The Forces Redefining Brokerage M&A

Uncertainty is the defining feature of today’s insurance brokerage mergers and acquisitions (M&A) landscape, but it’s just one of the forces altering dealmaking across the industry.

As the saying goes, the only constant is change. The market isn’t what it used to be, and it will continue to develop from here.

Uncertain Times

Geopolitical instability, macroeconomic volatility, and rapid technological shifts are fueling genuine anxiety across the industry because they are actively reshaping how agencies are valued, how deals get structured, and which buyers are best positioned to compete.

These forces are deeply interconnected. Geopolitical disruption—tariffs, trade conflict, energy volatility—feeds directly into macroeconomic uncertainty. Historically, changes in U.S. gross domestic product have affected insurance brokerage revenue growth. When businesses have more trucks on the road, more payroll, more square feet, they pay more for insurance, and therefore brokers earn more commission. When that growth stalls or reverses, broker revenues face headwinds. Growth, in turn, directly affects agency valuations.

That brings up some tough questions for agency owners, many of whom have substantial personal wealth concentrated in their business.

• Can I invest enough in technology and talent to stay ahead of competitors that have greater resources?
• Will my clients’ exposures shrink as they reduce headcount and close locations or pull back on expansion?
• Is now the right time to convert some of my equity into cash by finding a buyer that can help me navigate what’s coming?
• If something happens to me, what happens to my team and my clients?

Artificial intelligence adds another layer of complexity. Macroeconomic uncertainty has always put the focus on when or whether agencies will grow. Now, AI is creating competitive uncertainty about how they’ll operate. Agency owners are watching competitors deploy AI-powered tools for prospecting, placement, and service delivery and wondering whether they can afford to build or buy those capabilities independently. For many, the answer is increasingly, probably not alone.

These aren’t abstract concerns; there’s real potential for AI to affect how insurance brokerage businesses are valued, and therefore M&A. The recent market correction for the industry’s public brokers was widely reported to have been linked to this concern. Public broker valuations play a role in the broader M&A market, not only in those larger firms’ investments, but also in how their private broker competitors are viewed in comparison. This uncertainty may lead sellers to look for certainty before the value of their business is put in doubt.

The Changing Marketplace

This uncertainty is only part of the way the market is redefining itself. The structure of who’s buying and how deals get done has shifted meaningfully in recent years.

For the better part of 15 years, traditional private equity (PE)-backed platforms defined the tempo of insurance brokerage M&A. The playbook was familiar: raise capital, acquire agencies to reach scale, sell to the next sponsor, and repeat the cycle. But when interest rates climbed in 2022 and 2023, multiples peaked, and rate-driven organic growth slowed, the math became more challenging. Some platforms, which had been buying agencies with the goal of flipping them for more, had no clear path to exit those investments on their terms.

Publicly traded brokers have seized the opportunity. With less exposure to interest rate changes, ready access to capital markets, and a willingness to fully integrate their new operations, they have stepped in to purchase PE-backed platforms needing a buyer. There are many notable examples of this, including Gallagher’s acquisition of AssuredPartners, Aon’s purchase of NFP, Marsh McLennan’s deal for McGriff, Brown & Brown’s purchase of Risk Strategies, and WTW’s acquisition of Newfront.

These massive tie-ups have left many potential sellers with a new set of questions. If I sell my agency to a business that plans to resell it:

• Will I be as excited about the ultimate buyer and the price my agency is later resold at?; and
• What does a second integration into a larger firm look like for my employees and clients?

What the Market Demands

The shifting landscape has changed what agency leadership teams expect from a buyer; meeting those expectations is now table stakes.

Fifteen years ago, the offer of permanent patient capital and operational independence was often enough to attract entrepreneurial agencies. As more buyers entered the market and competition for quality agencies has intensified, platforms have had to differentiate.

Sellers looking only for cash for retirement have fewer questions and many options. However, sellers who want to keep building their businesses now demand more than capital. Leadership teams want to see concrete evidence that a platform can help make their business better and offer resources for growth.

The platforms navigating this most effectively today share several attributes. For one, when sellers retain real, material, local, and liquid equity, they are meaningful shareholders. They participate in profit distributions or dividends. Accordingly, they behave like owners, not employees, which drives long-term alignment with their partner buyer.

These successful platforms also offer support for deal sourcing, financial diligence, legal resources, and capital that acquired agency leadership teams can deploy according to their own growth strategies. They invest in recruiting, training, data and analytics, carrier relationships, and practice group development. Finally, critically, they create environments where agencies can learn from one another—sharing what’s working in sales, service, marketing, and M&A.

Some buyers aim to establish uniformity across their organization, while others (BroadStreet included) seek partner agencies with greater autonomy. Each of those agencies has unique market strategies, client bases, and operational approaches. This method demands accepting the premise that the agency owner has been successful for good reasons—and to customize support, technology, and analytics accordingly. This also creates conditions for powerfully effective peer-driven knowledge sharing. Each partner agency is a source of wisdom. In this way, a firm in Ohio can learn from what worked for a firm in Texas without waiting for a corporate mandate.

What’s Next

The brokerage M&A market will likely keep shifting. AI doesn’t eliminate the need for an insurance advisor, but it will increasingly allow the agencies that operate on scaled, data-enabled platforms to stand apart. They are big enough to enjoy economies of scale in talent and technology investment, with data analytics quality sufficient to have insights into the business that allow for actionable intelligence, and the capital to support those opportunities.

The competitive edge will belong to operators with a personal incentive to deploy tools that improve prospecting, placement, and service efficiency in ways that serve their specific markets, rather than agencies waiting for a corporate technology team to roll out a one-size-fits-all solution.

Agencies that fail to invest in these technologies aren’t necessarily unattractive targets, but they will struggle to keep pace against their tech-forward peers. Firms that successfully adopt AI and data-driven tools will become more valuable. Their innovations can be exported across a platform, creating value that extends well beyond the original acquisition. Buyers’ ability to identify, acquire, and support these technology-forward agencies is becoming a critical competitive advantage.

That forward-thinking capacity extends to specialization. Platforms that can share knowledge across agencies enable a producer at one agency who encounters a risk outside their expertise to find a specialist somewhere else in the network. Deep specialized advisory and associated market relationships are hard to replicate with technology and therefore are less susceptible to the vagaries of AI’s influence.

The fundamentals that drive the insurance brokerage space—trust, cultural alignment, expertise, and consistent execution over time—don’t shift with market cycles. But recent history has proven that everything else can change. Look for that to continue.