Canadian Underwriter

Canada’s most popular brokerage M&A models

January 24, 2022   by Jason Contant

Handshake following an acquisition

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Private equity-backed brokerages that acquire 100% of a brokerage and then offer the ability to roll over some equity continue to be Canada’s most popular M&A model, but others are gaining traction, a P&C transaction advisor says.

“While obtaining markets is always a challenge, it is not in the best interest for Canadian domestic insurance companies to rely on a handful of Canadian brokerages to control the distribution,” says Mike Berris, a partner at Smythe Advisory, a B.C.-based property and casualty insurance advisory and consulting firm.

One model gaining traction allows high-achieving producers and other insurance professionals to get into the business without necessarily having contacts, Berris explains.

“[They] are basically almost running like franchises, where… [the brokerage] will provide the markets, they’ll provide the backroom, and allow these [insurance professionals] to build up their own books of business,” Berris says in an interview. “It’s not perfect because you don’t have market, you don’t own the contracts yourself, but it’s a nice start. And then eventually they go on their own.”

This particular model is “really starting to gain traction,” Berris says, pointing to brokerages such as Sussex Insurance, Billyard Insurance Group, and Canadian Broker Network as examples.

Also, some new private equity players are offering different models, such as partial investments and financing for employees to become shareholders, Berris reports. While this is not a widespread trend, “this allows young, up-and-coming producers and insurance professionals to have access to become entrepreneurs.”

Smythe Advisory is also seeing more family and employee succession arrangements, “where the owners aren’t going for the simplest deal at the highest price,” Berris says. “They’re willing to take some discounts in the value to pass the business, to keep the business intact.”

What does the future hold for M&A in the Canadian P&C brokerage space?

Berris says that while he is still optimistic about the staying power of general retail brokerages (because they can offer a unique value proposition through service, local knowledge, and relationships), at some point M&A activity will start to decline as fewer and fewer brokerages are available for acquisition. “I don’t think it’s happening now, but it has to happen,” he says.

“I think it is important to stress that we regularly work with publicly-traded and [private equity]-owned brokerages and have found them to be professional, highly ethical, and deliver what they promise,” Berris says. This is not the case in other industries, where consolidators can be “terrible corporate citizens.”


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