Two Homes or a Forever Home? What the USI Deal Says About Insurance M&A

Aon’s $17 billion agreement to acquire USI Insurance Services is one of the largest brokerage transactions in recent years. The deal will add a business with approximately $3 billion in annual revenue, 10,500 teammates, and 200 offices to Aon’s growing U.S. middle-market presence, following its $13 billion acquisition of NFP in 2024.

But for those following insurance brokerage M&A, the more interesting story may be what the deal says about the options available to the industry’s largest private equity-backed platforms.

For years, the prevailing assumption has been that successful PE-backed brokerages can continue growing through acquisition before eventually recapitalizing with another private equity investor — or, at sufficient scale, pursuing the public markets. Yet as these platforms grow and valuations climb, the universe of potential buyers or investors capable of executing the next transaction inevitably shrinks.

USI adds another data point, and a reason for independent agency owners to think further ahead than the next transaction. Owners evaluating a sale today should also consider where that decision may ultimately take their business, whether the traditional “two bites of the apple” strategy carries the same advantages it once did (HINT: It doesn’t), and what kind of organization will give their customers and people the capabilities, knowledge, and long-term opportunities they need.

Four lessons stand out

Scale increasingly matters as customers demand more.

More independent agencies and PE-backed rollups are realizing that being part of a strategic organization can create additional value for their customers. A larger strategic buyer can provide more capabilities, greater access to data, deeper knowledge across different lines of business and vertical markets, and more people with specialized experience in particular industries.

Scale increasingly matters because it provides access to those capabilities. As customers demand more from their insurance partners, agencies need the data, knowledge, people, and resources to meet those needs.

You can choose a forever home, or multiple integrations.

Look at firms like Brown & Brown, Gallagher, Aon, and Marsh. If you’re an independent agency owner today, ask yourself: Do I want two homes, or do I want my forever home?

If the trend we’re seeing continues, an independent agency that sells to a PE-backed rollup may ultimately end up as part of a strategic buyer anyway. Selling directly to a strategic gives you more control over who you ultimately join and the terms of the arrangement. It can also mean avoiding two integrations, which can be disruptive to your team. An agency that joined USI, for example, may now face another transition as USI becomes part of Aon.

Historically, some owners accepted that tradeoff because they could get proceeds from the initial sale and another potential financial benefit when the PE-backed firm was sold or recapitalized — a strategy that worked particularly well as valuations continued to rise. But as valuations plateau or even decline, that advantage appears to be shrinking.

The public markets have long been discussed as another potential path for large PE-backed brokerages, but we’re still waiting to see which of today’s major platforms will successfully go public. Even if one does so in the near future, that doesn’t necessarily make going public a predictable exit path for others.

As your customers grow, your capabilities need to grow with them.

Insurance isn’t the only industry experiencing consolidation. We’re seeing it everywhere — across car washes, pest control, HVAC companies, and more. If you don’t have teammates who can help your customers grow and manage their risks, someone else will.

The days of having the same customer for 30 years while nothing changes are gone. You need to be creative about how you can best serve them year after year. You can’t do that if you aren’t continually bringing new people and capabilities into the team, whether through hiring, training, or M&A. If you’re part of a team that’s acquiring, every acquisition gives you another tool in the tool belt that you can use to serve your customers.

Good buyers want to acquire more than revenue. They want talent that is willing to commit to a long-term plan.

If you’re not willing to commit to the long-term success of the firm you’re acquiring, you’re not a good buyer. The same applies to the seller: If you’re not willing to commit to the buyer, go sell to someone else. You need to have confidence in the company acquiring you.

Commitment is top-down. Strategic buyers want to acquire a really good team, and that team comes with the deal. Assuming the shareholders are good leaders, the team will follow their lead. Teammates will take their cues from the tone and direction their leaders set. If they hit hurdles in the first year or the integration is difficult, they’re less likely to get nervous or upset if they see their leader is committed to making the relationship work for the long haul.

Think beyond the transaction

For independent agency owners, the USI deal is an important reminder to think beyond the economics of the deal in front of them and consider where they want their business, customers, and people to be for the long term.

Ultimately, a successful acquisition requires commitment on both sides. Buyers need to be committed to the firms and people they acquire, and sellers need to choose a buyer they are willing to build a future with. Long-term commitment can be difficult on both sides of the table — and it will be the focus of our next article.