Regional news: 
Pac-Man-like buyers igniting more insurance agency sales
Bob Graham is executive editor at Insurance & Financial Advisor and IFAwebnews.com.
They just keep coming and coming. Almost every day for the last few weeks, an insurance agency has been sold. Sometimes it’s more than one. Deal after deal after deal. Employee benefits firms, small agencies. (View all mergers and acquisitions reported on by IFAwebnews.com.) And more deals for insurance agencies can be expected, industry experts say.
After fasting for 18 months, the last few months have shown potential agency buyers are hungry, real hungry. Three big eaters, Arthur J. Gallagher, Bollinger and Brown & Brown, appear more than willing to pay to gobble up small agencies in their own Pac-Man game.
Their hunger compels other potential buyers to act faster, and that in some cases could mean a slight increase in what’s paid an agency owner for his operation. The thinking is that it’s better to pay a few extra dollars than lose the deal at the last minute.
In discussions with several executives involved in mergers and acquisitions, it seems that the current climate may finally coax agency owners who have been waiting on the sidelines off the bench. They may be adjusting to the new reality that their agency’s value – just like the value of their stock portfolio and property – isn’t what it was two or three years ago, prior to the economic crisis. They held on through the tough times, hoping for a big return later. It isn’t much stronger than their remaining will to hold on for another year or two.
As owners adjust to this new reality, they will find lots of buyers, including bigger agencies, banks, large insurance brokerages and private equity firms, ready and willing to sign on the dotted line. It doesn’t appear this Pac-Man game is going end anytime soon.
One Response
- HealthCorp Solutions Says:
August 31st, 2010 at 11:05 amBob, You are very right. Where there is fear there is opportunity. If you read up on his strategy over the past few decades, Warren Buffet likes to spend money in a downturn because the “deals are there.” Consolidation and standardization may be good especially in light of the cost of compliance in the next 5 to 10 years. Service may suffer, but who really knows. Very timely topic. Local professionals need to watch their backs and their backyards (but keep an eye open for opportunity.)
