Canadian Underwriter

Where M&A strategies are leading brokerages, big or small

June 6, 2022   by Jason Contant

David and Goliath robots prepare to do battle

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Large Canadian P&C brokerages continue to make national expansion a component of their acquisition strategies.

National brokerage Navacord partnered with Abatis Risk Management (Abatis Gestion de Risques inc.) in March, which was Navacord’s first partnership in Quebec, according to Navacord brokerage Jones DesLauriers. Around the same time, Western Canada-based Westland Insurance Group Ltd. acquired two P&C brokerages in Ontario, one of which was Stewart Morrison Insurance Brokers Ltd.

“As we continue our journey of national expansion, we’re honoured to be able to serve five additional communities in Ontario,” said Westland president and chief operating officer Jamie Lyons. He was referring to Stewart Morrison’s offices in Lindsay, Fenelon Falls, Bobcaygeon, Port Perry and Peterborough.

Brokerages like Westland have openly discussed their national expansion plans. But is M&A resonating on a more national level for other brokerages?

“Our experience and discussions with brokerages are that geographic expansion is an important part of their acquisition strategy,” Alex Wong, a partner at Smythe Advisory in Vancouver, told Canadian Underwriter.

The P&C insurance advisory and consulting firm served as advisors to Winnipeg-based King Insurance and Reider Insurance, both of which sold to Westland in August 2020 and December 2021, respectively.

“Westland viewed both as important acquisitions to expand their presence in Manitoba,” said Wong. “We’ve also been in talks with other B.C.-based brokerages that want to expand into other provinces through acquisitions.”

For Intact Financial Corporation subsidiary BrokerLink, focus remains on the three regions where it currently does business — Alberta, Ontario and Atlantic Canada, said senior executives.

That’s not to say BrokerLink can’t expand into other communities, noted its vice president of acquisitions Michael Stack. It’s just the focus remains on where the brokerage does well and has supports in place for employees.

However, as demographics change and urbanization or post-COVID shifts occur, Stack said BrokerLink will adjust and move into communities where it hasn’t been historically in response to growth in those locales.

“We’ll continue to be active in further consolidation of the marketplace, but also invest in the communities in which we operate and look for new ones where we believe we can grow and add value to other communities,” said BrokerLink president Joe D’Annunzio.

Is bigger always better when it comes to M&A?

“Without a doubt, the bigger consolidators have an advantage over the smaller acquirers these days given the high prices being paid,” said Wong. “In addition to having easier access to capital, the big consolidators also have the benefit of arbitrage on their pricing.”

For example, publicly traded brokerages are valued at 14x earnings and higher, so they can get an immediate lift if they are only paying 9x earnings before interest, taxes, depreciation and amortization on their acquisitions, Wong added.

At the same time, smaller acquirers can compete on the intangibles that are important to independent brokers, if price isn’t the sole motivator for the seller. “Many business owners care about their legacy,” said Wong. “If the broker is not looking to retire immediately, their ongoing work environment becomes especially important. Even for brokers looking to retire, they’ll often care about the treatment of their key employees and clients.

“For most business owners, they’ve spent their entire career building their brokerage, so selling is an emotional experience,” he added. “As long as a smaller acquirer offers a fair price that meets the seller’s financial goals, they may be willing to sell to a smaller acquirer that they think will be a better fit.”


This article is excerpted from one that appeared in the May issue of Canadian Underwriter. Feature image courtesy of