While the first quarter of 2018 did reach not see the same frenzy of reported transactions as in the first quarter of 2017, the pace of insurance agency mergers and acquisitions was still strong per OPTIS Partners in its latest quarterly report.
Third highest number of transactions for the 12-month period ending the first quarter
At the close of the first quarter of 2018, OPTIS Partner’s latest quarterly report showed there were 142 reported insurance agency mergers and acquisitions, as compared to 186 in the first quarter of 2017. The 142 transactions in this quarter are 4th highest quarterly total, behind the first quarter of 2017 (186), the second quarter of 2017 (135), and the fourth quarter of 2017 (151).
However, in the 12-month period ending in the first quarter, 567 transactions were reported. This result was the third highest number of transactions for any 12-month period. The latest quarterly results continue a series that began in the third quarter of 2017, with the 12-month periods ending in the third and fourth quarters of 2017, being the highest and second highest 12-months periods for insurance agency mergers and acquisitions recorded.
The quarterly report from OPTIS Partners includes data covering U.S. and Canadian insurance agencies that either sell property & casualty insurance, employee benefits, or both P&C and employee benefits. The report also includes transactions involving wholesalers and managing general agency brokerage businesses.
Comments from Dan Menzer of OPTIS Partners on the quarter
Dan Menzer, a principal of OPTIS Partners summed up the quarter for Agency Checklists saying:
I think the big takeaway should be a continuation of the very active agency M&A marketplace. The year-over-year decline, while not insignificant on a percentage basis, is much more a function of the extreme number from last year and less about the number for 2018. The buyer community remains very enthusiastic and aggressive. We also continue to see large Top 100 agencies being acquired, so it’s not just the small independent agencies being acquired through all of this.
Finally, while we continue to believe the market pricing will come down at some point, which may influence the sellers’ interest in selling, there is nothing in the windshield to indicate anything will be changing anytime soon.
There are lots of buyers out there, the number of baby-boomer sellers continues to feed the sales activity, and everyone’s happy.”
Top buyers in the first quarter of 2018
As per the following chart, the consolidation of the insurance agency continued with the top seven acquirers of five or more agencies accounting for fifty-four percent of all acquisitions completed this quarter. The leading buyer was Acrisure with twenty-eight transactions. The remaining large buyers were Hub International with thirteen, AssuredPartners with ten; Alera with eight; Broadstreet Partners with seven, Gallagher with six, and NFP with five.
The ownership column on the chart reflects the dominance of the private equity model as large acquirers continue to rollup insurance agencies. Private equity-backed buyers continued to fuel the growth in M&A acquisitions, completing a total of seventy-one deals this quarter.
Strong pricing and activity continued in the first quarter of 2018
According to OPTIS Partners, although the first quarter of 2018, did not reach the level of the record-breaking first quarter of 2017, buyers remain very aggressive on valuations, and sellers “continue to come out of the woodwork.”
The first quarter results show no apparent effect from the passage of the “Tax Cuts and Jobs Act of 2017.”
What happened with merger and acquisition activity in Massachusetts for the first quarter?
The following are the agency acquisitions that Agency Checklists has tracked and written about in the first quarter of 2018.
January 2018 (Q1)
February 2017 (Q1)
March 2017 (Q1)
About OPTIS Partners
OPTIS Partners was founded in 2002 by Tim Cunningham after a successful career in a privately owned insurance agency and other industry consulting firms.
- Mr. Cunningham focuses his attention on the M&A needs of his clients and expanding the breadth of services to agents, insurance companies and other financial institutions.
- Mr. Menzer joined the firm in July, 2008 with an extensive history of P&C brokerage financial management experience combined with his Big 8 public accounting and industry consulting background.
OPTIS Partners has been involved with M&A transactions representing both buyers and sellers, and provided Fair Market Valuations and Ownership Perpetuation strategies for countless agencies throughout the country. In addition, it has worked with a variety of insurance companies and their agents, insurance agency associations, banks and other insurance distribution parties on a diverse set of consulting engagements. Client engagements have included the following:
- Represented more than 100 buyers and sellers since 2005 in M&A transactions ranging in value from $500,000 to over $250 million
- Worked with several national insurance companies to develop and present perpetuation and M&A workshops to agency principals
- Facilitated the Strategic Planning meetings of insurance agencies, agency associations, and banks and other financial institutions focusing on maximizing agency values and investment returns
- Worked with clients on planning for producer recruitment and compensation alternatives, M&A strategies and ownership perpetuation planning.