Seven months into the year and the insurance industry continues to be poised to have the most active year of consolidation – by a significant margin. There have been 353 announced merger & acquisition (M&A) transactions in the U.S. Total announced transactions in the U.S. have increased by 10.0% compared to this time last year. The absence of the 2020 Q2 freeze in activity from the pandemic, coupled with anticipated federal capital gain tax increases, has driven deal activity. Retroactive deal announcements will likely further contribute to the record-breaking pace of deals being completed.
Private capital backed buyers have accounted for 254 of the 353 transactions (71.9%) through June, while independent firms have held steady at 15.0% of the total deal count. Deal activity in each of MarshBerry’s buyer categories has remained proportional to what has been observed over the last three years.
Specialty distributors also continued to play a larger role in M&A transactions. Deals involving managing general agents, wholesale and specialty brokers have seen an increase of 48.2% year-over-year (YoY). This YoY increase is the largest MarshBerry has observed since 2014.
Integrity Marketing Group LLC, Hub International Limited, and BroadStreet Partners, Inc. are the top three most active buyers in the U.S. in 2021, totaling a combined 20.1% of the 353 total transactions. The top 10 most active buyers completed 174 of the 353 announced transactions (49.3% of total).
It remains unknown whether capital gains taxes will increase but most sellers are still driving toward a year-end close to hedge against potentially higher taxes in 2022. While there is still discussion floating around about making tax increases retroactive, this premise is mostly political conjecture and unlikely to occur. The bottom line is that no one really knows what is going to happen.
We believe that 2022 could be as active as 2021 based on competitive pressures for brokers to continue executing on their acquisition strategies and the need for independent brokers to leverage resources to be more competitive in the marketplace.
Two major deals MarshBerry recently closed representing Sterling Insurance Group and RogersGray, Inc:
- June 30: AssuredPartners, Inc. completed its acquisition of Sterling Insurance Group (Sterling Insurance). Sterling Insurance, based in Sterling Heights, MI, is a full-service insurance firm specializing in key industries including manufacturing and health care practices.
- July 1: BRP Group, Inc. completed its previously announced acquisition of RogersGray, Inc. RogersGray is a Massachusetts-based multi-line agency with annual revenue of approximately $38.8 million. The acquisition marks BRP’s fourth “Top 100” acquisition since Q4 2020.
If you have questions about Today’s ViewPoint, or would like to learn more about activity in the M&A marketplace, email or call Phil Trem, President – Financial Advisory, at 440.392.6547.
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Disclosure: All deal count metrics are inclusive of completed deals with U.S. targets only. Scorecard year-to-date totals may change from month to month should an acquirer notify MarshBerry or the public of a prior acquisition. 2021 statistics are preliminary and may change in future publications. Please feel free to send any announcements to M&A@MarshBerry.com.
Source: S&P Global Market Intelligence, Insurance Journal, Business Insurance, and other publicly available sources.
MarshBerry continues to be the #1 sell side advisor in the industry (as ranked by S&P Global). If you’re considering selling your firm, we are the best choice to help you through the complicated process. If you don’t hire MarshBerry, hire a reputable advisor that can help you navigate one of the most important business decisions you will ever make. You will be much better off having an advisor in your corner that knows the industry than trying to do this on your own.
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