According to Optis Partners, total North American agent and broker M&A transactions fell 17% year on year in Q1 2023 to 158 as the deal environment shifts in response to economic changes and the sector returns to its longer-term historical average level.
Some of the sector’s most active buyers saw a significant slowdown in deal announcements.
According to the Chicago-based investment banking and financial consulting firm, the first quarter of 2023 saw the lowest level of M&As among US and Canadian agents and brokers since 2019 and was 7% lower than the five-year average for deals.
“Given the sharp rise in interest rates and economic uncertainty,” said Steve Germundson, a partner at Optis Partners, in a statement.
The drop continued a downward trend that began in the second half of 2022.
BroadStreet Partners Inc. was the most active buyer in the first quarter, with 14 transactions, followed by Inszone Insurance Services LLC and Hub International Ltd., both with ten transactions; World Insurance Associates LLC, with nine; and Risk Strategies Co., with eight.
Several buyers, including Acrisure LLC, PCF Insurance Services, High Street Insurance Partners Inc., and Digital Insurance Inc., which does business as OneDigital, that had been among the most active in the previous five years, saw a significant drop in deal numbers in the quarter, according to the report.
Private equity-backed groups and private brokers with substantial outside financial support continued to dominate the M&A landscape, accounting for 74% of transactions in the quarter.
Arthur J. Gallagher & Co. was the most active publicly traded brokerage in the quarter, with seven deals announced.