Bucking The Trend – M&A Transaction Activity of Specialty Distributors Hits Historic High

Video Transcription

Hello, I’m George Bucur, managing director and co-head of MarshBerry specialty practice. Serving MGAs (managing general agent), MGUs (managing general underwriter), wholesale brokers and program managers, we’re here today to talk about the overall M&A (mergers and acquisitions) transaction activity we’ve been seeing in the marketplace, and how specialty firms have been influencing those transactions.

Now, from an overall M&A activity perspective, last year clocked in at the third highest in terms of M&A transactions, that’s historically. However, we have known a decrease over the last couple years from 2021 and 2023. As we dig into those numbers, retail brokers are responsible for a 30% decrease of the highs experienced in 2021. However, bucking the trend and holding strong is that specialty organizations really have been solid in regards to the number of transactions they’ve experienced in each of the respective years of 21 through 23 with 181 transactions announced in 2023. Now, why is this? It’s because the buyer community, one, is very interested in organic growth, especially in light of the higher cost of capital environment that emerged in early 2022 due to inflationary pressures.  They’re now focused on those firms that bring a high level of quality and differentiation to the marketplace, as that translates to value and a more sticky client relationship; in other words, revenue. It’s this differentiation that the buyer community is latching onto and is really pushing forward and making a lot of investments into the specialty distribution segment.

If you have questions as to how a buyer might view your operations, or how you fit strategically into the overall insurance distribution system, we encourage you to reach out. Until next time, be well.