Agency owners must stay informed about significant new trends in the insurance industry. The following is part one of a two-part article highlighting seven industry trends insurance agencies should track for 2026.
2025 M&A Activity & Pricing
The field of buyers has shifted while the pace of acquisitions has slowed for a few reasons. In some situations, buyers are strategically slowing down. Some acquisition activity has been dampened by increased inflation and higher interest rates.
According to OPTIS Partners, “the deal count is down 7% from the same three quarters, now 520 transactions versus 562. For the trailing 4 quarters, deal pace is 741.” According to Sica Fletcher, an M&A broker, “the reasons for the slowdown are related to the cost of capital and stable to rising valuations, as well as global economic uneasiness resulting in stricter allocation of capital.”
The prices currently paid by publicly traded brokers, large regionals, and agencies backed by private equity firms remain high. They will remain high for the desirable firms. Since supply is dwindling, prices may be even higher for those that remain if they fit the profiles of today’s major buyers. Some buyers with weaker balance sheets may be forced to the sidelines if interest rates do not decrease significantly.
Optis Partners reports that “those who picked up the most were Alera Group up 100%, HighStreet Partners up 75%, and King Risk Partners at 53%.”
According to our discussions with key acquirers, M&A activity is expected to continue in 2026, though with some caveats. Here are some of their responses:
HUB added more than 50 merger partners in 2025, according to Clark Wormer, M&A director. “M&A is the foundation of our growth strategy, enabling them to help partners expand their business and unlock new opportunities,” Clark said.
Foundation Risk Partners (FRP) began in November 2017 and is approaching $800 million of annualized revenues by year-end 2025. They do not announce their transactions but are now among the top 20 largest U.S. independent agency brokers. They made numerous acquisitions this past year and will continue that trend in 2026. FRP is looking for more add-ons and new niches to spread nationwide. They would especially like to add firms in the Pacific Northwest, Texas, Arizona, the Rockies, and New England. They are also looking to continue building out existing regions, including the Northeast, Southeast, the Midwest, and California.
Alliant Insurance Services, based in Irvine, California, celebrated its 100th anniversary earlier this year. Alliant has become the largest privately held broker in the U.S., with over 14,000 employees and revenues approaching $6 billion annually. The company is viewed as having the highest organic growth rates among its peers. Alliant has never been considered a serial acquirer but continues to seek high-quality businesses that fit well within their core operations: specialty and middle market P&C, underwriting, employee benefits, and consumer operations. So far in 2025, the company has acquired 16 agencies with many more on the horizon.
Inszone will have completed 50 acquisitions by the end of 2025, and closed 49 acquisitions in 2024. With 1,000 employees, Inszone has now expanded into 21 states, supporting clients with commercial and personal lines, and offering employee benefits. Inszone provides partnering agencies with a well-established, fully integrated platform from which to support growth and streamline operations. They are now in the top 30 on Insurance Journal’s Top 100 ranking.
Choice Financial Group (CFG) completed nine transactions in 2025 and expects to sustain, or modestly increase, its M&A pace in 2026, prioritizing cultural and strategic alignment over deal volume. Volume by year end will be $81 million in revenues.
Arthur J. Gallagher will continue to be a good player in the acquisition field. They do not advertise the number and value of their transactions but continue to be competitive and in search for great agencies throughout the country. Two of their largest acquisitions this past year were Woodruff Sawyer of San Francisco and, closing January 1, 2026, Assured Partners.
King Risk Partners ranks No. 51 on IJ’s Top 100 now and is one of the fastest-growing firms in the U.S. The firm acquired 16 firms through Q3 2025, according to Optis.
BroadStreet Partners is now the 6th top broker at $2.210 billion in revenues, and led all buyers with 57 transactions through the third quarter of 2025, which is 44% above their previous 5-year average.
Acrisure is the third-largest broker and has $3.285 billion in revenues. They had around 100 or more transactions each year from 2019 through 2022, but only completed 22 transactions for the first three quarters of 2025.
Patriot Growth is ending 2025 at $625 million. According to Jonathan Sherman, the senior head of M&A, “Over 2024 and 2025, Patriot has completed 46 new partnerships and remains focused on identifying high-growth, culture-aligned agencies whose leaders want to stay actively engaged in their businesses. Our 2026 strategy includes partnering with agencies that strengthen our specialty practices–construction, captives, risk management, and self-funding or alternative risk–to expand our national capabilities while preserving local decision-making.”
World Insurance will celebrate its 15th anniversary next year. They are now the 14th largest broker with $644 million in revenues. They will have closed 38 deals through December 2025, and expect that for 2026 they will remain within their average of 35-40 acquisition range again. Their focus is to find quality deals that fit their fully integrated, full-service national brokerage model. They have nearly unlimited capital for good agency businesses.
There are other relatively newer buyers, especially High Street, which is now No. 15 of the top brokers at $576 million; Relation, which is close at $312 million in revenues; and ALKEME which is at $50 million. Most of these are funded by private equity and venture capitalists. They continue to solicit and buy independent agencies aggressively. They all have substantial capital to use for transactions.
Two previously large buyers that were acquired in 2025: Assured Partners, sold to AJ Gallagher, and Risk Strategies, sold to Brown & Brown.
Private equity firms have been buying insurance agencies for their investors. This makes a lot of sense because the return on investment is typically 20% to 30%, which is greater than most other available investments today. PE firms often still pay 9 to 11 times EBITDA for well-run agencies.
Deal Terms. There is a broad price spectrum today, depending on the seller’s motivation and the uniqueness of the item. Most down payments consist of approximately 80% cash price and the balance in stock. Sometimes, the stock can be used for key perpetuation candidates to ensure equity that the seller and buyer want to remain in the agency after the sale. In this way, they feel part of it and have some skin in the game, staying on for years after the key owners retire. We usually recommend that sellers take the stock, as it can yield a significant additional amount of money when they sell it, given the high growth rates these acquirers achieve compared to a typical independent agency. A number of these buyers have been averaging about 30% annual growth in stock value.
Smaller books are purchased at around 6.0 to 8.0 times EBITDA. There aren’t many books or agencies today that do not command at least two times revenues as a minimum.
Internal Perpetuation
It is often difficult for small and medium-sized independent agencies to perpetuate internally. The next generation often lacks the management and sales skills to replace the majority owner. In some cases, there are no perpetuation candidates at all. If this is the case, an external sale makes much more sense, as an internal sale may not work out, and retired principals don’t want to return to work.
If an owner sells internally, it is usually for less than the value of an external sale. Existing expenses will usually not change, unlike those in an external sale. Also, there is a risk that the internal candidates might not work out, and they often don’t have any or very little money to do a buyout.
The terms of internal purchases are typically 20% to 30% down, with the buyout lasting 5-10 years. The length of time it is paid out depends on the agency’s cash flow and whether the internal buyer has any money of their own. An internal buyout rarely has an earn-out component, so the value should be conservative to prevent paying too much. Often, the internal buyer uses the agency’s cash flow to pay for the loan over time. Buyers often want the retiring owners to retire after a few years so they can manage the firm without their influence and use their compensation and perks to pay off the note.
Often, the retiring principal finances the deal for the internal candidate. Oak & Associates recommends that the internal buyers obtain a 10-year loan, so the retiring shareholders don’t have to worry about getting paid. We also recommend that all owners of internal sales consider whether a GRAT (Grantor Retained Annuity Trust) would be the appropriate internal perpetuation tool if the owners are still healthy. There is typically a minimum payout of five years, and both principal and interest can be deducted.
Potential Tax Law Changes
There is little concern about tax increases. President Trump’s previous tax plan was expected to expire, and the pre-Trump 39.6% ordinary income tax rate would replace the current 34.6% ordinary income tax rate. With the passing of the Big Beautiful Bill, many tax increases were avoided and the current tax law will likely become permanent. Trump is also hoping to implement no income taxes on tips, overtime pay, or Social Security income. The legislators will have to agree to these things. There is a good chance Trump’s promise to lower corporate taxes will be implemented.
Any changes to capital gains taxes under the new Trump administration would result from broader tax negotiations. There appears to be no tax reason for business owners to change their schedule at this time when selling their businesses.
Part two of this report in January’s issue will include discussions on key trends for group benefits and health insurance, natural disasters, technology, and overall P&C market conditions.
Oak is the founder of the international consulting firm, Oak & Associates based in Sonoma, Calif. and Bend, Ore. Schoeffler is an associate of the firm. Website: www.oakandassociates.com. Phone: 707-935-6565. Email: catoak@gmail.com.
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