Dealmaking within the insurance brokerage industry saw a spirited turn in 2024, marked by a rise in mega deals. With giants like NFP being acquired by Aon, or the pending Gallagher-AssuredPartners deal, the brokerage landscape has shifted.
Mid-sized brokers need to reconsider their strategic future amidst the transformation, a brokerage M&A expert told Insurance Business.
Phil Trem (pictured), president, financial advisory at MarshBerry, said mega deals among brokerages are the product of converging forces and tough questions many firms can’t avoid any longer.
“Whether you're a $10-million revenue business or a billion-dollar one, brokerage leaders have to ask themselves: are we investing in the services and infrastructure needed to stay competitive?” Trem said. “If not, do we build those resources ourselves, or do we join a firm that’s already made those investments?”
Increasingly, firms are asking whether it’s smarter to develop those capabilities in-house or partner with someone who already has them.
Brokerage leaders no longer face a “build versus buy” decision, according to Trem. “It’s increasingly a ‘build versus join’ decision,” he said.
“Firms are hitting inflection points where they have to ask whether they’re better off partnering to offer enhanced solutions, rather than continuing to go it alone.”
This dynamic is especially evident among large brokers across the US, whether they're private equity–backed or independent. Many brokers need infrastructure, specialized expertise, and access to tools that require investment, and the decision to build from within or to join a firm already ahead has become central to strategic thinking.
This build-versus-join inflection point is hitting firms of all sizes, particularly as they contend with the need for specialization and modern service delivery.
For some firms, however, selling comes down to the ticking clock of ownership. These types of deals continue to drive activity within the US brokerage sector.
“In some instances, you have capital partners who are getting to a certain point in their life cycle or towards the end of their tenure as an individual shareholder, and there is a desire and need for liquidity,” said Trem.
That shift in strategic direction is being echoed in buyer behavior. Over the past decade, what buyers looked for has evolved, with more differentiation between growth driven by acquisitions versus true organic expansion.
“There used to be a heavy focus on growth,” Trem said. “Then there was a shift to what was your growth, and how much of it was organic. Today, there’s even deeper forensics on the organic growth part.”
So, what firms are catching the most attention? According to MarshBerry, it’s those that have built real sales engines: consistent organic growth machines that aren’t just bolted on to an M&A strategy.
“They’re not a one-hit wonder but have shown a steady approach and gotten steady results,” Trem said.
But are valuations holding strong, or starting to slip? The answer is nuanced, with the top-performing firms, or those delivering double-digit organic growth, getting slightly better pricing than before, while laggards are seeing compression.
“For the last three years, the average valuations have plateaued,” Trem said. “They haven’t peaked and come down, but they have hit a high-water mark.
“Firms that aren’t able to show any real organic growth are actually seeing a reduction in value. So, the averages are holding, but some of the best performing firms are actually getting slightly higher values, and those that are more average or below average are getting lower values than we’ve seen in prior years.”
This valuation landscape has big implications for mid-sized brokers caught between consolidation and the need to stay independent. Trem argued that for firms in the $50 to $500 million range, it’s time to get honest about the future.
“Specialization is becoming more and more required, and it’s very difficult to just be a generalist,” he said. “The longer they tread water, the harder it will be to survive.”
Looking at the early months of 2025, the brisk pace of dealmaking has continued, with MarshBerry anticipating activity to level off mid- to late-year.
“We did see a busy first quarter, because there were a number of firms that prepared for a transaction with concerns that a Vice President (Kamala) Harris administration would have seen taxes go up,” Trem said.
Those who delayed closings into Q1 after the election results contributed to the spike, but it’s unlikely to set the tone for the whole year. “Activity is still high, but we’re not anticipating a massive increase over last year,” Trem said.
With deal velocity high and valuations still holding for the best performers, the question is now how long the music will keep playing.
“Brokerages have to figure out how to make sure they’re putting themselves in a position to drive results that keep them at that higher valuation level,” said Trem.
