Agency M&A Down 24% in 2023 but More Large Deals May Be Seen in 2024: OPTIS

There has been a somewhat return to normal when it comes to insurance agency mergers and acquisitions, with traditionally active buyers preferring to remain inactive to focus on integration of agencies they’ve already acquired.

According to the M&A database of investment banking and financial firm OPTIS Partners, there were 782 announced insurance agency mergers and acquisitions in 2023, down 24% from 1,031 in 2022.

“The M&A market has returned to normal, and the number of potential buyers continues to be robust,” said Tim Cunningham, managing partner of OPTIS Partners. “Valuations should continue to hold solid, and for the better firms, we may see a slight increase continuing.

“The mega-deal between AON and NFP is slated to close sometime in 2024, and we think more large deals may be done this year.”

According to OPTIS, 2023 was a story of consistency, with the count of deals in each quarter equaling or exceeding tallies before a 25-month-long rush of deals that occurred from the end of 2019.

There were nearly 250 fewer deals done in 2023, compared with the previous year, and OPTIS said two firms accounted for nearly 60% of the decline: perennial deal-count leaders Acrisure (71 fewer deals) and PCF (69 fewer).

Hub International led buyers with 65 transactions in 2023, down 7% over its 2022 totals, yet 6% higher than its previous five-year average. Broadstreet Partners followed with 59 completed transactions (up from 35 in 2022). Thirteen firms did 20 or more deals in 2023 compared to 17 the prior year.

The activity of private-equity-backed buyers slowed down a bit in 2023, representing 69% of completed deals compared to the 12-month, high-water mark of 77% in the first quarter of 2022. But transactions led by privately owned firms hit an all-time high in 2023 at over 21% of the total, OPTIS said.