Q2 M&A Marketplace Activity
As of August 31, 2020, there have been 369 merger & acquisition (“M&A”) transactions announced in the United States. The marketplace is continuing to gain traction following the slowdown in the second quarter. The total deal count YTD is only a 5% decrease compared to the number of deals that were announced at this point last year.
Private Capital backed buyers continue to dominate the marketplace, completing 64.7% of all announced transactions. We believe that this will continue to be the case into the foreseeable future, especially as these buyers continue deploying capital following the initial brunt of the pandemic. The debt capital markets froze for a few months but are essentially fully functional at this point.
Independent firms accounted for 63 of the 369 (17.1%) announced deals, which is consistent with the activity observed in this buyer segment so far in 2020.
BroadStreet Partners, Inc., Acrisure, LLC and AssuredPartners, Inc. remain the top three most active buyers in 2020, contributing to a combined 24.6% of the 368 deals announced so far this year. The Top 10 most active buyers completed 191 of the 369 total announced transactions (59.5% of the total).
Deal activity is anticipated to steadily increase through the end of the year. Most buyers have resumed their typical deal activity and seller interest is on the rise as concerns of increased taxes seem to be pushing owners to accelerate their plans for a transaction.
The number of total announced transactions in 2020 is poised to land between the total deal count for 2018 and 2019 (580 and 651, respectively). As of August 31, the average number of announced transactions per month has remained at 46 deals. When applying this figure to the remaining months of the year, the 2020 deal count would come to 546 transactions.
A few notable large transactions:
- On August 3, NFP announced the acquisition of Rose & Kiernan, Inc. The Albany, NY, based broker has 150 years of experience in the New York and New England area, with sophisticated capabilities in P&C, surety and employee benefits. Financial terms of the deal were not disclosed.
- Randall & Quilter Investments Holdings Ltd. announced on August 10 its agreement to merge its wholly owned subsidiary, Sandell re Ltd. with Tradesman Program Managers LLC in return for a 35% interest in the combined entity. Tradesman is a New York based MGA that underwrites liability insurance in the construction industry. The initial book value of Randall & Quilter’s stake is $43.4 million, and 2020 pro forma pretax earnings for the entity are estimated to be $17.2 million. The transaction is subject to regulatory approval from the Bermuda Monetary Authority.
If you have questions about Today’s ViewPoint, or about activity in the M&A marketplace, please email or call Phil Trem, President – Financial Advisory, at 440.392.6547.
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