M&A Activity Outpacing Prior Years: MarshBerry

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Merger and acquisition (M&A) activity continued strong through the second quarter of 2017. The year to date announced deal count is 239 through June 30 (compaared to 222 for the same period last year). The number of buyers closing on deals appears to have decreased so far in 2017, but the total number of announced deals increased 8 percent over last year. A more concentrated group of buyers did a larger pro rata share of the deals.

Private equity-backed brokers continued to lead the number of acquisitions, with roughly half of the transactions.

Privately held, independent firms closed almost 30 percent of the deals, and publicly traded brokers closed approximately 10 percent of the transactions. The other 10 percent included bank or bank-owned firms, credit unions, insurance companies, and other various buyers.

Note: All transactions in this presentation are announced deals involving public companies, private equity backed brokers, private companies, banks, insurtech companies as well as others including private equity groups, underwriters, specialty lenders, etc. All targets are U.S. only. This data displays a snapshot at a particular point in time and has not been updated to reflect subsequent changes in prior years, if any. 2017 Q1 has been updated to reflect current deal count. MarshBerry estimates that only 15-30 percent of all transactions are actually made public. Past performance is not necessarily indicative of future results.

The 10 most active buyers in the first two quarters of 2017 closed on nearly half of the transactions. The top five buyers closed 36 percent of all deals in the first and second quarter. These top five are: Acrisure, LLC, BroadStreet Partners Inc., Arthur J. Gallagher & Co. (AJG), Hub International Limited, and NFP Corp.

Acrisure, a private equity-backed firm that completed a management-led buyout in late 2016, was the most active acquirer with 12 transactions in the second quarter (24 for year-to-date, 2017). Half of the deals Acrisure announced in the second quarter were employee benefit (EB) and consulting firms. The other half were property/casualty (P/C) firms or multi-line (firms that write P/C and EB). The deals were fairly evenly spread across the country, with six in the western U.S. and the other six in the central and eastern U.S.

Hub, a private equity-backed firm, announced nine transactions in the second quarter (16 as of June 30, 2017).

AJG, which is publicly traded, and BroadStreet Partners, which is majority owned by Ontario Teachers’ Pension Plan, tied for the third most active acquirer in the second quarter with eight announced deals each.

BroadStreet has announced 19 deals so far in 2017.

The fifth most active firm was NFP, also private equity-backed. NFP closed five deals in the second quarter and nine for the year-to-date.

Overall, 49 percent of the total second quarter deals were P/C firms, 20 percent were EB firms, and 31 percent were multi-line firms.

The geographic concentration of transactions generally followed the population. The three states with the largest number of deals were California, New York, and Texas, comprising roughly one-third of the transactions closed in the first half of 2017.

With the number of active buyers and sellers, and the current economic and industry conditions, we believe that the M&A market for insurance distribution firms shows no signs of a slowdown. If the deal pace continues at the current rate, 2017 will likely be another record year for insurance broker transactions.

Securities offered through MarshBerry Capital Inc., Member FINRA and SIPC, and an affiliate of Marsh, Berry & Co. Inc. 28601 Chagrin Blvd., Suite 400, Woodmere, Ohio 44122 (440-354-3230). Except where otherwise indicated, the information provided is based on matters as they exist as of the date of preparation. Past performance is not necessarily indicative of future results.

Topics Mergers & Acquisitions Property Casualty

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