Despite Market Volatility, Optimism in M&A for 2025 Remains High

The U.S. insurance brokerage M&A market has entered 2025 with resilience and momentum, despite persistent macroeconomic headwinds. While deal volume in Q1 appeared to show a rapid start, much of that energy was a spillover from 2024 – a year that closed with sellers delaying transactions for tax timing reasons. Now that the early wave has leveled out, year-to-date activity is nearly even with the same period last year. Yet, the underlying sentiment remains bullish: demand is strong, buyers are active, and capital is still flowing.

At DOXA, we view this equilibrium not as a slowdown, but as a moment of recalibration—a brief plateau that underscores the enduring strength of the M&A engine in the brokerage space.

A Quick Start, A Measured Rebalance

By the end of April 2025, the U.S. market saw 196 announced M&A transactions—just one less than the 197 recorded in the same period last year. This close parity is notable considering April’s softer showing of only 69 announced deals, compared to 83 in April 2024. After starting the year 11% ahead of Q1 2024’s pace, the market has gently corrected back toward equilibrium.

Why the shift? Partly, it’s macroeconomic noise. Uncertainty surrounding trade policy, inflationary concerns, and tariff headlines have cooled the velocity of some transactions. Additionally, the sharp contraction in Q1 GDP—a 0.3% decline after 2.4% growth in Q4 2024—has naturally led some sellers and investors to pause.

But let’s not confuse caution with retreat. The GDP figure, while headline-grabbing, was heavily influenced by historically large drags from net exports and a temporary slowdown in consumer activity. Markets, in turn, reacted with volatility, but not collapse. As of April 30, the S&P 500 and Dow Jones Industrial Average were down just 4.3% and 4.4%, respectively—modest drops in the context of broader resilience.

Buyers Remain Bullish—and Capital is Waiting

One thing remains clear: demand for quality insurance brokerages is still outpacing supply. Especially in the specialty distribution space, where only 31 of the 196 deals so far have involved niche or program-focused agencies, buyers continue to chase limited inventory.

Private capital continues to dominate the landscape. Through April, 133 of the 196 transactions (68%) were led by private equity-backed firms—a clear signal that the dry powder accumulated in prior years is still being deployed with conviction. Independent agencies made up 19.9% of deals, a strong showing for regional and founder-led firms eager to expand.

Bank-led deals, once a more regular feature, remain quiet with only four transactions announced so far this year. This isn’t surprising given ongoing banking sector caution and regulatory pressures. However, the vacuum left by traditional lenders has opened the door wider for agile acquirers with flexible capital stacks and a long-term growth mindset.

Quality Over Quantity

We’re seeing a more surgical approach to acquisitions. Buyers aren’t chasing growth for growth’s sake. They’re targeting firms with:

• High retention and organic growth

• Deep expertise in specialty markets

• Leadership teams willing to stay engaged post-close

• Tech-forward infrastructure or digital distribution channels

In this kind of environment, partnership-minded sellers—those looking to grow with the right strategic or financial backer—are well-positioned. At DOXA, we advise brokerages considering a sale to prioritize preparation. The market will reward clean books, scalable systems, and a compelling story.

Spotlight on Recent Transactions

Two major deals this April serve as barometers for the market’s confidence in long-term fundamentals:

• April 11: A prominent North American brokerage completed a recapitalization with a new investor group, including long-term institutional investors and global insurers. The company’s co-ownership model, with hundreds of local equity holders, is being cited as a key factor in its continued independence and culture-forward strategy. With digital transformation and regional expansion on the roadmap, the new capital partners are positioned to support multi-year growth.

• April 15: A specialty insurance group completed the divestiture of its commercial insurance business to a private equity firm managing over $50 billion in assets. The new brand (to be named later) will continue to build on the group’s portfolio of 15 niche insurance programs, led by a newly appointed CEO and supported by the original founders in board roles. This deal underscores how PE buyers are carving out assets with clear specialization, strong underwriting, and room to scale.

These transactions—among many others—reflect the level of sophistication in today’s market. It’s no longer just about top-line revenue or headcount. Buyers are leaning into structural alignment, brand differentiation, and cultural integration.

Looking Ahead: What’s Driving 2025 Optimism

While the headlines focus on economic risk, DOXA sees several tailwinds likely to support continued M&A activity through the remainder of 2025:

1. Fed Rate Cuts Still Possible: With inflation stabilizing, the Federal Reserve has held rates steady for three consecutive meetings. Any signal of a cut could reignite even more acquisition interest as cost of capital decreases.

2. Generational Ownership Shifts: Many brokerage principals are entering retirement windows, and succession planning remains a challenge. The pressure to find capital and continuity solutions will keep deals flowing.

3. Strategic vs. Opportunistic Buyers: The shift from opportunistic roll-ups to strategic combinations is healthy for the industry. Partnerships are being built with purpose—and with long-term operational synergies in mind.

4. Digital + Specialty Convergence: Firms that blend specialty knowledge with digital distribution capabilities will continue to command a premium. Buyers recognize the compound value in tech-enabled niche underwriting.

Final Thoughts: Equilibrium Isn’t a Plateau—it’s a Platform

M&A activity may have settled into a rhythm after a frantic Q1, but this isn’t stagnation—it’s maturation. The insurance brokerage landscape is becoming more intelligent, more nuanced, and more focused on value creation than volume chasing.

At DOXA, we believe this environment rewards clarity, conviction, and readiness. For owners, this means thinking about your next chapter—whether that’s expanding with a partner or preparing for a strategic exit. For buyers, it’s about refining the thesis and doubling down on deals that align with culture, capability, and client value.

If you’re thinking about selling your firm, merging with a like-minded agency, or just want to explore your options—we’re here to help. The market may be cooling in headlines, but beneath the surface, there’s real energy.

Let’s talk.