Buyers are more discerning, capital
is more expensive, and growth expectations are higher
Opportunities abound for smaller firms to acquire local
agencies that no longer fit the investment thesis of larger brokers.
By James Graham, CVA
Market timing is generally a losing strategy. For firms that have been waiting to sell, the best of times previously was 2021. But the next best of times appears to be today.
Demand for quality, high-growth firms remains strong, but the limited number of exit opportunities for large private equity (PE)-backed brokers is putting a strain on merger and acquisition (M&A) activity, as these firms look to conform to something the public markets will accept.
The ultimate market for large brokers is the public stock market, and valuations for publicly traded brokers have grown substantially over the last 15 years and are near all-time highs. The success of public brokers has provided the backdrop to allow PE firms to invest with confidence into the insurance broker space, as most nonpublic firms have traded at valuations discounted from the public ones.
However, today’s environment is more complex. For PE firms seeking near-term liquidity, the buyer universe for large brokers, defined as those north of $100 million in EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is limited. New PE entrants are cautious, given the high cost of capital and ongoing economic uncertainty.
Meanwhile, public brokers have become more selective, with little need to acquire firms that don’t align with their operating models or that demand valuations which aren’t accretive. And going public via an Initial Public Offering (IPO) remains a difficult route, particularly for highly leveraged, PE-backed firms.
So, what does this mean for the local and regional brokerages looking to transact in the future?
- The days of stacking revenue without integration are over—and have been for several years. Buyers are focused on profitability, operational efficiency, and cultural alignment.
- To achieve premium valuations, firms must align with industry best practices and demonstrate organic growth rates of 10% or more. Growth driven solely by acquisition or rate lift is no longer enough.
- Valuations have plateaued over the past few years and are likely to remain steady for the average firm. MarshBerry does not expect a broad-based increase. In fact, there is likely more of a downside risk than upside potential in the near term.
- Opportunities abound for smaller firms to acquire local agencies that no longer fit the investment thesis of larger brokers. This opens the door for entrepreneurial firms to grow strategically and gain scale.
- Competition for clients will become fiercer as large platform brokers look to validate their strategies.
In today’s environment, quality truly matters. Buyers are more discerning, capital is more expensive, and growth expectations are higher. Firms that invest in operational excellence, talent, and sustainable growth will stand out—whether they’re looking to sell, merge, or stay independent.
The market still rewards well-run brokerages, but only those that are prepared for what lies ahead.
The author
James Graham joined MarshBerry in 2015 and is a director on MarshBerry’s Financial Advisory team in its Dana Point, California, office. His expertise includes merger and acquisition advisory, capital raising, business valuation, perpetuation and succession planning, and strategic planning. James provides his clients with customized financial and capital strategies to help them accomplish their goals. He also is a facilitator for MarshBerry’s Connect Network and actively publishes articles relevant to the insurance distribution marketplace. Prior to joining MarshBerry, James was a senior consultant with Deloitte Consulting LLP.
James currently maintains the FINRA Securities Industry Essentials (SIE®) Exam in addition to the Series 62, 79 and 63 FINRA Registrations through MarshBerry Capital, LLC, the affiliated FINRA-registered broker-dealer of Marsh, Berry & Co., LLC. He earned a Bachelor of Science in Finance from Azusa Pacific University and a Master’s in Business Administration (MBA) from George Mason University. He is also a Certified Valuation Analyst (CVA). Contact him at James.Graham@MarshBerry.com or (949) 272-0351.
M&A Market Update
Private capital-backed buyers accounted for 57 (67.1%) of the 85 deals announced through February. Independent agencies were buyers in 20 deals, representing 23.5% of the market. There was one announced transaction by bank buyers in the first two months of 2025.
Deals involving specialty distributors as targets accounted for 10 transactions, about 12% of the total market, continuing the trend of low supply of specialty firms.
Ten buyers accounted for 60% of all announced transactions year to date, while the top three (BroadStreet Partners, Hub International, and NavSav Insurance) made 23 (27.1%) of the 85 deals.ry and may change in future publications. Please feel free to send any announcements to M&A@MarshBerry.com. Source: S&P Global Market Intelligence and other publicly available sources.
NOTABLE TRANSACTIONS
February 10: Hub International has acquired the assets of Mayfield Insurance, an independent insurance agency based in Mooresville, Indiana, that offers a range of commercial and personal insurance products. The terms of the transaction were not disclosed. Mayfield Insurance’s president, Dean Mayfield, and team will join Hub Midwest East. MarshBerry served as advisor to Mayfield in the transaction.
February 24: NSM Insurance Group has signed a definitive agreement to sell its U.S. commercial insurance division to New Mountain Capital, an investment firm managing over $55 billion in assets. The transaction includes NSM’s portfolio of 15 niche insurance programs across property and casualty, accident and health, and reinsurance, along with its retail agency, NSM Insurance Brokers. Aaron Miller, NSM’s chief commercial lines officer, will take over as CEO of the newly formed entity, with NSM CEO Geof McKernan and President Bill McKernan joining its board.
March 3: AmeriLife Group has completed its acquisition of Crump Life Insurance Services and Hanleigh Management from TIH Insurance. Financial terms were not disclosed. Crump will continue operating as an independent brand under AmeriLife Wealth Group, with CEO Mike Martini remaining at the helm. n
Investment banking services offered through MarshBerry Capital, LLC, Member FINRA and SIPC, and an affiliate of Marsh, Berry & Co., LLC. 28601 Chagrin Blvd., Suite 400, Woodmere, Ohio 44122; (440) 354-3230. Disclosure: All deal count metrics are inclusive of completed deals with U.S. targets only. Scorecard year-to-date totals may change from month to month should an acquirer notify MarshBerry or the public of a prior acquisition. Statistics are preliminary and may change in future publications. Please feel free to send any announcements to M&A@MarshBerry.com. Source: S&P Global Market Intelligence and other publicly available sources.
