At its current pace, 2019 is poised to overtake 2018’s record number of mergers and acquisitions in the U.S. brokerage and agency sector, experts say.
There have been 451 brokerage/agency transactions as of Sept. 30, compared with 429 at the same point in 2018 and 418 in 2017, according to the latest figures from MarshBerry Capital Inc., based in Woodmere, Ohio.
This follows some 580 transactions for all of 2018, which made it “the most active year on record,” John Wepler, chairman and CEO of MarshBerry, said during a panel discussion at S&P Global Inc.’s 10th Annual Insurance M&A Symposium in New York in October.
One of the drivers is a lot of independent insurance agencies and brokers across the country are aging, which creates a continual pool to acquire, he said.
There were 28,900 independent agencies and brokerages in 2015, and now there are 28,400, Mr. Wepler said.
“You would think that the consolidation would be so dramatic that we’d be running out of targets, but it does seem to replenish fairly quickly,” he said.
The current pace of mergers and acquisitions in the brokerage sector is a relatively “new normal” because there are “still a lot of targets and as many acquirers as ever before, and the capital is there,” Elan Sharoni, vice president of M&A at brokerage NFP Corp. in New York, said at the S&P event.
It would take a macroeconomic event such as a recession, “to cause people to be more cautious and scale back,” Mr. Sharoni said. “Otherwise I don’t see a reason why it will slow down.”
