Consolidation within the agency/brokerage community was active last year, with over 250 deals taking place--beating out 2005 by a long shot. If the recent move by USI Holdings is any indication, M&A activity in 2007 could be equally frenetic, thanks in part to growing interest from private equity firms flush with cash.
There are three primary buyers of agencies and brokerage firms today cited by M&A experts: larger insurance brokerages, banks and private equity investors. Of the three, brokers remain the most active, accounting for the majority of deals, while bank appetite for acquisition has waned somewhat.
However, with private equity players reportedly looking for investments in industries under distress, new M&A opportunities are being presented to brokers having difficulty achieving organic growth in a softening insurance market, according to analysts commenting on the $1.4 billion USI deal between the Briarcliff Manor, N.Y.-based insurance brokerage firm and the private equity firm GS Capital (see NU, Jan. 22/29, page 6).
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