The pace of agent and broker M&A dropped 18% year-on-year to 155 transactions in Q1 2024, the lowest in 15 quarters, according to an Optis Partners report.
This also marked the fifth consecutive quarter with deal volume below the long-term trend line.
By company, BroadStreet Partners was the lead buyer in the quarter with 29 deals, more than doubling from 14 in the same period last year.
Inszone Insurance Services stepped up to second place with 12 deals, followed by Hub International, the most acquisitive US brokerage of 2023, with 10 deals. Alkeme joined the top 10 list again with five acquisitions during the period compared to three in Q1 2023.
Meanwhile, buyers that were historically very active, such as High Street Partners, Acrisure, Patriot Growth Insurance Services, and Risk Strategies, all did fewer deals in Q1 2024 versus the prior-year period.
Private equity-backed and hybrid buyers accounted for 71% of all transactions in Q4 2023 and Q1 2024.
“While some buyers continue to exercise discipline in pricing, there are still plenty on the buy side that will maintain higher valuations, particularly for the better firms,” Optis wrote.
The consulting firm noted that “there is little reason to believe that deal pace will decline from current levels”, as active buyers are still looking to deploy capital.
“[The] primary concern may simply be on the supply side,” it added. “Nonetheless, there are still a lot of agencies that will need to sell.”
As this publication has previously reported, the current high interest rate environment has impacted broking cash flows and cooled M&A activity across the board. And while rate cuts are expected for 2024, debt costs are not anticipated to return to anything near 5% levels.