Insurance broker mergers and acquisitions are expected to remain robust this year, despite macroeconomic challenges, according to a Reagan Consulting report released Tuesday.
“There are still a significant number of well-capitalized buyers in the market eager to do business. As a result, we expect robust transaction activity to continue in 2023, accelerating from the 99 transactions completed in the first quarter,” said the Atlanta- based the M&A consultant.
That total was down 26.7% from 135 last year and 43% from 174 in Q4 2022.
Several of the most active buyers have experienced financial disruption from the significant rate hikes since mid-2022, the report noted.
Some consolidation among acquirers is expected as the market and companies continue to mature, the report said.
M&A multiples were flat overall in the first quarter, compared to the fourth quarter of 2022, while multiples for large quality assets increased.
The average M&A brokerage valuation in the first quarter was 1
2.5 times EBITDA for a well-run brokerage with $3-5 million in revenue, with an additional three times EBITDA available through an earnout based on future performance.Privately held brokers posted organic growth of 11.1% in the first quarter – the highest reported growth rate recorded since the survey was launched in 2008, while public brokers reported organic growth of 9.7% in the first quarter.
Commercial property/casualty lines continued to lead the way, with organic growth of 11.7% for the first quarter – the highest rate in the survey’s history, supported by the continued tight market, inflation and a healthy economy.
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