Mergers and acquisitions among insurance brokers and agents continued to increase during the third quarter, increasing total business so far in 2021 to 553, an increase of 13% compared to the same period last year, according to the latest report from Optis Partners LLC.  The Chicago-based investment banking and financial advisory firm said that values that are always high for brokers, aging owners and an expected increase in capital gains tax rates are helping to drive the gains.
During the third quarter, 213 transactions were announced, which is 27% higher than the average for the period over the previous four years, the report states.
Private buyers and buyers with significant external financial support are still the most active buyers, accounting for 76% of purchases during the third quarter.
Acrisure LLC, which has grown rapidly through acquisitions in recent years, is again by far the most active buyer in 2021, with 79 transactions announced from year to date (see chart).
Significant deals in the third quarter included insurtech Newfront Insurance Inc.'s acquisition of ABD Insurance & Financial Services Inc., which had $ 112.5 million in 2020 brokerage revenue, according to Business Insurance 's latest ranking and Alera Group's acquisition of Propel Insurance, which reported $ 107.6 million in brokerage revenue.
The hot trading pace is expected to continue.
"The fourth quarter of 2021 may not reach the large amount of business done during the last quarter of 2020, but it will probably be close," says Dan Menzer, partner at Optis. "A number of active buyers have told us that one of their biggest challenges is to set up legal and due diligence providers for the rest of the year."