Merger and Acquisitions (M&A) activity in the insurance brokerage distribution space saw its most active year on record. With 923 announced deals, the blistering pace of transactions in 2021 represents a 29.8% increase compared to the 2020 announced deal tally of 711.
Private Capital backed buyers accounted for 703 of the 923 transactions (76.2%) in 2021, which also represents a 45% increase in deal volume over 2020. Total deals by these buyers have increased at a Compound Annual Growth Rate (CAGR) of 26.9% since 2018. The astonishing growth in activity by Private Capital in the marketplace is a result of the proven attractiveness of insurance brokers as an investment as well as more sellers coming to the table due to a variety of factors. Independent firms accounted for 109 deals (11.8%) of the total deal count during 2021. This portion of the total announced transactions has declined considerably since 2019, partly due to spending restrictions (conserving capital) during the pandemic as well as being outpriced by larger acquirers.
Peter C. Foy & Associates Insurance Services, Inc., Acrisure LLC, and High Street Insurance Partners, LLC were the top three most active buyers in the U.S. in 2021 based on announced deal activity, representing a combined 22.1% of the 923 total transactions. The top 10 most active buyers combined completed 479 of the 923 announced transactions (51.9% of total).
Deal activity in 2022 has had a sluggish start following the year end blitz of 2021. There have been 28 total announced transactions, which is roughly 50% lower than those announced in January 2021. However, there will likely be retroactive announcements throughout the year that will likely bring this count more in line with prior years. This likely includes deals with targeted 2021 close dates that were moved to 2022. Deal announcements are anticipated to pick up considerably throughout the remainder of the first quarter as concerns over capital gains tax changes have calmed somewhat but have not gone away completely.
While 2022 activity won’t necessarily eclipse the 2021 total, it’s likely that activity will remain at the 2019/2020 levels landing somewhere around 750 announced transactions. Appetite from buyers in the marketplace remains strong and 2022 could ultimately show the second highest deal total on record.
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. For general inquiries, you can also get in touch with our team.
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MarshBerry is excited to announce it advised more than 95 companies and completed 130 M&A transactions (83 sell side/47 buy side) in 2021, closing another record year for the firm. MarshBerry continues to remain the number one sell side advisor for the 23rd year in a row and retains the top spot in the industry for total number of clients advised.
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