Deal Activity, Buyer & Seller Trends

Insurance agencies and brokerages, categorized into captive, managing, wholesale, and retail entities, facilitate the critical liaison between policyholders and insurers. These businesses primarily thrive on commission revenues from policies, of which property and casualty insurance forms a substantial chunk (~57%).

Success in this field hinges significantly on sound business strategies, sales acumen, and interpersonal skills. Crucial prerequisites for ownership include industry experience, sufficient capital, and good credit standing. The insurance industry, exhibiting a cyclical nature, responds directly to supply and demand forces.

Market Distribution, Dynamics & Future Growth

On average, these businesses operate from a single location with a small team and garner around $1.2 million in annual revenue. Effective marketing tactics like referrals and online lead generation are integral to their success. Interesting demographic data highlights that about 24% of these agencies and brokerages are female-owned, 18% minority-owned, and 15% veteran-owned.

Our industry presents a mixed bag of business structures with the majority being S corporations (~55%), followed by sole proprietorships (~22%) and other various models. P&C firms make up approximately 44% of the total market with the other 56% being occupied by Life and Health insurance.

The insurance marketplace splits largely into Property & Casualty (P&C) firms and Life & Health (L&H) insurance. The former, comprising auto, home, workers' compensation, cyber, marine insurance, and more, represents 44% ($678 billion) of the total market. The remaining 56% ($877 billion) falls under L&H insurance, covering individual and group life annuities, as well as accident and health insurance.

The insurance industry's cyclicity is dictated by supply and demand mechanics: a 'hard market' points to rising prices, while a 'soft market' implies declining prices.

Additional volatility is seen in business insurance due to various factors. Speaking generally, corporations have a bargaining edge over individuals, enabling them to negotiate policy terms subject to budget constraints. Certain commercial insurance lines exhibit higher volatility, countered by the competition for larger, high-commission accounts which provides a stability effect for smaller ones.

Economic projections illustrate a promising future with U.S. insurance agency and brokerage sales predicted to grow at a compounded annual rate of 5.56% from 2019 to 2025, outpacing GDP growth.

In essence, M&A refers to the amalgamation process, allowing multiple, separate business entities to coalesce into a new unified whole. Beyond this overarching concept, specific variants of M&A actions exist, each with unique connotations and implications. Companies' aspirations—ranging from those desiring to acquire agencies, those wishing to expand their scope, to carriers aiming for geographical or business line expansion—underpin M&A considerations.

A merger usually pertains to an equal footing amalgamation, where two firms consensually agree to join forces and form one freshly established company. On the other hand, an acquisition often implies a larger company absorbing part or all of a smaller entity, thereby becoming the latter's new owner or parent company. Acquisitions may occur voluntarily or involuntarily, occasionally coursing into a hostile takeover territory if met with reluctance from the entity being acquired.

Over the past two decades, the volume and value of insurance M&A deals have climbed and consistently stayed high, rising from about 80 deals totaling just under $40 billion in 2003 to a remarkable 869 deals amounting to $57.5 billion in 2021, marking a significant year of M&A activities.

Although M&A activities slowed in 2022 due to the declining economy, the insurance industry displayed resilience compared to other sectors, with insurance agency and brokerage M&A activities notably higher than those of carriers.

Consolidation within the insurance sector is largely propelled by the broad, disjointed nature of the insurance market and the aging ownership base. A third of the 36,000 insurance agencies are estimated to make less than $150,000 in annual revenue. In contrast, agencies turning over more than $10 million account for only 2% of the market which leaves a considerable middle spectrum, primarily composed of small, family-owned, and closely-held businesses.

Even with hundreds of deals taking place annually, there remains a significant pool of agencies open for transactions. Experts estimate that reported deals only account for 50% to 60% of actual transactions in a given year.

Factors that make the insurance market appealing include:

• High cash flow margins & low capital intensity: Insurance agencies require minimal capital investment compared to asset-intensive industries, and their commission/fee-driven revenues produce steady dividends and scalable distributions.
• Recurring revenue stream: Insurance is often mandatory, with businesses needing liability insurance and auto insurance required by law, making it a semi-required product.
• Plentiful credit: The availability of credit has benefited PE firms, family-owned offices, and others looking to deploy capital in both equity and debt deals.
• Success breeds success: As large, PE-backed platforms began their consolidation plays, more participants were drawn to the market.

In the mid-1990s, there were only a few active acquirers of insurance agents and brokers with the capital and appetite to do mergers & acquisitions on a national scale. Since 2001, the insurance industry has witnessed significant deal activities, primarily fueled by the entry of private equity firms.

Initially, annual transactions involved 200 to 300 agencies. Around 2006 to 2007, however, public equity firms took an active interest in the insurance industry, igniting a flood of funding for consolidators and rollup transactions. By 2018, private equity was involved in 60% of all public transactions, ranging from first-time acquisitions to recapitalizations and PE-backed consolidations.

We've seen private equity's role in the insurance agency buying game taking a bit of a nosedive. Why? The Fed didn't help, hiking up interest rates nine times over the past year. The result? Borrowing became a pricey affair for private equity folks, bringing the acquisition fever down a notch or two.

The overall market is sticking relatively close to the five-year norm. Independent insurance agents on the lookout for growth, diversification, or even a nice place to retire are finding tons of opportunities. With 40% predicted to change owners in the next five years and 17% of our agents headed for retirement, M&A activity is expected to rebound in Q4 and beyond. Valuations continue to remain steady and buyer demand remains high, especially for desirable sellers.

While high valuations are great news for sellers, the increased buyer competition also creates another powerful seller benefit: agency owners have an unprecedented number of options. The independent insurance agency sector continues to buzz with opportunities for growth and sell-side opportunities, regardless of private equity's waning presence.

In the not-too-distant past, a selling agency had few choices when selecting a perpetuation partner. And for the most part, they all looked pretty much the same. All were very large, had similarly rigid processes, and essentially offered indistinguishable benefits—capital, expanded market and program access, and a set operating structure.

Not surprisingly, today's agency owners have many objectives when considering potential perpetuation partners beyond just the highest possible valuation. And when considering perpetuation partners, it's helpful to think about seller objectives when deciding between offers. Local agencies, which were once sidelined by the financial might of PE firms, are now in the game, with many owners scouting for once out-of-reach agencies.

Of the 36,000 currently existing independent insurance agencies in the U.S, the majority are private, often family-owned entities. These firms will make up a large part of the mass exit by retiring Baby Boomer owners.

For a lot of insurance agency owners contemplating retirement, acquisition emerges as the optimal exit strategy. Suppose an agent has crafted a prosperous agency possessing a significant business portfolio during their career—an opportunity to sell the agency to a larger one could prove enticing. Conversely, agencies seeking extension into new states or business lines might find it simplest to procure an established agency offering the desired characteristics.

Even though organic growth represents the epitome of a thriving business, M&A can aid rapid growth without the hassles of staffing up, training, or integrating new technology. In ideal circumstances, the acquirer can reap almost immediate returns from the assimilated, already profitable company.

Top-tier agencies adopt a calculated M&A strategy to achieve specific organizational objectives beyond just revenue considerations. These top agencies have a plan - they're looking beyond just boosting their earnings.

They focus on specific organizational objectives, adopting carefully crafted M&A strategies to help them grow. Here are three examples of what they're after:

• Geographic expansion: An agency might acquire a business in an entirely new region. Through this, their goal is expanding both geographically and in the services they offer.
• Risk management expertise: An agency might be keen on acquiring another business celebrated for its niche specialization. In this case, they want to absorb valuable knowledge and expertise in risk management within that niche.
• Bringing in a new team: An agency acquires a high-performing team in an area they didn't offer before. Why? To bring on board experienced producers with unique business connections, allowing them to secure market share and discover new opportunities for others.

Your Vision, Your Strategy

Whether you aim to be a market-leading agency with a set annual revenue or the forerunner in a specific market, plan your organic and M&A growth strategies accordingly. A well-rounded strategy should include diversification to minimize risk, not just solely focusing on growth

A good strategy isn't purely focused on growth; it also factors in diversification to lessen the risk. So, don't just snap up every narrowly defined book of business that comes your way. Lay out a roadmap for your agency's future, guiding you towards those strategic goals.

Here are some tips on how to move forward as you plan your acquisition strategy:

• Clarity is key: Your agency should have a clearly defined mission, vision, value, and culture, providing a starting point for growth and helping you avoid clashes when acquiring another agency or book of business.
• Leverage your tools: Use your AMS and other data tools to fine-tune your book of business.
• Identify the perfect acquisition: Craft your ideal acquisition profile, including game-changing factors that can help you make informed decisions.

Typically, multiples range from 1.3 to 1.9 times annual commissions. However, various factors, such as the size of the agency, quality of insurance carriers, staff compensation, sales growth, and others, can affect the agency's value, causing multiples to vary from 1 to over 3.5 times commissions. EBITDA multiples can range from 4.5 to over 11 times depending on these factors.

Insurance brokerage transactions are usually structured as asset purchases, and the pricing generally pivots on a multiple of pro forma EBITDA. Disagreements over the multiple can be settled through a negotiated earnout agreement. Acquirers usually prefer to avoid stock sales due to associated liabilities.

In terms of financing, smaller deals might be self-financed, while larger ones typically involve 70% to 75% upfront cash, with the remaining balance paid over multiple years through an earnout based on future profitability or revenue targets. The nature of the target agency—whether a platform for new business or a "bolt-on" for existing accounts—influences structure components such as stock or other forms of pricing.

Capital Needs

Insurance firms often seek financing to expand via acquisitions, increasing sales, geographical reach, service capabilities, and product diversification. Funding may also be required for purchasing or upgrading computer information systems. Commercial banks typically provide funding, with carriers occasionally assisting new agents.

Seller Financing

Typically, financing involves a blend of a commercial loan and seller financing, with most sellers receiving about 85%-90% cash at closing and the remaining balance in a seller note. All-cash deals are also commonplace, determined by the buyer's capital resources.

Generally, earnouts can be disadvantageous for sellers. These arrangements, usually two to three years long, are noted in lines of credit from the buyer or through seller financing.

Insurance agencies are often sold without financing. Small firms typically sell with Small Business Administration (SBA) loans, and many transactions involve private-equity-backed buyers. External financing or cash usually represents 85% to 100% of the deal.

Often, an agency acquisition includes capital financing from the seller—around 5% to 10% in the form of a seller note—while the rest is secured from a bank or commercial lender. A seller note can range from 5% to 15% of the total purchase price. Usually, sellers are required to stay with the agency for a year to ensure high retention.

The process of acquiring an insurance agency entails considerable effort, even more so in a challenging market. Due diligence changes fundamentally as agencies grapple with client and carrier retention. Potential drawbacks of M&As include the creation of redundancies in personnel and systems. The time and resources expended to ascertain the functioning of the new business entity, either when merging two prior independent companies or an entity absorbed operations of another, can pose considerable challenges.

Navigating these risks, an inherent part of the acquisition process, presents challenges for agency owners.

The insurance industry often experiences hard market cycles, during which carriers adjust rates to balance business competition and market conditions. These fluctuations can impact retention strategies.

During soft market periods, agencies benefit from heightened carrier competition, prompting them to capitalize on writing new clients to increase revenue. In hard markets, agencies must readjust their strategies to retain existing clientele as competition among carriers decreases and clients seek competitive premium quotes due to increasing rates.

Retention is measurable through three metrics: Client Retention, Policies in Force (PIF), and Revenue Retention. Revenue retention holds vital importance, as commission revenue constitutes a key element in an agency's profit and loss statement and valuation.

Despite a reduction in client retention and PIF, maintaining certain thresholds can keep revenue retention stable or even surpass typical levels, compensating for lost business.

Client and Revenue Retention Strategies

During due diligence, ensure accurate measurement and interpretation of client retention, PIF, and revenue retention. Assess existing retention challenges in the agency's top markets and examine factors causing business migration or losses.

Evaluate whether your agency can provide alternatives to enhance retention and investigate planned communications or efforts aimed at maintaining client retention during the transition.

Addressing these points will help potential agency buyers optimize client retention and revenue preservation.

A crucial value driver or risk factor for agencies is their carrier relations. Should a carrier change its underwriting appetite or contract status, the agency's financial performance could be jeopardized. This risk has materialized for many agencies in the current hard market, with carriers ceasing new businesses or canceling contracts.

Carrier contracts typically require notification of ownership change, allowing carriers to plan for book consolidations or build rapport with new owners. However, some carriers may not extend contracts to new owners and terminate appointments, which is why purchase terms often include contingencies to preserve agency value.

In the current hard market, these risks have evolved as carriers actively reassess agency appointments, optimizing their distribution strategy. It is crucial to understand the current appointment status and the agency's relationship with the carriers.

Carrier Retention Retention Strategies

While purchasing a book of business, pay attention to potential risks that can pose opportunities if agencies' appointments are under threat, and you maintain a healthy relationship with the carrier. Due to confidentiality agreements, thorough due diligence around carrier relationships may be challenging.

Insurance agency owners grapple with intense competition, carrier demands, staffing difficulties, and diminishing commissions. However, the indispensable role of insurance ensures a steady profession with a strong potential for earnings.

Disparate income from policy renewals presents a challenge due to fluctuations in commissions tied to varying policy commencement dates. Sales of personal policies, linked to home and auto sales, may decline during colder seasons.

Customer retention is critical to profitability. Yet, the enticing higher commissions from new policy sales often divert focus towards acquiring new customers. Advertising and comparison websites sway customers to switch carriers for better deals and improved service.

It's vital for independent agencies to manage underwriting risks to maintain robust relations with carriers. Specializing in particular types of insurance could enhance risk assessment capabilities.

Smaller agencies frequently face hurdles such as limited resources, competition from larger entities, key-person dependencies, and typical growth constraints. The rising tide of regulatory protocols and carrier-specific rules promote industry consolidation. High-performing independent agencies are therefore likely to attract a diverse range of potential buyers, including banks, public companies, private equity firms, family offices, pension funds, and institutional investors.

The insurance industry, subject to market conditions, experiences fluctuating premiums. Economic downturns can curb insurance income due to decreased new car and home purchases. Sizeable losses, mainly from natural disasters, result in escalated premiums and trimmed capacity, affecting the profits of agencies and brokers.

Insurance agencies and brokerages derive substantial revenue from carrier-based commissions. Carriers reserve the right to terminate contracts with agents not meeting annual revenue objectives, and might drop policies in areas considered high-risk, leading to significant commission losses for agencies and brokerages.

Government regulations can dramatically alter insurance premiums, coverages, and commissions. Cybersecurity laws, in particular, continue to evolve, delineating insurers' responsibilities towards customer data security and privacy.

Insurance agencies and brokerages also face competition from banks, accounting firms, and consulting firms offering insurance in their risk management programs. Adding to it, direct policy sales from carriers and underwriters amplify the competition further.

The trend towards "captive" or personal insurance is surging, enabling owners to establish their own insurance companies, customize coverages, and profit from investment income on retained premiums. For new agents, the initial years can be financially taxing due to the commission-based pay model, leading to high turnover rates in the industry. Maintaining a consistent workforce remains a challenge in the industry.

As the client base expands, preserving relationships for policy renewals arises as a hefty task. Allocating resources for business development and nurturing existing relationships becomes pivotal in ensuring continued revenue.

Economic factors like increasing interest rates, downturns, recession, or limited capital could reduce the market's allure, especially for private equity firms, potentially affecting public company valuations. However, downturn forecasts often fall short, and the standalone agency model remains a key component of benefit distribution channels.

Despite alterations in regulations and economic instability, prospects abound for successful producers, managers, and budding entrepreneurs. They can leverage the graying owner demographic and industry disruptors to boost efficiencies and extend market reach. The enduring interest from private equity accentuates the attractive profitability of agencies, assuring a profitable segment for business appraisers in the foreseeable future.

Insurance agencies are highly valuable due to their robust retention, akin to owning an annuity. Achieving growth can come from procuring new businesses and strategic acquisitions. Prospective buyers should be prepared to act promptly as top-tier agencies sell out fast.

A fundamental step in the buying process is conducting a management interview to understand the company's operations and associated risks. Here are recommended questions about the company's functions and risks, with accompanying notes to facilitate framing further discussion.

Understanding the business mix of property & casualty versus health, the retention of any producers, and having substantial proof of revenue with commission and bank statements is advisable. Buyers should also verify the agency's financial statements, tax returns, and management reports.

Key areas for buyers to focus on while considering the purchase of insurance agencies include:

• Retention rate
• Number of clients
• Number of outstanding policies
• Names of carriers
• Number of top-rated carriers affiliated with the agency
• Mix of commercial versus personal policies
• Diversity in policy types
• Business longevity
• Revenue and earnings trends
• Number of employees and their non-compete status
• Producer performance
• Geographical market served

Here are some considerations about the operational aspects of the agency:

Primary Insurance Types Sold: Different insurance types like property and casualty, health and medical, life and accident, and annuities yield varying commission levels.

Marketing Territory: The agency's operational landscape is dictated by the states in which it is licensed.

Approach to Client Acquisition: A successful agency must increase its book of business or maintain a high policies in force (PIF) count by acquiring new clients.

Effective Marketing Strategies: Referrals from existing customers are often the primary lead source for new clientele.

Strategy for Enhancing Premium Income Per Client: Success-driven agencies attempt to increase sales and broaden coverage to cater to evolving client needs. Regular policy reviews can identify additional client needs.

Customer Retention Strategies: Agencies and carriers usually run bonus programs or contests emphasizing existing customer service due to higher commissions on new policies compared to renewals.

Agency Management System: Most agencies utilize agency management systems for automating workflows and managing customer information.

Here are some industry dynamics to consider:

Navigating Insurance Market Cycles: The insurance industry goes through cyclical changes, with premiums varying significantly based on market conditions.

Relationships with Insurance Carriers: Most of the revenue for insurance agencies and brokerages comes from commissions earned through insurance carriers.

Adapting to Regulatory Changes: Government regulations can influence insurance premiums, coverage levels, and commissions.

Primary Competition Sources: Insurance agencies and brokerages face competition from various providers.

Impact of Captive Insurance: The rise of self-insurance, also called "captive" insurance, presents a competitive challenge, with some customers or customer groups adopting it.

Here are some industry dynamics to consider:

Effect of economic trends on performance: How have recent fluctuations in economic conditions influenced your business performance?

Role of the internet in marketing: Given that more customers are researching and buying policies online, yet still prefer local agents, how are you incorporating the internet into your marketing plan?

Acquisition activity in the marketplace: With an observed increase in acquisition activity in the insurance brokerage industry, how are market developments affecting you?

Opportunities created by the baby boomer generation: How are you capitalizing on the changing insurance demands as the baby boomer generation retires?

Healthcare premium pricing trends: How is your business adapting to the trend of insurers raising premiums for group healthcare plans to offset costs linked to the Patient Protection and Affordable Care Act (PPACA)?

Understanding the agency’s cash flow and financial situation is crucial. Ask about their commission rates, the customer mix between direct and agency billing, preferred payment methods, and how they handle daily expenses.

Consider the impact of market cycles on premiums and cash flow, and inquire about the agency's major monthly expenses. Know which metrics they track in managing their agency and how they handle underwriting risks for new policies.

Also, consider the agency's plans for upgrading its information systems and strategies for expansion through acquisitions. Finally, consider whether the agency owns or leases different offices.

Questions to ask during the diligence process:

Typical commission rates: Can you provide details on your agency's commission rates, considering their variance depending on insurance type and underwriting carrier policies?

Customer mix between direct and agency billing: What proportion of your customers falls into direct-billed versus agency-billed categories?

Preferred payment method for personal policies: How does your agency ensure funds availability and payment convenience for personal insurance policies, typically paid by credit or debit cards?

Cash management between policy inception dates: How does your company handle daily expenses and cash, given the timing of policy inception dates can cause uneven sales?

Impact of market cycles on premiums and cash flow: How do your premiums, short-term cash flow, and profitability respond to market cycles, including "soft" and "hard" market trends triggered by competition and major losses respectively?

Procedure for commission payments from carriers: Does your cash flow benefit from advance or as-earned commission payments from carriers?

Major monthly expenses: Given labor costs typically constitute 21% to 22% of sales and rent 1% to 2%, what are your agency's largest monthly expenses?

Tracked metrics for agency management: What metrics – potential leads, quotes, applications, or closings per agent or broker – do you monitor to manage your agency?

Managing underwriting risks for new policies: How, as an independent agency, do you handle the underwriting risks associated with selling new policies?

Plans for computer information systems upgrade: Considering agency management systems often integrate with carrier systems for timely tracking of changes and claims, what are your upgrading plans?

Expansion through customer acquisitions: What strategies do you have in place for acquisitions to drive sales growth, geographical and service expansion, and product diversification?

Office ownership or leasing: Do you own or lease multiple office locations, and have you considered real estate loans for space acquisition?

While insurance agency M&A activity has softened recently, historical trends suggest a resilient and dynamically evolving market, greatly influenced by economic factors and buyer types. Even through challenging times, the market has demonstrated remarkable resilience and adaptability.

The independent agency system has observed substantial consolidation, making M&A a key strategy for independent agents seeking growth, diversification, or retirement. Despite high M&A activity in the property/casualty insurance sector in the US and Canada, escalated interest rates caused a slight reduction in deal volume. Q3 2023 recorded 168 transactions, a 34% decrease, indicating market normalization after a PE-driven boom. 

The Fed's nine interest rate hikes over the year led to depreciation of asset values, including insurance agencies, resulting in higher borrowing costs for PE and hence, a slower pace in acquisitions. However, despite a 24% decrease in H1 2023 deals (359 deals) compared to 2022, it aligns with the five-year average transaction volume.

The 2022 M&A market registered a slowdown due to increasing interest rates and economic volatility. However, the 987 deals still surpassed the 5-year average, though representing an 8% decrease from 2021. While there was a 5% increase in private buyer activity, private equity/hybrid buyers reduced operations, dropping from 77% to 74%. Seven of the ten most active buyers made fewer deals, with Acrisure leading with 107 deals.

Despite 2020's challenges, M&A activity in 2021 soared by 30% with 1,034 transactions, primarily driven by private equity/hybrid buyers (76%). Top-performing buyers for the year included Acrisure (122 deals), PCF Insurance (99 deals) and Hub (61 deals). Large privately-owned firms showed increasing acquisition tendencies.

The pandemic year 2020 saw solid M&A activity with 774 deals, marking a nearly 20% increase from 2019. Led mainly by private equity/hybrid entities, making up 71% of all transactions. Top-performing buyers were Acrisure (108 deals) maintaining their four-year average of 100 deals annually, Hub (64 deals), and BroadstreetPartners (58 deals).

M&A activity in 2019 slightly rose from 2018, totaling 649 transactions. The primary movers were private equity/hybrid firms, with Acrisure leading the transactions (98 deals). Concentration among the most active buyers experienced a slight decline in 2019. The top buyers accounted for 58% of total transactions, falling from the previous year's 61%. Five out of the ten most active buyers completed fewer deals in 2019 than they did in 2018.

Despite a slower H1, 2018 was a banner year for insurance M&A, marked by 626 deals. Acrisure emerged as the top buyer with 101 transactions, followed by Hub (59 deals), and AssuredPartners (37 deals). The concentration of M&A activity among the most active buyers continued to increase.

Property and casualty (P&C) agencies constituted half of the total transactions in 2018 (50%), a slight decrease from 56% in 2017. Other sellers included employee benefits agencies (22%), multiline agencies (18%), and others (10%). The majority of these deals, 82.4%, were represented by retail agencies, with the remaining 17.6% made up of wholesale agencies, managing general agencies, and specialty firms.

The insurance sector M&A activity in 2017 hit a record high with 604 transactions, primary sellers being Property and Casualty agencies. The increased activity was primarily due to many P&C agencies for sale and 'Baby Boomer' owners eyeing retirement.

The top ten buyers accounted for 56% of all deals. Acrisure was particularly notable with 92 deals, followed by Hub (49 deals), and Alera (38 deals). Assured Partners, NFP, and Seeman Holtz also closed more than 20 transactions each. The number of unique buyers increased to 173 in 2017 from 153 in 2016, including 126 single-transaction buyers.

2016 was a strong year for insurance M&A, second only to 2015, with 449 transactions. Private equity-backed firms dominated, representing 53% of all transactions. Acrisure led with 50% more transactions than the next player.

Of note is the surge in transaction correlation among the top 15 buyers; this group accounted for 60% of total transactions in 2016, showing a rising trend from 54% in 2015 and 51% in 2014.

The M&A market in 2015 broke records with 451 deals, a 26% increase from 2014. Led by private equity-backed firms accounting for 54% of all transactions. 

The market saw escalated prices and valuations. Key influences included: Increased deal activity, Retirement of baby boomer agency owners, Initial anxiety over the impact of the Affordable Care Act on the Employee Benefits sector, Buyers' familiarity with the operations of the P&C sector.

The year 2014 witnessed record M&A activity with 357 deals, a 33% increase from 2013. We saw a boom in private equity-backed firms and privately-owned buyers, while bank-owned brokers experienced a decline in activity. Predominantly a 'seller's market,' Property/Casualty brokers continued as the leading seller category throughout 2014.

The M&A market in 2013 normalized to align closely with the six-year average. A shift in buyer types emerged, with private equity-backed acquirers dominating the market. The year started slow but gained momentum, closing strongly with 76 deals in Q4, second only to Q4 in 2012 and 2010/Q1 2011.