“Given the amount of capital in the market and the number of buyers in the space, we do think 2023 will be an active year for M&A, though maybe not as active as 2021,” said Crites.

Reagan Consulting is a management consulting firm providing strategic consulting, valuation, capital raising, and M&A services to independent insurance brokers and agents. Crites said overall M&A activity this year has “moderated” as higher interest rates make cost to capital much more expensive.

“Will sellers feel comfortable selling now or waiting? It really depends on where they are,” Crites continued. “But we think today’s market can still provide excellent economic returns for folks who have built their business over 20 to 30 years.”

However, “well-run, youthful and specialized” agencies will continue to do well in the 2023 M&A marketplace. “If you’ve established a history of organic growth, everyone will want a seat at the table,” Crites said.

Organic growth dips in Q3 but still strong for the year

Reagan Consulting also conducts a quarterly growth and profitability survey tracking the performance of brokers and agents across the US. The survey’s latest edition revealed that brokers and agents posted their first decline in organic growth in nearly two years. The organic growth rate was 9.5% in Q3 2022, sliding from its double-digit high-water mark of 10.2% the previous quarter.

“We’ve seen accelerating organic growth up until this quarter. We’re still at nine and a half percent organic growth through the first nine months of the year, but it is a slight decline from the peak that we saw last quarter,” Crites commented.

The loss of momentum could be a sign of economic realities beginning to impact the industry. But brokers and agents continue to set a “blistering pace” in 2022, with nearly half (45%) of respondents