With growing concerns of the timing and severity of an inevitable federal capital gains increase, the M&A market is very active.
As of May 31, 2021, there have been 261 announced merger & acquisition (M&A) transactions in the U.S. The 261 transactions announced in 2021 represents a 26.6% increase compared to the number of deals announced this time last year. The discrepancy between this year and last year’s deal activity is a clear depiction of the screeching halt the M&A market experienced in the beginning months of lockdown due to COVID-19.
With growing concerns of the timing and severity of what appears to be an inevitable federal capital gains increase, the M&A market is very active. Many firms are pushing hard to the finish line in an attempt to capture today’s current tax rates. If taxes increase with an effective date of 1/1/22 or beyond, there will likely be a significant increase in the total number of announced transactions that peaked in 2020 with a total of 711 deals.
Private capital backed buyers accounted for 183 of the 261 transactions (70.1%) through May, while independent firms have held steady at 18.0% of the total deal count. Deal activity across all buyer categories has remained proportional to what has been observed over the last three years.
M&A deals involving specialty distributors have continued to move at a pace even greater than that of retail firms. Deals involving specialty targets are up 93.8% year-over-year at 62 transactions. This pace is expected to continue throughout the balance of the year.
Hub International Limited (Hub), Integrity Marketing Group LLC, and Broadstreet Partners, Inc. are the top three most active buyers in the U.S. in 2021, contributing a combined 20.3% of the 261 total transactions. The top 10 most active buyers completed 123 of the 261 announced transactions (47.1% of total).
Notable transactions that were announced in May include:
- May 5: Hub announced that it acquired the assets of Conover Insurance Services, LLC. Headquartered in Bellevue, WA, Conover is one of the largest insurance and financial brokerages in the Pacific Northwest and employs nearly 100 individuals. The firm specializes in the agriculture, construction, transportation, and tribal industries and is set to strengthen Hub’s specialty practice as it expands its presence in the area.
- May 10: Hub announced that it acquired the assets of Ion Insurance Corporation. Headquartered in Cheshire, Connecticut, Ion Insurance is a full service, independent insurance agency providing personal and business insurance solutions throughout the region.
- May 19: Alera Group, Inc. announced that it acquired Direct Benefits. Headquartered in Saint Paul, MN, Direct Benefits specializes in insuring individuals, families, retirees and small businesses with dental, vision, pet, travel, short-term medical and ID theft coverage.
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Sources: S&P Global Market Intelligence, https://www.insurancejournal.com, https://www.businessinsurance.com/ and other publicly available sources.Disclosure: All deal count metrics are inclusive of completed deals with U.S. targets only. Scorecard year-to-date totals may change from month to month should an acquirer notify MarshBerry or the public of a prior acquisition. 2021 statistics are preliminary and may change in future publications. Please feel free to send any announcements to M&A@MarshBerry.com.
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