Insurance M&A activity continues at record pace
The deal count continues to rise in the insurance distribution M&A market, says Marshberry.
The deal count continues to rise in the insurance distribution merger and acquisition (M&A) market.
Year-to-date (YTD) through June 2019, there were 280 announced transactions within the space, according to Marshberry’s “M&A Trends 2019” report. That total is down marginally from the 283 transactions announced during the same period in 2018.
“While the current total count is slightly lower than it was YTD in June 2018, the YTD total tends to lag behind current activity due to retroactive announcements, which suggests that actual transaction activity is still trending higher than a record-setting 2018,” says Phil Trem, executive vice president at MarshBerry, and author of the report.
Within the past 14 years, Q1 and Q2 of 2017 experienced the most M&A activity, with 295 announced deals, whereas the first half of 2013 saw the most inactivity with just 84 transactions. Since that time, the number of publicized M&A deals has steadily increased.
“After analyzing the deal count through the first quarter of 2019, we proposed the possibility of 2019 transactions eclipsing 600, and several months later the market still suggests that this may be within reach,” he explains.
According to Marshberry, the average transaction in Q2 2019 was priced at 10.94 times the earnings before interest, taxes, depreciation and amortization (EBITDA), including base purchase price, realistic earnout potential and maximum deal value potential, while the average transaction total potential deal value in the first quarter was 10.86 times EBITDA.
Buyer profile
Forty-four new buyers accounted for 76 of the deals in YTD 2019. Of these new buyers, six are private equity-backed brokers. “With what seems to be an ever-increasing acquisitive appetite for buyers and consistent addition of new investors, the M&A market is as active and competitive as ever,” Trem says, “which is increasing value for those that are interested in making a sale.”
| # | Buyer | Insurance broker buyer type | YTD as of June 30, 2019 | % of total |
| 1 | Patriot Growth Insurance Services | Private equity backed | 23 | 8.23% |
| 2 | HUB International | Private equity backed | 19 | 6.8% |
| 3 | Broadstreet Partners | Private equity backed | 17 | 6.1% |
| 4 | AssuredPartners | Private equity backed | 18 | 6.4% |
| 5 | Arthur J. Gallagher & Co. | Public | 14 | 5% |
| 6 | OneDigital Health and Benefits | Private equity backed | 11 | 3.9% |
| 7 | Alera Group | Private equity backed | 10 | 3.6% |
| 8 | Acrisure | Private equity backed | 9 | 3.2% |
| 9 | Brown & Brown | Public | 9 | 3.2% |
| 10 | The Hilb Group | Private equity backed | 8 | 2.9% |
| 11 | World Insurance Associates | Private equity backed | 8 | 2.9% |
| 12 | Integrity Marketing Group | Private equity backed | 6 | 2.1% |
| 13 | Seeman Holtz Property & Casualty | Private equity backed | 5 | 1.8% |
| 14 | Ryan Specialty Group | Independent | 5 | 1.8% |
| 15 | NFP Corp. | Private equity backed | 4 | 1.4% |
| 16 | Risk Strategies Company | Private equity backed | 4 | 1.4% |
| 17 | USI Holdings Corporation | Private equity backed | 4 | 1.4% |
| 18 | Marsh & McLennan Companies | Public | 3 | 1.1% |
| 19 | Peter C. Foy & Assoc. Insurance Services | Private equity backed | 3 | 1.1% |
| 20 | Reliance Global Group | Other buyer | 2 | 0.7% |
Related: Insurance mergers and acquisitions in first half of 2019 break record