According to OPTIS Partners, offers for property and casualty insurers as well as service brokers in the USA and Canada exploded in the past before the pandemic
CHICAGO, IL / ACCESSWIRE / January 20, 2021 / In 2020, 744 insurance agency mergers and acquisitions were announced, up nearly 20% from 649 in 2019. The increase resulted from the pent-up supply of outstanding deals earlier in the year associated with sellers looking to avoid an anticipated capital gain Taxes.
The 290 transactions in the fourth quarter of 2020 represented a 68% increase from 173 in 2019. That was 61% more than the 180 transactions reported for the third quarter of 2020 as the country learned to deal with the pandemic.
The data includes U.S. and Canadian agencies that primarily sell property and casualty insurance, agencies that sell both P&C and employee benefits, and agencies that only sell employee benefits.
“Most buyers continue to do business unabated, although some have pulled back a bit in integrating acquired companies. New buyers have also come online who have made significant progress in their acquisitions,” said Steve Germundson, partner at OPTIS Partners, an investment bank and financial consultancy specializing in the insurance industry.
The report tracks activity by type of buyer and seller
The report divides buyers into four groups: private equity-backed / hybrid brokers, privately held brokers, publicly held brokers, and everyone else. Sellers are classified as property and casualty insurance brokers, property and casualty insurance and employee benefits brokers, employee benefits brokers, and everyone else.
Acrisure continues to lead all buyers with 108 deals in 2020, which is their four-year average of around 100 deals per year. Other top buyers were Hub International with 64 acquisitions (up from 52 in 2019) and Broadstreet Partners with 58 deals (up from 34 in 2019) and World Insurance Associates with 42 (up from 18 in 2019) at the top of the list). Other buyers considered “most active” include PCF Insurance with 36 (out of 6) and OneDigital with 29 (out of 17 in 2019).
The story goes on
There were several other historically active buyers that saw their transaction count drop slightly in 2020, including AssuredPartners (38 vs 44), Gallagher (34 vs 23) and Hilb Group (25 vs 22).
Private equity buyers dominate
The private equity-supported / hybrid buyer group continues to dominate the transaction volume with around 70% of the total volume. Acquisitions made by private companies and public companies remained constant at 17% and 9% of all transactions, respectively.
P&C sellers accounted for 397 of the total of 774 transactions (51%), which is their percentage of total transactions in recent years.
“While it may not be quite as active as 2020, 2021 is likely to be very active as a new wave of salespeople emerges who want to avoid an expected capital gain tax hike or just sell with a growth story. Agency reviews and multipliers for high quality companies should continue to reach new limits as demand remains strong and supply of quality companies is reduced, “said Tim Cunningham, Managing Partner of OPTIS Partners.
The full report can be read at https://optisins.com/wp/2021/01/2020-ma-report.
OPTIS Partners was consistently ranked among the six most active M&A advisory firms for brokers and brokers by S & P Global Market Intelligence from 2014 to 2019.
Chicago-based OPTIS Partners (www.optisins.com) is solely focused on the insurance sales market, providing buyers and sellers with merger and acquisition representation, including due diligence. It offers ratings of fair market value; Review of financial performance, including trend analysis and internal controls; and Transfer of Title and Perpetuation Planning.
Contact: Tim Cunningham, OPTIS partner, firstname.lastname@example.org, 312-235-0081
Dan Menzer, OPTIS Partners, email@example.com, 630-520-0490
Steve Germundson, OPTIS partner, Germundson@optisins.com 612-758-0598
Henry Stimpson, Stimpson Communications, 508-647-0705 Henry@StimpsonCommunications.com
SOURCE: OPTIS partner
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