Insurance Mergers and Acquisitions Decline in First Half of 2026

Insurance agency M&A has reached its slowest first-half pace in a decade, but the best-run firms are still attracting serious buyer interest and premium valuations.

That combination tells a more important story than the headline decline alone. The North American insurance distribution market is not running out of buyers or capital. It is becoming more selective about which agencies deserve the strongest offers, which acquisitions fit a buyer’s strategy, and which organizations are prepared for a successful transition.

For agency owners, this is a reminder that a future sale price will depend less on simply participating in a desirable industry and more on demonstrating sustainable growth, dependable earnings, strong client retention, transferable relationships, and an operation that can function without relying entirely on the owner.

Deal Volume Falls to Its Lowest Level Since 2016

OPTIS Partners recorded 292 announced agency and brokerage acquisitions in the United States and Canada during the first half of 2026. That was down 15% from the 342 transactions reported during the same period in 2025 and approximately 24% below the previous five-year average.

The slowdown became more pronounced during the second quarter. OPTIS counted 138 transactions in the quarter, a 25% decline from the 185 deals reported during the comparable period a year earlier. On a trailing 12-month basis, the market produced 646 transactions, down 17% from the prior-year period and the lowest rolling total since early 2019.

Those figures confirm that the extraordinary acquisition pace of the earlier consolidation cycle has cooled. Higher financing costs, more disciplined investment committees, integration demands, and a reduced supply of desirable sellers are encouraging buyers to be more deliberate.

The decline should also be interpreted carefully. OPTIS primarily tracks announced transactions, while many internal perpetuations, minority investments, producer buy-ins, and sales between privately held agencies may never become public. A separate 2026 analysis from IA Valuations found that most agency ownership transactions during 2025 occurred between privately held retail agencies rather than through the large deals that typically generate industry headlines.

“Several of the big, most active buyers over the past several years have significantly cut back activity.”

Private Equity Still Dominates the Buyer Pool

Private-equity-backed and hybrid organizations remained the dominant acquirers, accounting for approximately 76% of first-half transactions. Of the 68 unique buyers identified by OPTIS, 37 were private-equity-backed organizations. Six of those firms announced their first acquisition.

Privately held brokerages represented another 21 buyers, including nine organizations entering the acquisition market for the first time. This matters because the buyer landscape is becoming broader even as total transaction volume declines. Some longstanding consolidators are slowing down, while newer platforms are accelerating their acquisition programs.

BroadStreet Partners led the first-half rankings with 37 transactions, followed by Inszone Insurance Services with 33. ALKEME and World Insurance Associates each completed 15 acquisitions.

At the same time, several established buyers, including Hub International, Keystone Agency Partners, HighStreet Partners, and Acrisure, reduced their activity substantially compared with the prior year. A slower pace does not necessarily signal a loss of interest in insurance distribution. Some platforms may be concentrating on integration, operational improvement, debt management, or preparation for a recapitalization or future sale.

For sellers, that shift can change the competitive dynamics of a transaction. The buyer offering the highest headline valuation may not be the organization offering the best cultural fit, employee opportunity, operating support, carrier strategy, or long-term treatment of clients.

Property and Casualty Agencies Remain the Main Targets

Property and casualty agencies represented 198 of the reported transactions, or 68% of the total. Standalone employee benefits agencies accounted for 31 deals, combination P&C and benefits firms accounted for 25, and other insurance distribution businesses represented 38.

P&C agencies remain attractive because they can offer recurring commission revenue, high client retention, opportunities for cross-selling, and relationships that are often embedded in local communities or specialized industries. Buyers may also see opportunities to improve placement, add specialty capabilities, centralize service functions, and expand access to carriers.

However, the quality of a P&C book can vary considerably. Buyers will examine client concentration, carrier dependency, loss-ratio history, producer ownership of relationships, geographic exposure, revenue tied to market-driven premium increases, and the amount of work required to integrate agency management systems and operating procedures.

An agency that has grown because commercial clients expanded, producers generated new business, and retention remained strong will generally present a more durable story than one whose recent revenue gains came primarily from premium inflation.

The Valuation Market Is Splitting Into Two Lanes

OPTIS expects valuations to remain strong for larger, well-managed firms while softening for less differentiated agencies. This is an important distinction. A decline in the number of transactions does not automatically produce lower valuations for every seller.

Scarcity can support pricing for agencies with reliable organic growth, strong leadership teams, clean financial records, diversified books, modern operations, and a clear path for continued expansion. Buyers still have capital to deploy, but they can be more demanding when fewer platforms feel pressure to complete acquisitions at any cost.

IA Valuations reported that agency values ended 2025 near record levels, with average external-sale revenue multiples around 3.0 times and average EBITDA multiples around 8.5 times across the revenue categories it examined. Those averages should not be treated as automatic pricing benchmarks. Actual offers can vary significantly based on size, profitability, growth, business mix, deal structure, retention requirements, and the buyer’s strategic interest.

“Fundamentals, not speculation, continue to underpin valuations.”

That principle may become increasingly visible as the market normalizes. Agencies with weak documentation, inconsistent earnings, aging producer teams, excessive concentration, or limited organic growth may discover that the premium valuations discussed across the industry do not apply equally to every organization.

What Buyers Are Likely to Reward

A buyer is ultimately purchasing future cash flow, not simply the agency’s historical commission statements. The strongest sellers can explain where their growth came from, why clients stay, how employees will be retained, and how the organization can continue producing results after ownership changes.

Succession Remains the Market’s Long-Term Engine

The most durable driver of agency M&A may not be private equity. It may be demographics.

The independent agency system remains highly fragmented, and many firms are led by owners approaching retirement without a funded internal perpetuation plan. IA Valuations estimates that approximately 37% of agency principals are older than 61. OPTIS expects a substantial number of smaller agencies that cannot transition ownership internally to enter the market during the next five to ten years.

Internal perpetuation can be difficult even when a capable successor exists. Younger leaders may not have the personal capital required to purchase the business, while owners may depend on sale proceeds for retirement. Agencies also need enough profitability to fund the transaction without depriving the business of the resources needed for hiring, technology, marketing, and growth.

An external sale can solve some of those financial challenges, but it creates additional questions about employee roles, decision-making authority, compensation, client service, branding, carrier relationships, and the seller’s responsibilities after closing. These issues require planning well before a letter of intent is signed.

What Agency Owners Should Be Doing Now

Agency owners do not need to be ready to sell in order to begin preparing. Most of the steps that strengthen acquisition value also create a healthier independent agency.

• Separate growth from market effects: Measure new business, retention, exposure growth, rate impact, and acquired revenue independently.
• Reduce owner dependency: Transfer important client, carrier, and employee relationships to a broader leadership team.
• Clean the financial picture: Document compensation, discretionary expenses, related-party costs, and realistic normalized earnings.
• Review concentration risk: Identify excessive dependence on individual producers, major accounts, industries, carriers, or geographic regions.
• Build multiple succession options: Compare internal perpetuation, minority investment, merger, and full-sale scenarios before circumstances force a decision.

Owners should also review employment agreements, producer compensation arrangements, restrictive covenants, ownership records, licensing procedures, E&O history, carrier contracts, and data security practices. Problems in these areas can slow due diligence, reduce buyer confidence, or shift more of the purchase price into contingent payments.

A three-to-five-year planning period gives an agency time to improve recurring earnings, develop successors, repair weak processes, and demonstrate that improvements are sustainable. Changes made only a few months before a sale may be viewed as temporary adjustments rather than evidence of a stronger business.

Why the Slowdown Matters to Carriers

Carriers should not view agency M&A solely as a transaction between buyers and sellers. Ownership changes can affect premium concentration, appointment strategies, production commitments, underwriting communication, access to local markets, and the people responsible for managing the relationship.

A large consolidator may bring greater scale, broader data capabilities, and more centralized management. It may also review carrier relationships across the combined organization and redirect business toward a smaller group of strategic partners. Carriers need a clear process for identifying ownership changes, evaluating the resulting concentration, and maintaining communication with both local agency leaders and centralized executives.

The decline in transaction volume may give carriers more time to address each change thoughtfully, but the growing presence of new buyers introduces additional organizations whose operating models, capitalization, and long-term strategies may be less familiar.

Client and Employee Continuity Can Determine Whether a Deal Works

An acquisition can look successful on a spreadsheet and still lose value if key producers leave, service deteriorates, or clients become uncertain about the new organization. Buyers therefore have an interest in understanding how the agency communicates, how responsibilities are distributed, and how much trust resides with individual employees.

Agency owners should be prepared to explain what will change and what will remain familiar. Clients usually care less about the transaction structure than they do about whether their service team will remain accessible, whether coverage advice will stay objective, and whether the new organization will continue advocating for them during renewals and claims.

Employees will have similar questions about compensation, benefits, reporting relationships, technology, workloads, advancement, and job security. Addressing those concerns promptly can protect the client relationships and operational knowledge that supported the agency’s valuation in the first place.

A More Selective Market May Reward Better Planning

The first half of 2026 confirms that the agency acquisition market has moved beyond the period when rapidly expanding consolidators appeared willing to pursue almost every available opportunity. Total activity is lower, established buyers are adjusting their pace, and emerging organizations are becoming more visible.

Yet the fundamental attraction of insurance distribution remains intact. Recurring revenue, strong retention, fragmented ownership, and continuing succession needs are still bringing capital into the sector. What has changed is the level of discipline surrounding where that capital is deployed.

For well-run agencies, that selectivity can be an advantage. A business with credible growth, strong employees, diversified relationships, clean operations, and a thoughtful succession plan can distinguish itself more clearly when buyers are no longer competing simply to accumulate transaction volume.

The practical message for agency leaders is straightforward: do not wait for a buyer, a health event, a producer departure, or a retirement deadline to determine the future of the business. Build an agency that can remain independent, transition internally, or attract a strong external partner. That flexibility may ultimately be one of its most valuable assets.