period of the economy post 2008, when many of those millennials and Gen X-ers struggled to find gainful employment on a meaningful career path.
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