Agency mergers-and-acquisitions activity has come roaring back after plummeting during the economic crisis of 2008-2009. In fact, 2011 was the second-most-active year for M&A in the insurance industry's history—only 16 deals short of the all-time record of 301 deals announced in 2008. If current trends hold, 2012 may set a new record for deals made.
Most of the past decade reflected a "seller's market" for agencies, in which an abundance of buyers chased a relatively small number of sellers and pushed valuations up to extraordinary heights—particularly in 2007-2008. Then, for a short time in 2009 after the economy stalled, both buyers and sellers backed away from M&A, retreating due to economic uncertainty.
Perhaps the biggest story of 2012 is that for the first time in memory we seem to be close to a state of equilibrium between buyers and sellers. Buyer demand has returned with a vengeance, as major brokers are looking to supplement their own relatively weak organic growth; and as upstarts such as Marsh & McLennan Agency and Assured Partners are trying to rapidly build critical mass.
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