By Michael Loney

April 11 - (The Insurer) - U.S. insurance brokerage M&A was up 11.4% in the first quarter compared to the same period of last year while valuations remain elevated, according to MarshBerry, .

The boutique investment bank in a new report said there were 127 announced M&A transactions in the first quarter, compared with 114 in last year’s first quarter.

MarshBerry highlighted “optimism for continued strong deal activity amidst lower cost of capital and improved profitability in a hard rate environment.”

Private capital–backed buyers accounted for 86, or 68%, of the 127 transactions, in Q1 2025.

Independent agencies were buyers in 28, or 22.0%, of the first quarter deals, while there was one transaction by a bank buyer.

Deals involving specialty distributors as targets accounted for 19 transactions, or 15.0%, the same level as in 2024. MarshBerry said Q1 was “continuing the trend of a low supply of specialty firm sellers”.

The top 10 buyers accounted for 55.9% of the announced transactions in the first quarter.

The top buyer was BroadStreet, with 16 deals in the first quarter. It was announced yesterday that a consortium led by Ethos Capital, British Columbia Investment Management Corporation and White Mountains Insurance Group is taking an ownership stake in BroadStreet.

It was followed by KingRisk Partners with nine deals, and Keystone Agency Partners and Hub International, both with eight.

MarshBerry said that the valuations remained elevated in the first quarter for both average of all firms and platform firms. This is driven by continued demand for high performing firms with strong organic growth and high margins.

“When compared to 2024 levels, valuations through Q1 2025 are basically flat for both all firm average and platform firms,” the report said.

Valuations as a multiple of Ebitda on upfront base purchase price for the last twelve months ending Q1 2025 were 11.16x across all firms on average. Platform firms for LTM ending Q1 2025 averaged 13.78x at closing.

“There may be continued pressure on valuations for firms who are not able to generate organic growth outside of rate or exposure base. Firms who are able to generate sales velocity in the mid to high teens should still command aggressive valuations as the buyers are continuing to look for ways to enhance their own organic growth metrics,” the report said.