The data covers U.S. and Canadian agencies selling primarily property-and-casualty insurance, agencies selling both P&C and employee benefits, and those selling only employee benefits.
"Multiple factors that drive deal activity continue unabated. An aging group of owners looking at all-time high valuations and expecting future tax increases is met by a larger group of buyers needing to fuel inorganic growth," said Steve Germundson, partner of OPTIS Partners, an investment banking and financial consulting firm specializing in the insurance industry.
The report breaks down buyers into four groups: private equity-backed/hybrid brokers, privately held brokers, publicly held brokers, and all others.
Acrisure leads buyer list
Acrisure led all buyers with 79 transactions year-to-date, far more than any other buyer, and back on track with their historical pace, which had slowed earlier this year. Other top buyers were PCF Insurance and BroadStreet Partners, both with 31 deals (up from 22 and 40 in 2020, respectively), World Insurance Associates with 27 (up from 22), and Hub International with 25 (down from 40).
Of the 10 most active buyers, only three completed fewer deals through three quarters of 2021 versus 2020: Hub declined by 15, BroadStreet had nine fewer deals, and AssuredPartners dropped by three. Relation Insurance, High Street Partners, and Alera each more than doubled the number of transactions completed.
Private equity-backed/hybrid group dominates buyers
The private equity-backed/hybrid group of buyers did 70% of all transactions so far in 2021, which is comparable to the same period in 2020 while acquisitions by privately held brokers inched upwards from 18% to 20%. The publicly traded brokers slipped from 10% to 6% of total transactions as their deal count fell 32% year-over-year.
P&C sellers accounted for 313 of the total 553 transactions (57%), consistent with their percentage of the totals in recent years.
Hot pace expected to continue
"The fourth quarter of 2021 may not reach the massive volume of deals done in the last quarter of 2020, but it will likely be close. A number of active buyers have told us one of their biggest challenges is lining up legal and due-diligence providers for the remainder of the year," said Dan Menzer, partner at OPTIS.
"There is nothing on the horizon that indicates a material slowing of deal activity, absent true economic disruption, even if we see a modest increase in capital gains taxes and rise in interest rates," said Tim Cunningham, managing partner. "During the biggest economic disruption since 2008, OPTIS has handled more deals than ever. There's just so much capital continuing to look for sound investments."
The full report can be read at https://optisins.com/wp/2021/10/sep-2021-ma-report/.
OPTIS Partners has consistently been ranked in the top six most active agent-broker M&A advisory firms for 2014 - 2019 by S&P Global Market Intelligence.