There were 359 announced insurance agency mergers and acquisitions in the first half of 2023, down 24% from 475 in the same period in 2022, according to OPTIS Partners' M&A database. 

The decrease follows a 17% decline in the first quarter of 2023 compared to 2022 and a 23.4% decrease in 2022 compared to 2021.

Higher interest rates and uncertain economic conditions continue to limit deals. However, the first-half deal total equaled the number of deals in the first half of 2020 and was equal to the five-year average between 2015 and 2020.

Deals hit an all-time record in 2021, with an increase of 30% compared to 2020. A large number of 2021 deals were completed in the fourth quarter as sellers looked to avoid a potential federal tax increase, which never materialized.

“The drop-off in deal count continues as we move through 2023, which isn't surprising anyone if for no other reason than the cost of capital has increased so much," said Steve Germundson, a partner at OPTIS Partners, an investment banking and financial consulting firm specializing in the insurance industry.

“We're seeing the effects of relative inactivity of some previously very active buyers," added Timothy J. Cunningham managing partner at OPTIS. “Yet, others are successfully completing more deals."

Among buyers, Hub International and BroadStreet Partners recorded the most transactions in H1 2023 with 29 and 26 deals, respectively. Inszone, World and Patriot Growth followed with 22, 17 and 16 deals, respectively. 

Among the most historically active buyers for which deal volume declined materially compared to the same period in 2022 are PCF (down 98%), Acisure (down 74%) and Highstreet Partners (down 57%). These three firms account for over 75% of the net decrease in the number of completed transactions. 

Active firms that picked up the deal pace in the first half of 2023 versus the first half of 2022 are World Insurance Associates (up 112%), Risk Strategies (86% higher) and Broadstreet Partners (up 62%).

Will Jones is IA editor-in-chief.