Incentives Matter in M&A

In today’s insurance brokerage M&A market, the value of a transaction extends well beyond the purchase price.

As competition for experienced talent intensifies and “lift outs” become increasingly common, buyers and sellers alike recognize that keeping the people who built the business is just as important as acquiring client relationships. The result is a growing emphasis on transaction structures that reward and retain non-shareholder employees before, during, and after closing.

Historically, the financial benefits of a sale primarily accrued to shareholders. Now, many sellers want to recognize the years of dedication, client service, and operational excellence that helped create the value being monetized. At the same time, buyers often encourage—or even require—retention programs as part of the acquisition, understanding that the long-term success of the investment depends on maintaining continuity among producers, account managers, and operational leaders. This approach aligns with MarshBerry’s view that strategic compensation and equity incentives are powerful tools for attracting, motivating, and retaining top talent.

Several structures have emerged for rewarding non-shareholder employees:

Closing bonuses (paid at or just prior to closing) provide an immediate reward for past performance and acknowledge employees’ contributions to building the firm. Because these payments are treated as compensation rather than purchase consideration, they are typically funded from company earnings instead of transaction proceeds and provide an expense deduction to the selling firm.

Retention bonuses shift the focus toward the future. These incentives are often paid over a defined period following closing, encouraging vital employees to remain through integration and continue supporting client relationships. Deferred payment schedules also provide stability during ownership transitions.

Bonus pools tied to the transaction’s earnout are another increasingly popular strategy. Under this approach, a percentage of future earnout proceeds (averaging around 20%) is allocated to select employees if the company achieves its performance targets. This structure creates alignment between employees and the buyer by rewarding the entire team for helping maximize post-closing growth. While not every buyer permits earnout-sharing because of its potential impact on financial performance, it can be an effective retention and motivation tool when thoughtfully structured.

Equity grants, stock options, or profits interests in the acquiring organization are provided in some transactions to create long-term wealth-building opportunities. Rather than simply offering a one-time payment, these programs give high-performing employees the opportunity to participate in future enterprise value creation. Participation in equity-based incentives helps align interests, strengthen retention, and position firms for sustained growth beyond the transaction itself.

Ultimately, the most successful M&A transactions don’t just transfer ownership—they preserve the talent that made the deal viable in the first place. By thoughtfully rewarding and retaining non-shareholder employees, buyers and sellers can strengthen alignment during the deal, reduce transition risk, and position the business for long-term success.

M&A Market Update

As of July 31, there were 360 announced insurance brokerage M&A transactions in the United States in 2026—down 8.9% from 395 deals last year at this time. Private capital-backed buyers accounted for 268 of the 360 deals (74.4%) through July.

Independent brokers’ share of deal activity has steadily declined over the years, mostly due to private equity’s scaled and sustained increase in M&A. Through July, independent acquirers accounted for 31 transactions, representing 8.6% of the market, while bank buyers announced six transactions to date this year. Deals involving specialty intermediaries as targets accounted for 61 transactions, representing 16.9% of all acquisitions.

Ten buyers accounted for 51.9% of all announced transactions year to date, while the top three (BroadStreet Partners, Inszone, and ALKEME) represented 29.7% of the 360 deals.

Notable Transactions

• June 30: Sequel Insurance Agencies acquired Paris-Kirwan Associates, a New Jersey-based independent insurance agency. The acquisition enables ParisKirwan to maintain its established identity and management team while gaining access to Sequel’s expanded resources, specialty products, and technology platform. It was among five deals Sequel announced at the end of June. MarshBerry advised Paris-Kirwan in this transaction.
• July 1: ALKEME Insurance acquired Blue Sky Insurance, a Southern California-based independent brokerage specializing in solutions for apartment and multifamily properties. The acquisition (one of eight ALKEME completed in the second quarter of 2026) strengthens ALKEME’s capabilities in the habitational insurance market, an area that has become increasingly specialized as property owners navigate evolving underwriting conditions and greater reliance on surplus lines capacity. MarshBerry advised Blue Sky Insurance in this transaction.