June 12, 2020
By Steven M. Weiss and Emily K. Watson
With hundreds of deals reported each year during the last 15+ years, the insurance distribution market has been one of the more consistent M&A sectors pre-pandemic with new buyers entering the market each year. The reason for the run-up is clear: private equity loves low capex, recurring revenues, and high retention rates on a product that, in simple terms, is non-discretionary. Even though some buyers have temporarily hit the pause button on M&A activity, Levenfeld Pearlstein remains bullish on the sector as a number of the buyers whose corporate ethos is rooted in M&A have drawn on massive credit facilities to continue to support acquisition opportunities during the current environment.
Levenfeld Pearlstein partners Steven M. Weiss and Emily K. Watson interviewed a number of the most active investment bankers and buyers in the insurance distribution space to get a better sense of what the insurance distribution M&A market looks like in the current environment.
The investment bankers and the buyers were asked the same four simple questions. Today we are sharing the responses from the investment bankers, and within the next few days, we will share the responses from the buyers. Rather than provide an interpretive narrative of the interviews, we have conveyed the responses in their own words, edited for clarity.
What are the biggest challenges of completing the purchase and sale of an agency in the current environment?
If you were pitching a potential agency seller, what would you say are the reasons why now is actually a good time to transact?
What are the key attributes of a target agency that make it most attractive to a buyer in the current environment?
What are the key considerations in integrating an agency post-acquisition in the current environment?
About the Authors: Levenfeld Pearlstein is a leading law firm for buyers and sellers of insurance agencies. Partners Steven M. Weiss and Emily K. Watson lead teams of M&A, tax, employment, employee benefits, and real estate leasing lawyers that have closed on the purchase and sale of more than 150 insurance agencies.
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