As we progress through 2025, the insurance agency mergers and acquisitions (M&A) landscape is evolving rapidly. Understanding the latest trends is crucial for agency owners contemplating a sale, merger, or acquisition. Here’s an overview of the current M&A environment and what it means for your agency.
1. Deal Volume Declines, but Valuations Remain Strong
In 2024, the total number of insurance agency M&A transactions decreased by 10% compared to 2023, with 750 deals reported. This marks the third consecutive year of declining deal volume. However, despite fewer transactions, valuations have remained robust, driven by high demand for quality agencies and significant capital availability.
2. Surge in Mega-Deals
The market has witnessed a rise in large-scale acquisitions. Notably, Arthur J. Gallagher’s $13.45 billion acquisition of AssuredPartners and Marsh McLennan’s $7.75 billion purchase of McGriff Insurance Services highlight the trend towards consolidation among major players seeking to expand their market share and capabilities.
3. Private Equity’s Dominant Role
Private equity (PE) firms continue to be significant drivers of M&A activity. In 2024, PE-backed buyers accounted for 72% of all insurance brokerage transactions. Their involvement brings substantial capital and a focus on scaling operations, making them attractive partners for agencies looking to grow or exit.
4. Innovative Deal Structures Emerge
There’s a growing trend towards creative deal structures, including the use of equity in transactions. In the first half of 2024, nearly one-third of insurance M&A deals involved equity components, allowing sellers to retain a stake in the business and align interests with buyers.
5. Buyer-Friendly Insurance Market Conditions
The M&A insurance market remains favorable for buyers, with stable pricing and broad coverage options. Innovations in representations and warranties insurance have made it easier to navigate complex transactions, providing additional security for both parties.
The insurance agency M&A landscape in 2025 presents both challenges and opportunities. While deal volumes have declined, the market remains active, with strong valuations and innovative deal structures. Whether you’re considering selling, merging, or acquiring, staying informed about these trends is essential for making strategic decisions.
If you’re exploring your options in this dynamic market, we’re here to provide expert guidance tailored to your agency’s unique needs.